\nARTICLE VI CONDITIONS TO THE MERGER………………………………………………………………… 53<\/p>\n 6.1 Conditions to Obligations of Each Party to Effect the Merger………………………….. 53
\n ————————————————————
\n 6.2 Additional Conditions to Obligations of Company……………………………………… 54
\n ———————————————–
\n 6.3 Additional Conditions to the Obligations of Parent and Merger Sub……………………… 54
\n —————————————————————– <\/p>\n
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER……………………………………………………….. 55<\/p>\n
7.1 Termination……………………………………………………………………… 55
\n ———–
\n 7.2 Notice of Termination; Effect of Termination………………………………………… 57
\n ——————————————–
\n 7.3 Fees and Expenses………………………………………………………………… 58
\n —————–
\n 7.4 Amendment……………………………………………………………………….. 59
\n ———
\n 7.5 Extension; Waiver………………………………………………………………… 59
\n —————– <\/p>\n
ARTICLE VIII GENERAL PROVISIONS……………………………………………………………………. 59<\/p>\n
8.1 Non-Survival of Representations and Warranties………………………………………. 59
\n ———————————————-
\n 8.2 Notices…………………………………………………………………………. 59
\n ——-
\n 8.3 Interpretation…………………………………………………………………… 60
\n ————–
\n 8.4 Counterparts…………………………………………………………………….. 61
\n ————
\n 8.5 Entire Agreement; Third Party Beneficiaries…………………………………………. 61
\n ——————————————-
\n 8.6 Severability…………………………………………………………………….. 62
\n ————
\n 8.7 Other Remedies; Specific Performance……………………………………………….. 62
\n ————————————
\n 8.8 Governing Law……………………………………………………………………. 62
\n ————-
\n 8.9 Rules of Construction…………………………………………………………….. 62
\n ———————
\n 8.10 Assignment………………………………………………………………………. 62
\n ———-
\n 8.11 Waiver of Jury Trial……………………………………………………………… 62
\n ——————–
\n<\/c><\/s><\/caption>\n<\/table>\n
-iii-<\/p>\n
INDEX OF EXHIBITS
\n —————–<\/p>\n
Exhibit A-1 Form of Company Voting Agreement<\/p>\n
Exhibit A-2 Form of Parent Voting Agreement<\/p>\n
Exhibit B Form of Stock Option Agreement<\/p>\n
Exhibit C-1 Form of Company Affiliate Agreement<\/p>\n
Exhibit C-2 Form of Parent Affiliate Agreement<\/p>\n
Exhibit D Form of Acknowledgment Agreement<\/p>\n
-iv-<\/p>\n
AGREEMENT AND PLAN OF REORGANIZATION<\/p>\n
This AGREEMENT AND PLAN OF REORGANIZATION (this “Agreement”) is made and
\nentered into as of July 26, 2000, among InfoSpace, Inc., a Delaware corporation
\n(“Parent”), Giants Acquisition Corp., a Delaware corporation and a wholly-owned
\nsubsidiary of Parent (“Merger Sub”), and Go2Net, Inc., a Delaware corporation
\n(“Company”).<\/p>\n
RECITALS
\n ——–<\/p>\n
A. Upon the terms and subject to the conditions of this Agreement and in
\naccordance with the Delaware General Corporation Law (“Delaware Law”), Parent,
\nMerger Sub and Company intend to enter into a business combination transaction.<\/p>\n
B. The Board of Directors of Company (i) has determined that the Merger (as
\ndefined in Section 1.1) is consistent with and in furtherance of the long-term
\nbusiness strategy of Company and fair to, and in the best interests of, Company
\nand its stockholders, (ii) has approved this Agreement, the Merger and the other
\ntransactions contemplated by this Agreement, (iii) has adopted a resolution
\ndeclaring the Merger advisable and (iv) has determined to recommend that the
\nstockholders of Company adopt this Agreement.<\/p>\n
C. The Board of Directors of Parent (i) has determined that the Merger is
\nconsistent with and in furtherance of the long-term business strategy of Parent
\nand fair to, and in the best interests of, Parent and its stockholders, (ii) has
\napproved this Agreement, the Merger and the other transactions contemplated by
\nthis Agreement, (iii) has adopted a resolution declaring the Merger advisable
\nand (iv) has determined to recommend that the stockholders of Parent approve the
\nissuance of shares of Parent Common Stock (as defined below) pursuant to the
\nMerger (the “Share Issuance”).<\/p>\n
D. Concurrently with the execution of this Agreement and as a condition and
\ninducement to Parent’s willingness to enter into this Agreement: (1) certain
\nstockholders of Company are entering into Voting Agreements in substantially the
\nform attached hereto as Exhibit A-1 (the “Company Voting Agreements”), (2)
\n ———–
\nCompany is executing and delivering a Stock Option Agreement in favor of Parent
\nin substantially the form attached hereto as Exhibit B (the “Stock Option
\n ———
\nAgreement”), (3) certain Company Affiliates are entering into Company Affiliate
\nAgreements in substantially the form attached hereto as Exhibit C-1 (the
\n ———–
\n“Company Affiliate Agreements”), and (4) certain individuals are entering into
\nAcknowledgment Agreements in substantially the form attached hereto as Exhibit D
\n ———
\n(the “Acknowledgment Agreements”).<\/p>\n
E. Concurrently with the execution of this Agreement and as a condition and
\ninducement to Company’s willingness to enter into this Agreement: (1) certain
\nstockholders of Parent are entering into Voting Agreements in substantially the
\nform attached hereto as Exhibit A-2 (the “Parent Voting Agreements”), and (2)
\n ———–
\ncertain Parent affiliates are entering into Parent Affiliate Agreements in
\nsubstantially the form attached as Exhibit C-2 hereto (the “Parent Affiliate
\n ———–
\nAgreements”).<\/p>\n
E. The parties intend, by executing this Agreement, to adopt a plan of
\nreorganization within the meaning of Section 368(a) of the Internal Revenue Code
\nof 1986, as amended (the “Code”).<\/p>\n
F. It is also intended by the parties hereto that the Merger shall qualify
\nfor accounting treatment as a pooling of interests.<\/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
\n ———-
\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
\nCompany (the “Merger”), the separate corporate existence of Merger Sub shall
\ncease and Company shall continue as the surviving corporation. Company as the
\nsurviving corporation after the Merger is hereinafter sometimes referred to as
\nthe “Surviving Corporation.”<\/p>\n
1.2 Effective Time; Closing. Subject to the provisions of this Agreement,
\n ———————–
\nthe parties hereto shall cause the Merger to be consummated by filing a
\nCertificate 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 (or such later time as may be agreed in
\nwriting by Company and Parent and specified in the Certificate of Merger) being
\nthe “Effective Time”) as soon as practicable on or after the Closing Date (as
\nherein defined). The closing of the Merger (the “Closing”) shall take place at
\nthe offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, at a
\ntime and date to be specified by the parties, which shall be no later than the
\nsecond business day after the satisfaction or waiver of the conditions set forth
\nin Article VI, or at such other time, date and location as the parties hereto
\nagree in writing (the “Closing Date”).<\/p>\n
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
\n ——————–
\nshall be as provided in this Agreement and the applicable provisions of Delaware
\nLaw. Without limiting the generality of the foregoing, and subject thereto, at
\nthe Effective Time all the property, rights, privileges, powers and franchises
\nof Company and Merger Sub shall vest in the Surviving Corporation, and all
\ndebts, liabilities and duties of Company and Merger Sub shall become the debts,
\nliabilities and duties of the Surviving Corporation.<\/p>\n
1.4 Certificate of Incorporation; Bylaws.
\n ———————————— <\/p>\n
(a) At the Effective Time, subject to the provisions of Section 5.10,
\nthe Certificate of Incorporation of Merger Sub shall be the Certificate of
\nIncorporation of the Surviving<\/p>\n
-2-<\/p>\n
Corporation; provided, however, that the Certificate of Incorporation of the
\n ——– ——-
\nSurviving Corporation shall be amended so that the name of the Surviving
\nCorporation shall be “Go2Net, Inc.”.<\/p>\n
(b) Subject to the provisions of Section 5.10, the Bylaws of Merger
\nSub, as in effect immediately prior to the Effective Time, shall be, at the
\neffective time, the Bylaws of the Surviving Corporation.<\/p>\n
1.5 Directors and Officers. The initial directors of the Surviving
\n ———————-
\nCorporation shall be the directors of Merger Sub immediately prior to the
\nEffective Time until their successors shall have been duly elected and
\nqualified. The initial officers of the Surviving Corporation shall be the
\nofficers of Merger Sub immediately prior to the Effective Time.<\/p>\n
1.6 Effect on Capital Stock. Subject to the terms and conditions of this
\n ———————–
\nAgreement, at the Effective Time, by virtue of the Merger and without any action
\non the part of Parent, Merger Sub, Company or the holders of any of the
\nfollowing securities, the following shall occur:<\/p>\n
(a) Conversion of Company Common Stock. In accordance with the
\n ———————————-
\nCertificate of Designation of the Company, each share of Preferred Stock, par
\nvalue $0.01 per share (the “Company Preferred Stock”) issued and outstanding
\nimmediately prior to the Effective Time will automatically be converted into
\n30.2526 shares of Common Stock, par value $0.01 per share, of Company (the
\n“Company Common Stock”). Each share of Company Common Stock issued and
\noutstanding immediately prior to the Effective Time (including shares of
\nPreferred Stock converted into Company Common Stock, but excluding any share of
\nCompany Common Stock to be canceled and extinguished pursuant to Section 1.6(b))
\nwill be automatically converted (subject to Sections 1.6(e) and (f)) into 1.82
\n(the “Exchange Ratio”) of a share of Common Stock, par value $0.001 per share,
\nof Parent (the “Parent Common Stock”), which shall be referred to in this
\nAgreement as the “Merger Consideration.” If any shares of Company Common Stock
\noutstanding immediately prior to the Effective Time are unvested or are subject
\nto a repurchase option, risk of forfeiture or other condition under any
\napplicable restricted stock purchase agreement or other agreement with Company,
\nthen the shares of Parent Common Stock issued in exchange for such shares of
\nCompany Common Stock will also be unvested and subject to the same repurchase
\noption, risk of forfeiture or other condition, and the certificates representing
\nsuch shares of Parent Common Stock may accordingly be marked with appropriate
\nlegends.<\/p>\n
(b) Cancellation of Company-Owned Stock. Each share of Company Common
\n ———————————–
\nStock held by Company or any direct or indirect wholly-owned subsidiary of
\nCompany immediately prior to the Effective Time shall be canceled and
\nextinguished without any conversion thereof.<\/p>\n
(c) Stock Options; Employee Stock Purchase Plans. At the Effective
\n ——————————————–
\nTime, all options to purchase Company Common Stock then outstanding under
\nCompany’s 2000 Stock Option Plan and 1996 Stock Option Plan, the Authorize.Net
\nCorporation 1999 Stock Incentive Plan, the Silicon Investor, Inc. 1996 Plan, the
\nWeb 21 Stock Option Plan, the Haggle Online, Inc. Non-qualified Stock Option
\nAgreement and the IQC Option to Purchase Common Stock (collectively, the<\/p>\n
-3-<\/p>\n
“Company Option Plans”), and Company Option Plans themselves, shall be assumed
\nby Parent in accordance with Section 5.8. At the Effective Time, Company’s 1999
\nEmployee Stock Purchase Plan (the “ESPP”) will be terminated in accordance with
\nSection 5.8.<\/p>\n
(d) Capital Stock of Merger Sub. Each share of Common Stock, $0.001 par
\n —————————
\nvalue per share, of Merger Sub (the “Merger Sub Common Stock”) issued and
\noutstanding immediately prior to the Effective Time shall be converted into one
\nvalidly issued, fully paid and nonassessable share of Common Stock, $0.001 par
\nvalue per share, of the Surviving Corporation. Each certificate evidencing
\nownership of shares of Merger Sub Common Stock shall evidence ownership of such
\nshares of capital stock of the Surviving Corporation.<\/p>\n
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted
\n —————————–
\nto reflect appropriately the effect of any stock split, reverse stock split,
\nstock dividend (including any dividend or distribution of securities convertible
\ninto or exercisable or exchangeable for Parent Common Stock or Company Common
\nStock), extraordinary cash dividend, reorganization, recapitalization,
\nreclassification, combination, exchange of shares or other like change with
\nrespect to Parent Common Stock or Company Common Stock occurring or having a
\nrecord date on or after the date hereof and prior to the Effective Time.<\/p>\n
(f) Fractional Shares. No fraction of a share of Parent Common Stock
\n ——————
\nwill be issued by virtue of the Merger, but in lieu thereof each holder of
\nshares of Company Common Stock who would otherwise be entitled to receive a
\nfraction of a share of Parent Common Stock (after aggregating all fractional
\nshares of Parent Common Stock that otherwise would be received by such holder)
\nshall, upon surrender of such holder’s Certificates(s) (as defined in Section
\n1.7(c)) receive from Parent an amount of cash (rounded to the nearest whole
\ncent), without interest, equal to the product of (i) such fraction, multiplied
\nby (ii) the average closing price of one share of Parent Common Stock for the
\nfive (5) most recent days that Parent Common Stock has traded ending on the
\ntrading day immediately prior to the Effective Time, as reported on the Nasdaq
\nNational Market (“Nasdaq”).<\/p>\n
1.7 Surrender of Certificates.
\n ————————- <\/p>\n
(a) Exchange Agent. Prior to the Effective Time, Parent shall select a
\n ————–
\nbank or trust company reasonably acceptable to Company to act as the exchange
\nagent (the “Exchange Agent”) in the Merger.<\/p>\n
(b) Parent to Provide Common Stock. Promptly after the Effective Time,
\n ——————————
\nParent shall make available to the Exchange Agent for exchange in accordance
\nwith this Article I, the shares of Parent Common Stock issuable pursuant to
\nSection 1.6(a) in exchange for outstanding shares of Company Common Stock, and
\ncash in an amount sufficient for payment in lieu of fractional shares pursuant
\nto Section 1.6(f) and any dividends or distributions to which holders of shares
\nof Company Common Stock may be entitled pursuant to Section 1.7(d).<\/p>\n
-4-<\/p>\n
(c) Exchange Procedures. As soon as practicable after the Effective
\n ——————-
\nTime, and in no event later than fifteen (15) days thereafter, Parent shall
\ncause the Exchange Agent to mail to each holder of record (as of the Effective
\nTime) of a certificate or certificates, which immediately prior to the Effective
\nTime represented outstanding shares of Company Common Stock (the “Certificates”)
\n(i) a letter of transmittal in customary form (which shall specify that delivery
\nshall be effected, and risk of loss and title to the Certificates shall pass,
\nonly upon delivery of the Certificates to the Exchange Agent and (ii)
\ninstructions for use in effecting the surrender of the Certificates in exchange
\nfor certificates representing shares of Parent Common Stock pursuant to Section
\n1.6(a), cash in lieu of any fractional shares pursuant to Section 1.6(f) and any
\ndividends or other distributions pursuant to Section 1.7(d). Upon surrender of
\nCertificates for cancellation to the Exchange Agent or to such other agent or
\nagents as may be appointed by Parent, together with such letter of transmittal,
\nduly completed and validly executed in accordance with the instructions thereto,
\nthe holders of such Certificates shall be entitled to receive in exchange
\ntherefor certificates representing the number of whole shares of Parent Common
\nStock into which their shares of Company Common Stock were converted pursuant to
\nSection 1.6(a), payment in lieu of fractional shares which such holders have the
\nright to receive pursuant to Section 1.6(f) and any dividends or other
\ndistributions payable pursuant to Section 1.7(d), and the Certificates so
\nsurrendered shall forthwith be canceled. Until so surrendered, outstanding
\nCertificates will be deemed, from and after the Effective Time, to evidence only
\nthe ownership of the number of whole shares of Parent Common Stock into which
\nsuch shares of Company Common Stock shall have been so converted (including any
\nvoting, notice or other rights associated with the ownership of such shares of
\nParent Common Stock under the Certificate of Incorporation or Bylaws of Parent
\nor under Delaware Law) and the right to receive an amount in cash in lieu of the
\nissuance of any fractional shares in accordance with Section 1.6(f) and any
\ndividends or other distributions payable pursuant to Section 1.7(d).<\/p>\n
(d) Distributions With Respect to Unexchanged Shares. Dividends or
\n ————————————————
\nother distributions declared or made after the date of this Agreement with
\nrespect to Parent Common Stock with a record date after the Effective Time will
\nbe paid to the holders of any unsurrendered Certificates with respect to the
\nshares of Parent Common Stock represented thereby when the holders of record of
\nsuch Certificates surrender such Certificates.<\/p>\n
(e) Transfers of Ownership. If certificates representing shares of
\n ———————-
\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 (i) paid to Parent or any agent designated by
\nit any transfer or other taxes required by reason of the issuance of
\ncertificates representing shares of Parent Common Stock in any name other than
\nthat of the registered holder of the Certificates surrendered, or (ii)
\nestablished to the satisfaction of Parent or any agent designated by it that
\nsuch tax has been paid or is not payable.<\/p>\n
(f) Required Withholding. Each of the Exchange Agent, Parent and the
\n ——————–
\nSurviving Corporation shall be entitled to deduct and withhold from any
\nconsideration payable or<\/p>\n
-5-<\/p>\n
otherwise deliverable pursuant to this Agreement to any holder or former holder
\nof Company Common Stock such amounts as may be required to be deducted or
\nwithheld therefrom under the Code or state, local or foreign law. To the extent
\nsuch amounts are so deducted or withheld, such amounts shall be treated for all
\npurposes under this Agreement as having been paid to the person to whom such
\namounts would otherwise have been paid.<\/p>\n
(g) No Liability. Notwithstanding anything to the contrary in this
\n ————
\nSection 1.7, neither the Exchange Agent, Parent, the Surviving Corporation nor
\nany party hereto shall be liable to a holder of shares of Parent Common Stock or
\nCompany Common Stock for any amount properly paid to a public official pursuant
\nto any applicable abandoned property, escheat or similar law.<\/p>\n
1.8 No Further Ownership Rights in Company Common Stock. All shares of
\n —————————————————
\nParent Common Stock issued in accordance with the terms hereof (including any
\ncash paid in respect thereof pursuant to Sections 1.6(f) and 1.7(d)) shall be
\ndeemed to have been issued in full satisfaction of all rights pertaining to such
\nshares of Company Common Stock. There shall be no further registration of
\ntransfers on the records of the Surviving Corporation of shares of Company
\nCommon Stock which were outstanding immediately prior to the Effective Time. If,
\nafter the Effective Time, Certificates are presented to the Surviving
\nCorporation for any reason, they shall be canceled and exchanged as provided in
\nthis Article I.<\/p>\n
1.9 Lost, Stolen or Destroyed Certificates. In the event that any
\n ————————————–
\nCertificates shall have been lost, stolen or destroyed, the Exchange Agent shall
\nissue and pay in exchange for such lost, stolen or destroyed Certificates, upon
\nthe making of an affidavit of that fact by the holder thereof, certificates
\nrepresenting the shares of Parent Common Stock into which the shares of Company
\nCommon Stock represented by such Certificates were converted pursuant to Section
\n1.6(a), cash for fractional shares, if any, as may be required pursuant to
\nSection 1.6(f) and any dividends or distributions payable pursuant to Section
\n1.7(d); provided, however, that the Exchange Agent, may, in its discretion and
\n ——– ——-
\nas a condition precedent to the issuance of such certificates representing
\nshares of Parent Common Stock and the payment of cash and other distributions,
\nrequire the owner of such lost, stolen or destroyed Certificates to deliver a
\nbond in such sum as it may reasonably direct as indemnity against any claim that
\nmay be made against Parent, the Surviving Corporation or the Exchange Agent with
\nrespect to the Certificates alleged to have been lost, stolen or destroyed.<\/p>\n
1.10 Tax and Accounting Consequences.
\n ——————————-<\/p>\n
(a) It is intended by the parties hereto that the Merger shall
\nconstitute a reorganization within the meaning of Section 368(a) of the Code.
\nThe parties hereto adopt this Agreement as a “plan of reorganization” within the
\nmeaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury
\nRegulations. Accordingly, both prior to and after the Closing, each party’s
\nbooks and records shall be maintained and all federal, state and local income
\ntax returns and schedules thereto shall be filed in a manner consistent with the
\nMerger being qualified as a reverse triangular merger under Section 368(a)(2)(E)
\nof the Code. Each party shall provide to each other<\/p>\n
-6-<\/p>\n
such information, reports, returns or schedules as may be reasonably required to
\nassist such party in accounting for and reporting the Merger being so qualified.<\/p>\n
(b) It is intended by the parties hereto that the Merger shall qualify
\nas a pooling of interests for accounting purposes.<\/p>\n
1.11 Taking of Necessary Action; Further Action. If, at any time after the
\n ——————————————
\nEffective Time, any further action is necessary or desirable to carry out the
\npurposes 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 Company and Merger Sub, the officers and directors of Parent
\nand the Surviving Corporation shall be fully authorized (in the name of Merger
\nSub, Company, the Surviving Corporation and otherwise) to take all such
\nnecessary action.<\/p>\n
ARTICLE II
\n REPRESENTATIONS AND WARRANTIES OF COMPANY<\/p>\n
Company represents and warrants to Parent and Merger Sub, subject to such
\nexceptions as are disclosed in writing in the disclosure letter supplied by
\nCompany to Parent dated as of the date hereof (the “Company Schedule”), which
\ndisclosure shall provide an exception to or otherwise qualify the
\nrepresentations or warranties of Company contained in the section of this
\nAgreement corresponding by number to such disclosure and the other
\nrepresentations and warranties herein to the extent such disclosure shall
\nreasonably appear to be applicable to such other representations or warranties,
\nas follows:<\/p>\n
2.1 Organization of Company.
\n ———————–<\/p>\n
(a) Company and each of its subsidiaries is a corporation or limited
\nliability company duly organized, validly existing and in good corporate or
\nlimited liability company standing under the laws of the jurisdiction of its
\nincorporation; has the corporate or limited liability power and authority to
\nown, lease and operate its assets and property and to carry on its business as
\nnow being conducted and as proposed to be conducted; and is duly qualified to do
\nbusiness and in good corporate or limited liability standing as a foreign
\ncorporation or limited liability company in each jurisdiction in which the
\nfailure to be so qualified would have a Material Adverse Effect (as defined in
\nSection 8.3) on Company.<\/p>\n
(b) Company has delivered to Parent a true and complete list of all of
\nCompany’s subsidiaries, indicating the jurisdiction of incorporation of each
\nsubsidiary and Company’s equity interest therein.<\/p>\n
(c) Company has delivered or made available to Parent a true and
\ncorrect copy of the Certificate of Incorporation and Bylaws of Company and
\nsimilar governing instruments of each of its material subsidiaries, each as
\namended to date, and each such instrument is in full force and<\/p>\n
-7-<\/p>\n
effect. Neither Company nor any of its subsidiaries is in violation of any of
\nthe provisions of its Certificate of Incorporation or Bylaws or equivalent
\ngoverning instruments.<\/p>\n
2.2 Company Capital Structure. The authorized capital stock of Company
\n ————————-
\nconsists of 499,000,000 shares of Common Stock, par value $0.01 per share, of
\nwhich there were 31,356,368 shares issued and outstanding as of July 19, 2000,
\nand 1,000,000 shares of Preferred Stock, par value $0.01 per share (“Company
\nPreferred Stock”), of which there were 300,000 shares issued and outstanding as
\nof July 19, 2000. All outstanding shares of Company Common Stock and Company
\nPreferred Stock are duly authorized, validly issued, fully paid and
\nnonassessable and are not subject to preemptive rights created by statute, the
\nCertificate of Incorporation or Bylaws of Company or any agreement or document
\nto which Company is a party or by which it is bound. As of July 19, 2000,
\nCompany had reserved an aggregate of 18,520,375 shares of Company Common Stock,
\nnet of exercises, for issuance to employees, consultants and non-employee
\ndirectors pursuant to the Company Stock Option Plans, under which options are
\noutstanding for an aggregate of 14,323,344 shares and under which 4,273,717
\nshares are available for grant as of July 19, 2000. As of July 19, 2000, Company
\nhas reserved 1,000,000 shares of Company Common Stock for issuance under the
\nESPP, of which 6,655 shares had been issued. As of July 19, 2000, the Company
\nhad reserved 9,075,783 shares of Company Common Stock for issuance upon
\nconversion of the Company Preferred Stock. All shares of Company Common Stock
\nsubject to issuance as aforesaid, upon issuance on the terms and conditions
\nspecified in the instruments pursuant to which they are issuable, would be duly
\nauthorized, validly issued, fully paid and nonassessable. <\/p>\n
2.3 Obligations With Respect to Capital Stock.
\n —————————————–<\/p>\n
Except as set forth in Section 2.2, there are no equity securities,
\npartnership interests or similar ownership interests of any class of Company, or
\nany securities exchangeable or convertible into or exercisable for such equity
\nsecurities, partnership interests or similar ownership interests issued,
\nreserved for issuance or outstanding. Except for securities Company owns,
\ndirectly or indirectly through one or more subsidiaries, there are no equity
\nsecurities, partnership interests or similar ownership interests of any class of
\nany subsidiary of Company, 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 Section 2.2, there are no options, warrants, equity securities,
\npartnership interests or similar ownership interests, calls, rights (including
\npreemptive rights), commitments or agreements of any character to which Company
\nor any of its subsidiaries is a party or by which it is bound obligating Company
\nor any of its subsidiaries to issue, deliver or sell, or cause to be issued,
\ndelivered or sold, or repurchase, redeem or otherwise acquire, or cause the
\nrepurchase, redemption or acquisition, of any shares of capital stock of Company
\nor any of its subsidiaries or obligating Company or any of its subsidiaries to
\ngrant, extend, accelerate the vesting of or enter into any such option, warrant,
\nequity security, partnership interest or similar ownership interest, call,
\nright, commitment or agreement. There are no registration rights and, to the
\nknowledge of Company there are no voting trusts, proxies or other agreements or
\nunderstandings with respect to any equity security of any class of Company or
\nwith<\/p>\n
-8-<\/p>\n
respect to any equity security, partnership interest or similar ownership
\ninterest of any class of any of its subsidiaries.<\/p>\n
2.4 Authority.<\/p>\n
(a) Company has all requisite corporate power and authority to enter
\ninto this Agreement and the Stock Option Agreement and to consummate the
\ntransactions contemplated hereby and thereby. The execution and delivery of this
\nAgreement and the consummation of the transactions contemplated hereby, and the
\nexecution and delivery of the Stock Option Agreement and the consummation of the
\ntransactions contemplated thereby, have been duly authorized by all necessary
\ncorporate action on the part of Company, subject only to the adoption of this
\nAgreement by Company’s stockholders and the filing and recordation of the
\nCertificate of Merger pursuant to Delaware Law. A vote of the holders of at
\nleast (i) a majority of the outstanding shares of the Company Common Stock and
\nCompany Preferred Stock, voting as a single class with the Company Preferred
\nStock voting on an as-converted basis), and (ii) a majority of the outstanding
\nshares of Company Preferred Stock voting as a single class, is required for
\nCompany’s stockholders to approve and adopt this Agreement and approve the
\nMerger. This Agreement and the Company Stock Option Agreement have been duly
\nexecuted and delivered by Company and, assuming the due authorization, execution
\nand delivery by Parent and, if applicable, Merger Sub, constitute the valid and
\nbinding obligations of Company, enforceable in accordance with their respective
\nterms, except as enforceability may be limited by bankruptcy and other similar
\nlaws and general principles of equity. The execution and delivery of this
\nAgreement and the Stock Option Agreement by Company do not, and the performance
\nof this Agreement and the Stock Option Agreement by Company will not, (i)
\nconflict with or violate the Certificate of Incorporation or Bylaws of Company
\nor the equivalent organizational documents of any of its subsidiaries, (ii)
\nsubject to obtaining the approval and adoption of this Agreement and the
\napproval of the Share Issuance by Parent’s stockholders as contemplated in
\nSection 5.2 and compliance with the requirements set forth in Section 2.4(b)
\nbelow, conflict with or violate any law, rule, regulation, order, judgment or
\ndecree applicable to Company or any of its subsidiaries or by which its or any
\nof their respective properties is bound or affected, or (iii) result in any
\nbreach of, or constitute a default (or an event that with notice or lapse of
\ntime or both would become a default) under, or impair Company’s rights or alter
\nthe rights or obligations of any third party under, or give to others any rights
\nof termination, amendment, acceleration or cancellation of, or result in the
\ncreation of a lien or encumbrance on any of the properties or assets of Company
\nor any of its subsidiaries pursuant to, any material note, bond, mortgage,
\nindenture, contract, agreement, lease, license, permit, franchise or other
\ninstrument or obligation to which Company or any of its subsidiaries is a party
\nor by which Company or any of its subsidiaries or its or any of their respective
\nproperties are bound or affected, except to the extent such conflict, violation,
\nbreach, default, impairment or other effect could not, in the case of clause
\n(ii) or (iii), individually or in the aggregate, reasonably be expected to have
\na Material Adverse Effect on Company.<\/p>\n
(b) No consent, approval, order or authorization of, or registration,
\ndeclaration or filing with any court, administrative agency or commission or
\nother governmental authority or instrumentality (“Governmental Entity”) is
\nrequired by or with respect to Company in connection <\/p>\n
-9-<\/p>\n
with the execution and delivery of this Agreement and the Stock Option Agreement
\nor the consummation of the transactions contemplated hereby or thereby, except
\nfor (i) the filing of a Form S-4 Registration Statement (the “S-4”) with the
\nSecurities and Exchange Commission (“SEC”) in accordance with the Securities Act
\nof 1933, as amended (the “Securities Act”), (ii) the filing of the Certificate
\nof Merger with the Secretary of State of Delaware, (iii) the filing of the Joint
\nProxy Statement\/Prospectus (as defined in Section 2.18) with the SEC in
\naccordance with the Securities Exchange Act of 1934, as amended (the “Exchange
\nAct”), (iv) such consents, approvals, orders, authorizations, registrations,
\ndeclarations and filings as may be required under applicable federal and state
\nsecurities laws and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
\namended (the “HSR Act”) and the laws of any foreign country and (v) such other
\nconsents, authorizations, filings, approvals and registrations which, if not
\nobtained or made, would not be material to Company or Parent or have a material
\nadverse effect on the ability of the parties to consummate the Merger.<\/p>\n
2.5 SEC Filings; Company Financial Statements.
\n —————————————–<\/p>\n
(a) Company has filed all forms, reports and documents required to be
\nfiled with the SEC since the initial filing date of the registration statement
\nfor Company’s initial public offering, and has made available to Parent such
\nforms, reports and documents in the form filed with the SEC. All such required
\nforms, reports and documents (including those that Company may file subsequent
\nto the date hereof) are referred to herein as the “Company SEC Reports.” As of
\ntheir respective dates, the Company SEC Reports (i) were prepared in accordance
\nwith the requirements of the Securities Act or the Exchange Act, as the case may
\nbe, and the rules and regulations of the SEC thereunder applicable to such
\nCompany SEC Reports, and (ii) did not at the time they were filed (or if amended
\nor superseded by a filing prior to the date of this Agreement, then on the date
\nof such filing) contain any untrue statement of a material fact or omit to state
\na material fact required to be stated therein or necessary in order to make the
\nstatements therein, in the light of the circumstances under which they were
\nmade, not misleading. None of 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, in each
\ncase, any related notes thereto) contained in the Company SEC Reports (the
\n“Company Financials”), including any Company SEC Reports 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 generally accepted accounting principles (“GAAP”)
\napplied on a consistent basis throughout the periods involved (except as may be
\nindicated in the notes thereto or, in the case of unaudited interim financial
\nstatements, as may be permitted by the SEC on Form 10-Q under the Exchange Act)
\nand (iii) fairly presented the consolidated financial position of Company and
\nits subsidiaries at the respective dates thereof and the consolidated results of
\nits operations and cash flows for the periods indicated, except that the
\nunaudited interim financial statements were or are subject to normal and
\nrecurring year-end adjustments which were not, or are not expected to be,
\nmaterial in amount. The balance sheet of Company as of June 30, 2000 is
\nhereinafter referred to as the “Company Balance Sheet.” Except as disclosed in
\nthe Company<\/p>\n
-10-<\/p>\n
Financials, neither Company nor any of its subsidiaries has any liabilities
\n(absolute, accrued, contingent or otherwise) of a nature required to be
\ndisclosed on a balance sheet or in the related notes to the consolidated
\nfinancial statements prepared in accordance with GAAP which are, individually or
\nin the aggregate, material to the business, results of operations or financial
\ncondition of Company and its subsidiaries taken as a whole, except liabilities
\n(i) provided for in the Company Balance Sheet, or (ii) incurred since the date
\nof the Company Balance Sheet in the ordinary course of business consistent with
\npast practices and which would not reasonably be expected to have a Material
\nAdverse Effect on the Company.<\/p>\n
(c) Company has heretofore furnished to Parent a complete and correct
\ncopy of any amendments or modifications, which have not yet been filed with the
\nSEC but which will be required to be filed, to agreements, documents or other
\ninstruments which previously had been filed by Company with the SEC pursuant to
\nthe Securities Act or the Exchange Act.<\/p>\n
2.6 Absence of Certain Changes or Events. Since the date of the Company
\n ————————————
\nBalance Sheet, there has not been: (i) any Material Adverse Effect on Company,
\n(ii) any material change by Company in its accounting methods, principles or
\npractices, except as required by concurrent changes in GAAP, or (iii) any
\nrevaluation by Company of any of its assets, including, without limitation,
\nwriting down the value of capitalized inventory or writing off notes or accounts
\nreceivable other than in the ordinary course of business.<\/p>\n
2.7 Taxes.
\n —–<\/p>\n
Definition of Taxes. For the purposes of this Agreement, “Tax” or,
\n ——————-
\ncollectively, “Taxes”, means (i) any and all federal, state, local and foreign
\ntaxes, assessments and other governmental charges, duties, impositions and
\nliabilities relating to taxes, including taxes based upon or measured by gross
\nreceipts, income, profits, sales, use and occupation, and value added, ad
\nvalorem, transfer, franchise, withholding, payroll, recapture, employment,
\nexcise and property taxes, together with all interest, penalties and additions
\nimposed with respect to such amounts; (ii) any liability for the payment of any
\namounts of the type described in clause (i) as a result of being a member of an
\naffiliated, consolidated, combined or unitary group for any period; and (iii)
\nany liability for the payment of any amounts of the type described in clause (i)
\nas a result of any express or implied obligation to indemnify any other person
\nor as a result of any obligations under any agreements or arrangements with any
\nother person with respect to such amounts and including any liability for taxes
\nof a predecessor entity.<\/p>\n
(a) Tax Returns and Audits.
\n ———————- <\/p>\n
(i) Company and each of its subsidiaries have timely filed all
\nfederal, state, local and foreign returns, estimates, information statements and
\nreports (“Returns”) relating to Taxes required to be filed by Company and each
\nof its subsidiaries with any Tax authority, except such Returns which are not
\nmaterial to Company. Company and each of its subsidiaries have paid all Taxes
\nshown to be due on such Returns.<\/p>\n
-11-<\/p>\n
(ii) Company and each of its subsidiaries as of the Effective
\nTime will have withheld with respect to its employees all federal and state
\nincome taxes, Taxes pursuant to the Federal Insurance Contribution Act and other
\nTaxes required to be withheld, except such Taxes which are not material to
\nCompany.<\/p>\n
(iii) Neither Company nor any of its subsidiaries has been
\ndelinquent in the payment of any material Tax nor is there any material Tax
\ndeficiency outstanding, assessed, or, to Company’s knowledge, proposed against
\nCompany or any of its subsidiaries, nor has Company or any of its subsidiaries
\nexecuted any unexpired waiver of any statute of limitations on or extending the
\nperiod for the assessment or collection of any Tax.<\/p>\n
(iv) No audit or other examination of any Return of Company or
\nany of its subsidiaries by any Tax authority is presently in progress, nor has
\nCompany or any of its subsidiaries been notified of any request for such an
\naudit or other examination.<\/p>\n
(v) No adjustment relating to any Returns filed by Company or
\nany of its subsidiaries has been proposed in writing formally or to Company’s
\nknowledge informally by any Tax authority to Company or any of its subsidiaries
\nor any representative thereof.<\/p>\n
(vi) Neither Company nor any of its subsidiaries has any
\nliability for any material unpaid Taxes which has not been accrued for or
\nreserved on Company Balance Sheet in accordance with GAAP, whether asserted or
\nunasserted, contingent or otherwise, which is material to Company, other than
\nany liability for unpaid Taxes that may have accrued since June 30, 2000 in
\nconnection with the operation of the business of Company and its subsidiaries in
\nthe ordinary course.<\/p>\n
(vii) There is no contract, agreement, plan or arrangement to
\nwhich Company or any of its subsidiaries is a party as of the date of this
\nAgreement, including but not limited to the provisions of this Agreement,
\ncovering any employee or former employee of Company or any of its subsidiaries
\nthat, individually or collectively, would reasonably be expected to give rise to
\nthe payment of any amount that would not be deductible pursuant to Sections
\n280G, 404 or 162(m) of the Code. There is no contract, agreement, plan or
\narrangement to which Company is a party or by which it is bound to compensate
\nany individual for excise taxes paid pursuant to Section 4999 of the Code.<\/p>\n
(viii) Neither Company nor any of its subsidiaries has filed any
\nconsent agreement under Section 341(f) of the Code or agreed to have Section
\n341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
\ndefined in Section 341(f)(4) of the Code) owned by Company or any of its
\nsubsidiaries.<\/p>\n
(ix) Neither Company nor any of its subsidiaries (A) has ever
\nbeen a member of an affiliated group filing a consolidated federal income Tax
\nReturn (other than a consolidated group the common parent of which is Company),
\n(B) is a party to any Tax sharing or Tax allocation agreement, arrangement or
\nunderstanding, (C) is liable for the Taxes of any other<\/p>\n
-12-<\/p>\n
person under Treasury Regulation 1.1502-6 (or any similar provision of state,
\nlocal or foreign law), as a transferee or successor, by contract or otherwise,
\nand (D) is a party to any joint venture, partnership or other arrangement that
\ncould be treated as a partnership for income Tax purposes.<\/p>\n
(x) Neither the Company nor any of its subsidiaries has
\nconstituted either a “distributing corporation” or a “controlled corporation” in
\na distribution of stock qualifying for tax-free treatment under Section 355 of
\nthe Code (i) in the two years prior to the date of this Agreement or (ii) in a
\ndistribution which could otherwise constitute part of a “plan” or “series of
\nrelated transactions” (within the meaning of Section 355(e) of the Code) in
\nconjunction with the Merger.<\/p>\n
(xi) None of Company’s or its subsidiaries’ assets are tax exempt
\nuse property within the meaning of Section 168(h) of the Code.<\/p>\n
2.8 Company Intellectual Property. For the purposes of this Agreement,
\n —————————–
\nthe following terms have the following definitions:<\/p>\n
“Intellectual Property” shall mean any or all of the following and all
\nrights in, arising out of, or associated therewith: (i) all United States,
\ninternational and foreign patents and applications therefor and all reissues,
\ndivisions, renewals, extensions, provisionals, continuations and continuations-
\nin-part thereof; (ii) all inventions (whether patentable or not), invention
\ndisclosures, improvements, trade secrets, proprietary information, know how,
\ntechnology, technical data and customer lists, and all documentation relating to
\nany of the foregoing; (iii) all copyrights, copyrights registrations and
\napplications therefor, and all other rights corresponding thereto throughout the
\nworld; (iv) all industrial designs and any registrations and applications
\ntherefor throughout the world; (v) all trade names, logos, common law trademarks
\nand service marks, trademark and service mark registrations and applications
\ntherefor throughout the world; (vi) all databases and data collections and all
\nrights therein throughout the world; (vii) all domain names; (viii) all moral
\nand economic rights of authors and inventors, however denominated, throughout
\nthe world, and (ix) any similar or equivalent rights to any of the foregoing
\nanywhere in the world.<\/p>\n
“Company Intellectual Property” shall mean any Intellectual Property that
\nis owned by, or exclusively licensed to, Company or any of its subsidiaries.<\/p>\n
“Registered Intellectual Property” means all United States, international
\nand foreign: (i) patents and patent applications (including provisional
\napplications); (ii) registered trademarks, applications to register trademarks,
\nintent-to-use applications, or other registrations or applications related to
\ntrademarks; (iii) registered copyrights and applications for copyright
\nregistration; and (iv) any other Intellectual Property that is the subject of an
\napplication, certificate, filing, registration or other document issued, filed
\nwith, or recorded by any state, government or other public legal authority.<\/p>\n
“Company Registered Intellectual Property” means all of the Registered
\nIntellectual Property owned by, or filed in the name of, Company or any of its
\nsubsidiaries.<\/p>\n
-13-<\/p>\n
(a) No Company Intellectual Property or product or service of Company
\nor any of its subsidiaries is subject to any proceeding or outstanding decree,
\norder, judgment, contract, license, agreement, or stipulation restricting in any
\nmanner the use, transfer, or licensing thereof by Company or any of its
\nsubsidiaries, or which may affect the validity, use or enforceability of such
\nCompany Intellectual Property.<\/p>\n
(b) Company or one of its subsidiaries owns and has good and exclusive
\ntitle to, or has license to (sufficient for the conduct of its business as
\ncurrently conducted and as proposed to be conducted), each material item of
\nCompany Intellectual Property or other Intellectual Property used by Company or
\nany of its subsidiaries free and clear of any lien or encumbrance (excluding
\nlicenses and related restrictions); and Company or one of its subsidiaries is
\nthe exclusive owner of all trademarks and trade names used in connection with
\nthe operation or conduct of the business of Company and its subsidiaries,
\nincluding the sale of any products or the provision of any services by Company
\nand its subsidiaries.<\/p>\n
(c) Company or one of its subsidiaries owns exclusively, and has good
\ntitle to, all copyrighted works that are Company products or which Company or
\nany of its subsidiaries otherwise expressly purports to own.<\/p>\n
(d) To the extent that any material Intellectual Property has been
\ndeveloped or created by a third party for Company or any of its subsidiaries,
\nCompany or one of its subsidiaries has a written agreement with such third party
\nwith respect thereto and Company or one of its subsidiaries thereby either (i)
\nhas obtained ownership of, and is the exclusive owner of, or (ii) has obtained a
\nlicense (sufficient for the conduct of its business as currently conducted and
\nas proposed to be conducted) to all such third party’s Intellectual Property in
\nsuch work, material or invention by operation of law or by valid assignment.<\/p>\n
(e) Neither Company nor any of its subsidiaries has transferred
\nownership of, or granted any exclusive license with respect to, any Intellectual
\nProperty that is or was material Company Intellectual Property, to any third
\nparty.<\/p>\n
(f) To the knowledge of Company, the operation of the business of
\nCompany and its subsidiaries as such business currently is conducted, including
\nCompany’s and its subsidiaries’ design, development, manufacture, marketing and
\nsale of the products or services of Company and its subsidiaries (including
\nproducts currently under development) has not, does not and will not infringe or
\nmisappropriate the Intellectual Property of any third party or, to its
\nknowledge, constitute unfair competition or trade practices under the laws of
\nany jurisdiction.<\/p>\n
(g) Neither Company nor any of its subsidiaries has received notice
\nfrom any third party that the operation of the business of Company or any of its
\nsubsidiaries or any act, product or service of Company or any of its
\nsubsidiaries, 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
-14-<\/p>\n
(h) To the knowledge of Company, no person has materially infringed or
\nis materially infringing or misappropriating any Company Intellectual Property.<\/p>\n
(i) Company and each of its subsidiaries has taken reasonable steps to
\nprotect Company’s and its subsidiaries’ rights in Company’s confidential
\ninformation and trade secrets that it wishes to protect or any trade secrets or
\nconfidential information of third parties provided to Company or any of its
\nsubsidiaries, and, without limiting the foregoing, each of Company and its
\nsubsidiaries 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
\nCompany and any of its subsidiaries have executed such an agreement, except
\nwhere the failure to do so is not reasonably expected to be material to Company.<\/p>\n
2.9 Compliance; Permits; Restrictions
\n ———————————<\/p>\n
(a) Neither Company nor any of its subsidiaries is, in any material
\nrespect, in conflict with, or in default or violation of (i) any law, rule,
\nregulation, order, judgment or decree applicable to Company or any of its
\nsubsidiaries or by which its or any of their respective properties is bound or
\naffected, or (ii) any material note, bond, mortgage, indenture, contract,
\nagreement, lease, license, permit, franchise or other instrument or obligation
\nto which Company or any of its subsidiaries is a party or by which Company or
\nany of its subsidiaries or its or any of their respective properties is bound or
\naffected. To the knowledge of Company, no investigation or review by any
\nGovernmental Entity is pending or threatened against Company or its
\nsubsidiaries, nor has any Governmental Entity indicated in writing an intention
\nto conduct the same. There is no material agreement, judgment, injunction,
\norder or decree binding upon Company or any of its subsidiaries which has or
\ncould reasonably be expected to have the effect of prohibiting or materially
\nimpairing any business practice of Company or any of its subsidiaries, any
\nacquisition of material property by Company or any of its subsidiaries or the
\nconduct of business by Company as currently conducted.<\/p>\n
(b) Company and its subsidiaries hold all permits, licenses,
\nvariances, exemptions, orders and approvals from governmental authorities which
\nare material to the operation of the business of Company (collectively, the
\n“Company Permits”). Company and its subsidiaries are in compliance in all
\nmaterial respects with the terms of the Company Permits.<\/p>\n
2.10 Litigation. As of the date of this Agreement, there is no action,
\n ———-
\nsuit, proceeding, claim, arbitration or investigation pending, or as to which
\nCompany or any of its subsidiaries has received any notice of assertion nor, to
\nCompany’s knowledge, is there a threatened action, suit, proceeding, claim,
\narbitration or investigation against Company or any of its subsidiaries which
\nreasonably would be likely to be material to Company, or which in any manner
\nchallenges or seeks to prevent, enjoin, alter or delay any of the transactions
\ncontemplated by this Agreement.<\/p>\n
2.11 Brokers’ and Finders’ Fees. Except for fees payable to Merrill Lynch
\n ————————–
\n& Co. pursuant to an engagement letter dated July 17, 2000, copies of which have
\nbeen provided to Parent,<\/p>\n
-15-<\/p>\n
Company has not incurred, nor will it incur, directly or indirectly, any
\nliability for brokerage or finders’ fees or agents’ commissions or any similar
\ncharges in connection with this Agreement or any transaction contemplated
\nhereby.<\/p>\n
2.12 Employee Benefit Plans
\n ———————-<\/p>\n
(a) All employee compensation, incentive, fringe or benefit plans,
\nprograms, policies, commitments, agreements or other arrangements (whether or
\nnot set forth in a written document and including, without limitation, all
\n“employee benefit plans” within the meaning of Section 3(3) of the Employee
\nRetirement Income Security Act of 1974, as amended (“ERISA”)) covering any
\nactive or former employee, director or consultant of Company (“Company Employee”
\nwhich shall for this purpose mean an employee of Company or an ERISA Affiliate
\n(as defined below)), any subsidiary of Company or any trade or business (whether
\nor not incorporated) which is a member of a controlled group or which is under
\ncommon control with Company within the meaning of Section 414 of the Code (an
\n“ERISA Affiliate”), or with respect to which Company has or, to its knowledge,
\nmay in the future have liability, are listed in Section 2.12(a) of the Company
\nSchedule (the “Company Plans”). Company has provided or will make available to
\nParent: (i) correct and complete copies of all documents embodying each Company
\nPlan including (without limitation) all amendments thereto, all related trust
\ndocuments, and all material written agreements and contracts relating to each
\nsuch Company Plan; (ii) the 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 Plan; (iii) the most recent
\nsummary plan description together with the summary(ies) of material
\nmodifications thereto, if any, required under ERISA with respect to each Company
\nPlan; (iv) all IRS determination, opinion, notification and advisory letters;
\n(v) all material correspondence to or from any governmental agency relating to
\nany Company Plan; (vi) all forms and related notices required under the
\nConsolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”);
\n(vii) the most recent discrimination tests for each Company Plan; (viii) the
\nmost recent actuarial valuations, if any, prepared for each Company Plan; (ix)
\nif the Company Plan is funded, the most recent annual and periodic accounting of
\nthe Company Plan assets; and (x) all communication to Company Employees relating
\nto any Company Plan and any proposed Company Plan, in each case, relating to any
\namendments, terminations, establishments, increases or decreases in benefits,
\nacceleration of payments or vesting schedules, or other events which would
\nresult in any material liability to Company or any ERISA Affiliate.<\/p>\n
(b) Each Company Plan has been maintained and administered in all
\nmaterial respects in compliance with its terms and with the requirements
\nprescribed by any and all statutes, orders, rules and regulations (foreign or
\ndomestic), including but not limited to ERISA and the Code, which are applicable
\nto such Company Plans. No suit, action or other litigation (excluding claims for
\nbenefits incurred in the ordinary course of Company Plan activities) has been
\nbrought, or to the knowledge of Company, is threatened, against or with respect
\nto any such Company Plan. There are no audits, inquiries or proceedings pending
\nor, to the knowledge of Company, threatened by the Internal Revenue Service (the
\n“IRS”) or Department of Labor (the “DOL”) with respect to any Company Plans. All
\ncontributions, reserves or premium payments required to be made or accrued as <\/p>\n
-16-<\/p>\n
of the date hereof to the Company Plans have been timely made or accrued. Any
\nCompany Plan intended to be qualified under Section 401(a) of the Code and each
\ntrust intended to qualify under Section 501(a) of the Code (i) has either
\nobtained a favorable determination, notification, advisory and\/or opinion
\nletter, as applicable, as to its qualified status from the IRS or still has a
\nremaining period of time under applicable Treasury Regulations or IRS
\npronouncements in which to apply for such letter and to make any amendments
\nnecessary to obtain a favorable determination, and (ii) incorporates or has been
\namended to incorporate all provisions required to comply with the Tax Reform Act
\nof 1986 and subsequent legislation. To the knowledge of Company, no condition or
\ncircumstance exists giving rise to a material likelihood that any such Company
\nPlan would not be treated as qualified by the IRS. Company does not have any
\nplan or commitment to establish any new Company Plan, to modify any Company Plan
\n(except to the extent required by law or to conform any such Company Plan to the
\nrequirements of any applicable law, in each case as previously disclosed to
\nParent in writing, or as required by the terms of any Company Plan or this
\nAgreement), or to enter into any new Company Plan. Each Company Plan can be
\namended, terminated or otherwise discontinued after the Effective Time in
\naccordance with its terms, without liability to Parent, Company or any of its
\nERISA Affiliates (other than ordinary administration expenses).<\/p>\n
(c) Neither Company, any of its subsidiaries, nor any of their ERISA
\nAffiliates has at any time ever maintained, established, sponsored, participated
\nin, or contributed to any plan subject to Title IV of ERISA or Section 412 of
\nthe Code and at no time has Company contributed to or been requested to
\ncontribute to any “multiemployer plan,” as such term is defined in ERISA.
\nNeither Company, any of its subsidiaries, nor any officer or director of Company
\nor any of its subsidiaries is subject to any material liability or penalty under
\nSection 4975 through 4980B of the Code or Title I of ERISA. No “prohibited
\ntransaction,” within the meaning of Section 4975 of the Code or Sections 406 and
\n407 of ERISA, and not otherwise exempt under Section 4975 of the Code and
\nSection 408 of ERISA, has occurred with respect to any Company Plan which could
\nsubject Company or its ERISA Affiliates to material liability.<\/p>\n
(d) None of the Company Plans promises or provides retiree medical or
\nother retiree welfare benefits to any person except as required by applicable
\nlaw, and neither Company nor any of its subsidiaries has represented, promised
\nor contracted (whether in oral or written form) to provide such retiree benefits
\nto any Company Employee, former employee, director, consultant or other person,
\nexcept to the extent required by statute.<\/p>\n
(e) Except as would not have a Material Adverse Effect, Company is in
\ncompliance in all material respects with all applicable material foreign,
\nfederal, state and local laws, rules and regulations respecting employment,
\nemployment practices, terms and conditions of employment and wages and hours.<\/p>\n
(f) Neither the execution and delivery of this Agreement nor the
\nconsummation of the transactions contemplated hereby will (i) result in any
\npayment (including severance, unemployment compensation, golden parachute, bonus
\nor otherwise) becoming due to any <\/p>\n
-17-<\/p>\n
stockholder, director or Company Employee or any of its subsidiaries under any
\nCompany Plan or otherwise, (ii) materially increase any benefits otherwise
\npayable under any Company Plan, or (iii) result in the acceleration of the time
\nof payment or vesting of any such benefits.<\/p>\n
2.13 Absence of Liens and Encumbrances. Company and each of its
\n ———————————
\nsubsidiaries has good and valid title to, or, in the case of leased properties
\nand assets, valid leasehold interests in, all of its material tangible
\nproperties and assets, real, personal and mixed, used in its business, free and
\nclear of any liens or encumbrances except as reflected in the Company Financials
\nand except for liens for taxes not yet due and payable and such imperfections of
\ntitle and encumbrances, if any, which would not be material to Company.<\/p>\n
2.14 Environmental Matters
\n ———————<\/p>\n
(a) Hazardous Materials Activities. Except as would not reasonably be
\n ——————————
\nlikely to result in a material liability to Company (in any individual case or
\nin the aggregate), (i) neither Company nor any of its subsidiaries has
\ntransported, stored, used, manufactured, disposed of, released or exposed its
\nemployees or others to pollutants, contaminants, wastes, any toxic, radioactive
\nor otherwise hazardous materials (“Hazardous Materials”) in violation of any law
\nin effect on or before the Closing Date, and (ii) neither Company nor any of its
\nsubsidiaries has disposed of, transported, sold, used, released, exposed its
\nemployees or others to or manufactured any product containing a Hazardous
\nMaterial (collectively, “Hazardous Materials Activities”) 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
(b) Environmental Liabilities. No action, proceeding, revocation
\n ————————-
\nproceeding, amendment procedure, writ, injunction or claim is pending, or to
\nCompany’s knowledge, threatened concerning any Company Permit relating to any
\nenvironmental matter, Hazardous Material or any Hazardous Materials Activity of
\nCompany or any of its subsidiaries. Company is not aware of any fact or
\ncircumstance which could involve Company or any of its subsidiaries in any
\nenvironmental litigation or impose upon Company or any of its subsidiaries any
\nenvironmental liability.<\/p>\n
2.15 Labor Matters. (i) There are no controversies pending or, to the
\n ————-
\nknowledge of each of Company and its respective subsidiaries, threatened,
\nbetween Company or any of its subsidiaries and any of their respective employees
\nwhich could reasonably be expected to result in a cash payment obligation by
\nCompany in excess of $250,000; (ii) as of the date of this Agreement, neither
\nCompany nor any of its subsidiaries is a party to any collective bargaining
\nagreement or other labor union contract applicable to persons employed by
\nCompany or its subsidiaries nor does Company or its subsidiaries know of any
\nactivities or proceedings of any labor union to organize any such employees; and
\n(iii) as of the date of this Agreement, neither Company nor any of its
\nsubsidiaries has any knowledge of any strikes, slowdowns, work stoppages or
\nlockouts, or threats thereof, by or with respect to any employees of Company or
\nany of its subsidiaries.<\/p>\n
-18-<\/p>\n
2.16 Agreements, Contracts and Commitments. Neither Company nor any of its
\n ————————————-
\nsubsidiaries is a party to or is bound by:<\/p>\n
(a) any employment or consulting agreement, contract or commitment
\nwith any officer or director or higher level employee or member of Company’s
\nBoard of Directors, other than those that are terminable by Company or any of
\nits subsidiaries on no more than thirty (30) days’ notice without liability or
\nfinancial obligation to Company;<\/p>\n
(b) any agreement or plan, including, without limitation, any stock
\noption plan, stock appreciation right plan or stock purchase plan, any of the
\nbenefits of which will be increased, or the vesting of benefits of which will be
\naccelerated, by the occurrence of any of the transactions contemplated by this
\nAgreement or the value of any of the benefits of which will be calculated on the
\nbasis of any of the transactions contemplated by this Agreement;<\/p>\n
(c) any agreement of indemnification or any guaranty other than any
\nagreement of indemnification entered into in the ordinary course of business of
\nCompany;<\/p>\n
(d) any agreement, contract or commitment containing any covenant
\nlimiting in any material respect the right of Company or any of its subsidiaries
\nto engage in any line of business (other than with respect to limitations on the
\ndistribution by Company of certain content and service providers), or to compete
\nwith any person or granting any exclusive distribution rights of Company
\nservices;<\/p>\n
(e) any agreement, contract or commitment currently in force relating
\nto the disposition or acquisition by Company or any of its subsidiaries after
\nthe date of this Agreement of a material amount of assets not in the ordinary
\ncourse of business or pursuant to which Company has any material ownership
\ninterest in any corporation, partnership, joint venture or other business
\nenterprise other than Company’s subsidiaries;<\/p>\n
(f) (i) any dealer, distributor, joint marketing or development
\nagreement currently in force under which Company or any of its subsidiaries have
\ncontinuing material obligations to jointly market any product, technology or
\nservice and which may not be canceled without penalty upon notice of ninety (90)
\ndays or less, or (ii) any material agreement pursuant to which Company or any of
\nits subsidiaries have continuing material obligations to jointly develop any
\nintellectual property that will not be owned, in whole or in part, by Company or
\nany of its subsidiaries and which may not be canceled without penalty upon
\nnotice of ninety (90) days or less except for agreements, contracts or
\ncommitments with an annual value of less than $100,000;<\/p>\n
(g) any agreement, contract or commitment currently in force to
\nprovide source code to any third party for any product or technology that is
\nmaterial to Company and its subsidiaries taken as a whole;<\/p>\n
-19-<\/p>\n
(h) any agreement, contract or commitment currently in force to
\nlicense any third party to manufacture or reproduce any Company product, service
\nor technology or any agreement, contract or commitment currently in force to
\nsell or distribute any Company products, service or technology except those
\nagreements with customers, distributors or sales representatives made in the
\nnormal course of business and substantially in the form previously provided to
\nParent;<\/p>\n
(i) any mortgages, indentures, guarantees, loans or credit agreements,
\nsecurity agreements or other agreements or instruments relating to the borrowing
\nof money or extension of credit;<\/p>\n
(j) any settlement agreement entered into within five (5) years prior
\nto the date of this Agreement; or<\/p>\n
(k) any other agreement, contract or commitment that involves annual
\nexpenditures or receipts of $2,500,000 or more individually.<\/p>\n
Neither Company nor any of its subsidiaries, nor to Company’s knowledge any
\nother party to a Company Contract (as defined below), is in breach, violation or
\ndefault under, and neither Company nor any of its subsidiaries has received
\nwritten notice that it has breached, violated or defaulted under, any of the
\nmaterial terms or conditions of any of the agreements, contracts or commitments
\nto which Company or any of its subsidiaries is a party or by which it is bound
\nthat are required to be disclosed in the Company Schedule (any such agreement,
\ncontract or commitment, a “Company Contract”) in such a manner as would permit
\nany other party to cancel or terminate any such Company Contract, or would
\npermit any other party to seek material damages or other remedies (for any or
\nall of such breaches, violations or defaults, in the aggregate).<\/p>\n
2.17 Statements; Joint Proxy Statement\/Prospectus. None of the information
\n ——————————————–
\nsupplied or to be supplied by Company for inclusion or incorporation by
\nreference in (i) the S-4 (as defined in Section 2.4(b)) will at the time it
\nbecomes effective under the Securities Act, contain any untrue statement of a
\nmaterial fact or omit to state any material fact required to be stated therein
\nor necessary in order to make the statements therein not misleading and (ii) the
\nproxy statement\/prospectus to be sent to the stockholders of Company and
\nstockholders of Parent in connection with the meeting of Company’s stockholders
\nto consider the adoption of this Agreement (the “Company Stockholders’ Meeting”)
\nand in connection with the meeting of Parent’s stockholders to consider the
\napproval of the Share Issuance (the “Parent Stockholders’ Meeting”) (such joint
\nproxy statement\/prospectus as amended or supplemented is referred to herein as
\nthe “Joint Proxy Statement\/Prospectus”) shall not, on the date the Joint Proxy
\nStatement\/Prospectus is first mailed to Company’s stockholders and Parent’s
\nstockholders, at the time of the Company Stockholders’ Meeting or the Parent
\nStockholders’ Meeting and at the Effective Time, contain any untrue statement of
\na material fact or omit to state any material fact required to be stated therein
\nor necessary in order to make the statements therein, in light of the
\ncircumstances under which they are made, not false or misleading, or omit to
\nstate any material fact necessary to correct any statement in any earlier
\ncommunication with respect to the solicitation of proxies for the Company
\nStockholders’<\/p>\n
-20-<\/p>\n
Meeting or the Parent Stockholders’ Meeting which has become false or
\nmisleading. The Joint Proxy Statement\/Prospectus will comply as to form in all
\nmaterial respects with the provisions of the Exchange Act and the rules and
\nregulations thereunder. If at any time prior to the Effective Time, any event
\nrelating to Company or any of its affiliates, officers or directors should be
\ndiscovered by Company which should be set forth in an amendment to the S-4 or a
\nsupplement to the Joint Proxy Statement\/Prospectus, Company shall promptly
\ninform Parent. Notwithstanding the foregoing, Company makes no representation or
\nwarranty with respect to any information supplied by Parent or Merger Sub which
\nis contained in any of the foregoing documents.<\/p>\n
2.18 Board Approval. The Board of Directors of Company has, as of the date
\n ————–
\nof this Agreement, (i) determined that the Merger is fair to, advisable and in
\nthe best interests of Company and its stockholders, (ii) determined to recommend
\nthat the stockholders of Company adopt this Agreement and (iii) duly approved
\nthe Merger, this Agreement and the transactions contemplated hereby.<\/p>\n
2.19 State Takeover Statutes. The Board of Directors of Company has
\n ———————–
\napproved the Merger, this Agreement, the Stock Option Agreement, the Parent
\nVoting Agreement and the transactions contemplated hereby and thereby, and such
\napproval is sufficient to render inapplicable to the Merger, this Agreement, the
\nStock Option Agreement, the Parent Voting Agreement and the transactions
\ncontemplated hereby and thereby the provisions of Section 203 of Delaware Law to
\nthe extent, if any, such section is applicable to the Merger, this Agreement,
\nthe Stock Option Agreement, the Parent Voting Agreement and the transactions
\ncontemplated hereby and thereby. No other state takeover statute or similar
\nstatute or regulation applies to or purports to apply to the Merger, this
\nAgreement, the Stock Option Agreement, the Parent Voting Agreement or the
\ntransactions contemplated hereby and thereby.<\/p>\n
2.20 Fairness Opinion. Company has received a written opinion from Merrill
\n —————-
\nLynch & Co., dated as of the date hereof, to the effect that as of the date
\nhereof, the Exchange Ratio is fair to Company’s stockholders from a financial
\npoint of view and has delivered to Parent a copy of such opinion.<\/p>\n
ARTICLE III
\n REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB<\/p>\n
Parent and Merger Sub jointly and severally represent and warrant to
\nCompany, subject to such exceptions as are disclosed in writing in the
\ndisclosure letter supplied by Parent to Company dated as of the date hereof (the
\n“Parent Schedule”), which disclosure shall provide an exception to or otherwise
\nqualify the representations or warranties of Parent and Merger Sub contained in
\nthe section of this Agreement corresponding by number to such disclosure and the
\nother representations and warranties herein to the extent such disclosure shall
\nreasonably appear to be applicable to such other representations or warranties,
\nas follows:<\/p>\n
3.1 Organization of Parent
\n ———————-<\/p>\n
-21-<\/p>\n
(a) Parent and each of its subsidiaries is a corporation or limited
\nliability company duly organized, validly existing and in good corporate or
\nlimited liability company standing under the laws of the jurisdiction of its
\nincorporation; has the corporate or limited liability company power and
\nauthority to own, lease and operate its assets and property and to carry on its
\nbusiness as now being conducted and as proposed to be conducted; and is duly
\nqualified to do business and in good corporate or limited liability company
\nstanding as a foreign corporation or limited liability in each jurisdiction in
\nwhich the failure to be so qualified would have a Material Adverse Effect on
\nParent.<\/p>\n
(b) Parent has delivered to Company a true and complete list of all of
\nParent’s subsidiaries, indicating the jurisdiction of incorporation of each
\nsubsidiary and Parent’s equity interest therein.<\/p>\n
(c) Parent has delivered or made available to Company a true and
\ncorrect copy of the Certificate of Incorporation and Bylaws of Parent and
\nsimilar governing instruments of each of its material subsidiaries, including,
\nwithout limitation, Merger Sub, each as amended to date, and each such
\ninstrument is in full force and effect. Neither Parent nor any of its
\nsubsidiaries is in violation of any of the provisions of its Certificate of
\nIncorporation or Bylaws or equivalent governing instruments.<\/p>\n
3.2 Parent Capital Structure. The authorized capital stock of Parent
\n ————————
\nconsists of 900,000,000 shares of Common Stock, par value $0.0001 per share, of
\nwhich there were 230,115,,485 shares issued and outstanding as of June 30, 2000
\nand 15,000,000 shares of Preferred Stock, par value $0.0001 per share, of which
\none share was issued and outstanding. The authorized capital stock of Merger Sub
\nconsists of 100 shares of Common Stock, par value $0.0001 per share (the “Merger
\nSub Common Stock”), all of which, as of the date hereof, are issued and
\noutstanding and are held by Parent. All outstanding shares of Parent Common
\nStock, Parent Preferred Stock and Merger Sub Common Stock are duly authorized,
\nvalidly issued, fully paid and non-assessable and are not subject to preemptive
\nrights created by statute, the Certificate of Incorporation or Bylaws of Parent
\nor Merger Sub, respectively, or any agreement or document to which Parent or
\nMerger Sub is a party or by which it is bound. As of June 30, 2000, Parent had
\nreserved an aggregate of 45,967,866 shares of Parent Common Stock, net of
\nexercises, for issuance to employees, consultants and non-employee directors
\npursuant to Parent’s 1996 Flexible Stock Incentive Plan (the “Parent Stock
\nOption Plan”), under which options are outstanding for 25,489,533 shares and
\nunder which 11,356,009 shares are available for grant as of June 30, 2000. As of
\nJune 30, 2000, 7,904,794 shares were reserved for issuance pursuant to options
\ngranted outside the Parent Stock Option Plan. As of June 30, 2000, there were
\n18,965,024 warrants outstanding to purchase shares of Parent Common Stock. All
\nshares of Parent Common Stock subject to issuance as aforesaid, upon issuance on
\nthe terms and conditions specified in the instruments pursuant to which they are
\nissuable, would be duly authorized, validly issued, fully paid and
\nnonassessable.<\/p>\n
3.3 Obligations With Respect to Capital Stock. Except as set forth in
\n —————————————–
\nSection 3.2, there are no equity securities, partnership interests or similar
\nownership interests of any class of Parent, or any securities exchangeable or
\nconvertible into or exercisable for such equity securities, partnership<\/p>\n
-22-<\/p>\n
interests or similar ownership interests issued, reserved for issuance or
\noutstanding. Except for securities Parent owns, directly or indirectly through
\none or more subsidiaries, there are no equity securities, partnership interests
\nor similar ownership interests of any class of any subsidiary of Parent, or any
\nsecurity exchangeable or convertible into or exercisable for such equity
\nsecurities, partnership interests or similar ownership interests issued,
\nreserved for issuance or outstanding. Except as set forth in Section 3.2, there
\nare no options, warrants, equity securities, partnership interests or similar
\nownership interests, calls, rights (including preemptive rights), commitments or
\nagreements of any character to which Parent or any of its subsidiaries is a
\nparty or by which it is bound obligating Parent or any of its subsidiaries to
\nissue, deliver or sell, or cause to be issued, delivered or sold, or repurchase,
\nredeem or otherwise acquire, or cause the repurchase, redemption or acquisition,
\nof any shares of capital stock 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 option, warrant, equity security, partnership
\ninterest or similar ownership interest, call, right, commitment or agreement.
\nThere are no registration rights and, to the knowledge of Parent there are no
\nvoting trusts, proxies or other agreements or understandings with respect to any
\nequity security 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.<\/p>\n
3.4 Authority.
\n ———<\/p>\n
(a) Parent has all requisite corporate power and authority to enter
\ninto this Agreement and the Stock Option Agreement and to consummate the
\ntransactions contemplated hereby and thereby, and Merger Sub has all requisite
\ncorporate power and authority to enter into this Agreement and to consummate the
\ntransactions contemplated hereby. The execution and delivery of this Agreement
\nand the consummation of the transactions contemplated hereby, and the execution
\nand delivery of the Stock Option Agreement and the consummation of the
\ntransactions contemplated thereby, have been duly authorized by all necessary
\ncorporate action on the part of Parent, subject only to the approval of the
\nShare Issuance by Parent’s stockholders and the filing and recordation of the
\nCertificate of Merger pursuant to Delaware Law. The execution and delivery of
\nthis Agreement and the consummation of the transactions contemplated hereby have
\nbeen duly authorized by all necessary corporate action on the part of Merger
\nSub. A vote of the holders of at least a majority of the outstanding shares of
\nthe Parent Common Stock voting with respect to the Share Issuance is required
\nfor Parent’s stockholders to approve the Share Issuance. This Agreement and the
\nStock Option Agreement have been duly executed and delivered by Parent and,
\nassuming the due authorization, execution and delivery by Company, constitute
\nthe valid and binding obligations of Parent, enforceable in accordance with
\ntheir respective terms, except as enforceability may be limited by bankruptcy
\nand other similar laws and general principles of equity. This Agreement has been
\nduly executed and delivered by Merger Sub and, assuming the due authorization,
\nexecution and delivery by Company, constitutes the valid and binding obligation
\nof Merger Sub, enforceable in accordance with its 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 and the
\nStock Option Agreement by Parent and of this Agreement by Merger Sub do not, and
\nthe performance of <\/p>\n
-23-<\/p>\n
this Agreement and the Stock Option Agreement by Parent and of this Agreement by
\nMerger Sub will not, (i) conflict with or violate the Certificate of
\nIncorporation or Bylaws of Parent or the equivalent organizational documents of
\nany of its subsidiaries, (ii) subject to obtaining the approval and adoption of
\nthe Share Issuance by Parent’s stockholders as contemplated in Section 5.2 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 its or any of their respective
\nproperties is bound or affected, or (iii) result in any breach of, or constitute
\na default (or an event that with notice or lapse of time or both would become a
\ndefault) under, or impair Parent’s rights or alter the rights or obligations of
\nany third party under, or give to others any rights of termination, amendment,
\nacceleration or cancellation of, or result in the creation of a lien or
\nencumbrance on any of the properties or assets of Parent or any of its
\nsubsidiaries pursuant to, any material note, bond, mortgage, indenture,
\ncontract, agreement, lease, license, permit, franchise or other instrument or
\nobligation to which Parent or any of its subsidiaries is a party or by which
\nParent or any of its subsidiaries or its or any of their respective properties
\nare bound or affected, except to the extent such conflict, violation, breach,
\ndefault, impairment or other effect could not, in the case of clause (ii) or
\n(iii), individually or in the aggregate, reasonably be expected to have a
\nMaterial Adverse Effect on Parent.<\/p>\n
(b) No consent, approval, order or authorization of, or registration,
\ndeclaration or filing with any Governmental Entity is required by or with
\nrespect to Parent in connection with the execution and delivery of this
\nAgreement and the Stock Option Agreement, or to Merger Sub in connection with
\nthe execution and delivery of this Agreement, or the consummation of the
\ntransactions contemplated hereby or thereby, except for (i) the filing of a S-4
\nwith the SEC in accordance with the Securities Act, (ii) the filing of the
\nCertificate of Merger with the Secretary of State of Delaware, (iii) the filing
\nof the Joint Proxy Statement\/Prospectus with the SEC in accordance with the
\nExchange Act, (iv) such consents, approvals, orders, authorizations,
\nregistrations, declarations and filings as may be required under applicable
\nfederal and state securities laws and the HSR Act and the 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
\nCompany or have a material adverse effect on the ability of the parties to
\nconsummate the Merger.<\/p>\n
3.5 SEC Filings; Parent Financial Statements.
\n —————————————-<\/p>\n
(a) Parent has filed all forms, reports and documents required to be
\nfiled with the SEC since the initial filing date of the registration statement
\nfor Parent’s initial public offering and has made available to Company such
\nforms, reports and documents in the form filed with the SEC. All such required
\nforms, reports and documents (including those that Parent may file subsequent to
\nthe date hereof) are referred to herein as the “Parent SEC Reports.” As of
\ntheir respective dates, the Parent SEC Reports (i) were prepared in accordance
\nwith the requirements of the Securities Act or the Exchange Act, as the case may
\nbe, and the rules and regulations of the SEC thereunder applicable to such
\nParent SEC Reports, and (ii) did not at the time they were filed (or if amended
\nor superseded by a filing prior to the date of this Agreement, then on the date
\nof such filing) contain any <\/p>\n
-24-<\/p>\n
untrue statement of a material fact or omit to state a material fact required to
\nbe stated therein or necessary in order to make the statements therein, in the
\nlight of the circumstances under which they were made, not misleading. None of
\nParent’s subsidiaries is required to file any forms, reports or other documents
\nwith the SEC.<\/p>\n
(b) Each of the consolidated financial statements (including, in each
\ncase, any related notes thereto) contained in the Parent SEC Reports (the
\n“Parent Financials”), including any Parent SEC Reports 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 permitted by the SEC
\non Form 10-Q under the Exchange Act) and (iii) fairly presented the consolidated
\nfinancial position of Parent and its subsidiaries at the respective dates
\nthereof and the consolidated results of its operations and cash flows for the
\nperiods indicated, except that the unaudited interim financial statements were
\nor are subject to normal and recurring year-end adjustments which were not, or
\nare not expected to be, material in amount. The balance sheet of Parent as of
\nJune 30, 2000 is hereinafter referred to as the “Parent Balance Sheet.” Except
\nas disclosed in the Parent Financials, neither Parent nor any of its
\nsubsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of
\na nature required to be disclosed on a balance sheet or in the related notes to
\nthe consolidated financial statements prepared in accordance with GAAP which
\nare, individually or in the aggregate, material to the business, results of
\noperations or financial condition of Parent and its subsidiaries taken as a
\nwhole, except liabilities (i) provided for in the Parent Balance Sheet, or (ii)
\nincurred since the date of the Parent Balance Sheet in the ordinary course of
\nbusiness consistent with past practices which would not reasonably be expected
\nto have a Material Adverse Effect on Parent.<\/p>\n
(c) Parent has heretofore furnished to Company a complete and correct
\ncopy of any amendments or modifications, which have not yet been filed with the
\nSEC but which will be required to be filed, to agreements, documents or other
\ninstruments which previously had been filed by Parent with the SEC pursuant to
\nthe Securities Act or the Exchange Act.<\/p>\n
3.6 Absence of Certain Changes or Events. Since the date of the Parent
\n ————————————
\nBalance Sheet, there has not been: (i) any Material Adverse Effect on Parent,
\n(ii) any material change by Parent in its accounting methods, principles or
\npractices, except as required by concurrent changes in GAAP, or (iii) any
\nrevaluation by Parent of any of its assets, including, without limitation,
\nwriting down the value of capitalized inventory or writing off notes or accounts
\nreceivable other than in the ordinary course of business.<\/p>\n
3.7 Taxes.
\n —– <\/p>\n
(a) Parent and each of its subsidiaries have timely filed all Returns
\nrelating to Taxes required to be filed by Parent and each of its subsidiaries
\nwith any Tax authority, except such <\/p>\n
-25-<\/p>\n
Returns which are not material to Parent. Parent and each of its subsidiaries
\nhave paid all Taxes shown to be due on such Returns.<\/p>\n
(b) Parent and each of its subsidiaries as of the Effective Time will
\nhave withheld with respect to its employees all federal and state income taxes,
\nTaxes pursuant to the Federal Insurance Contribution Act and other Taxes
\nrequired to be withheld, except such Taxes which are not material to Parent.<\/p>\n
(c) Neither Parent nor any of its subsidiaries has been delinquent in
\nthe payment of any material Tax nor is there any material Tax deficiency
\noutstanding, assessed, or, to Parent’s knowledge, proposed against Parent or any
\nof its subsidiaries, nor has Parent 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
(d) No audit or other examination of any Return of Parent or any of
\nits subsidiaries by any Tax authority is presently in progress, nor has Parent
\nor any of its subsidiaries been notified of any request for such an audit or
\nother examination.<\/p>\n
(e) No adjustment relating to any Returns filed by Parent or any of
\nits subsidiaries has been proposed in writing formally or to Parent’s knowledge
\ninformally by any Tax authority to Parent or any of its subsidiaries or any
\nrepresentative thereof.<\/p>\n
(f) Neither Parent nor any of its subsidiaries has any liability for
\nany material unpaid Taxes which has not been accrued for or reserved on Parent
\nBalance Sheet in accordance with GAAP, whether asserted or unasserted,
\ncontingent or otherwise, which is material to Parent, other than any liability
\nfor unpaid Taxes that may have accrued since June 30, 2000 in connection with
\nthe operation of the business of Parent and its subsidiaries in the ordinary
\ncourse.<\/p>\n
3.8 Parent Intellectual Property. For the purposes of this Agreement, the
\n —————————-
\nfollowing terms have the following definitions:<\/p>\n
“Parent Intellectual Property” shall mean any Intellectual Property that is
\nowned by, or exclusively licensed to, Parent or any of its subsidiaries.<\/p>\n
“Parent Registered Intellectual Property” means all of the Registered
\nIntellectual Property owned by, or filed in the name of, Parent or any of its
\nsubsidiaries.<\/p>\n
(a) No Parent Intellectual Property or product or service of Parent or
\nany of its subsidiaries is subject to any proceeding or outstanding decree,
\norder, judgment, contract, license, agreement, or stipulation restricting in any
\nmanner the use, transfer, or licensing thereof by Parent or any of its
\nsubsidiaries, or which may affect the validity, use or enforceability of such
\nParent Intellectual Property.<\/p>\n
-26-<\/p>\n
(b) Parent or one of its subsidiaries owns and has good and exclusive
\ntitle to, or has license to (sufficient for the conduct of its business as
\ncurrently conducted and as proposed to be conducted), each material item of
\nParent Intellectual Property or other Intellectual Property used by Parent or
\nany of its subsidiaries free and clear of any lien or encumbrance (excluding
\nlicenses and related restrictions); and Parent or one of its subsidiaries is the
\nexclusive owner of all trademarks and trade names used in connection with the
\noperation or conduct of the business of Parent and its subsidiaries, including
\nthe sale of any products or the provision of any services by Parent and its
\nsubsidiaries.<\/p>\n
(c) Parent or one of its subsidiaries owns exclusively, and has good
\ntitle to, all copyrighted works that are Parent products or which Parent or any
\nof its subsidiaries otherwise expressly purports to own.<\/p>\n
(d) To the extent that any material Intellectual Property has been
\ndeveloped or created by a third party for Parent or any of its subsidiaries,
\nParent or one of its subsidiaries has a written agreement with such third party
\nwith respect thereto and Parent or one of its subsidiaries thereby either (i)
\nhas obtained ownership of, and is the exclusive owner of, or (ii) has obtained a
\nlicense (sufficient for the conduct of its business as currently conducted and
\nas proposed to be conducted) to all such third party’s Intellectual Property in
\nsuch work, material or invention by operation of law or by valid assignment.<\/p>\n
(e) Neither Parent nor any of its subsidiaries has transferred
\nownership of, or granted any exclusive license with respect to, any Intellectual
\nProperty that is or was material Parent Intellectual Property, to any third
\nparty.<\/p>\n
(f) To the knowledge of Parent, the operation of the business of
\nParent and its subsidiaries as such business currently is conducted, including
\nParent’s and its subsidiaries’ design, development, manufacture, marketing and
\nsale of the products or services of Parent and its subsidiaries (including
\nproducts currently under development) has not, does not and will not infringe or
\nmisappropriate the Intellectual Property of any third party or, to its
\nknowledge, constitute unfair competition or trade practices under the laws of
\nany jurisdiction.<\/p>\n
(g) Neither Parent nor any of its subsidiaries has received notice
\nfrom any third party that the operation of the business of Parent or any of its
\nsubsidiaries or any act, product or service of Parent or any of its
\nsubsidiaries, 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
(h) To the knowledge of Parent, no person has materially infringed or
\nis materially infringing or misappropriating any Parent Intellectual Property.<\/p>\n
(i) Parent and each of its subsidiaries has taken reasonable steps to
\nprotect Parent’s and its subsidiaries’ rights in Parent’s confidential
\ninformation and trade secrets that it wishes to protect or any trade secrets or
\nconfidential information of third parties provided to Parent <\/p>\n
-27-<\/p>\n
or any of its subsidiaries, and, without limiting the foregoing, each of Parent
\nand its subsidiaries has and enforces a policy requiring each employee and
\ncontractor to execute a proprietary information\/confidentiality agreement
\nsubstantially in the form provided to Company and all current and former
\nemployees and contractors of Parent and any of its subsidiaries have executed
\nsuch an agreement, except where the failure to do so is not reasonably expected
\nto be material to Parent.<\/p>\n
3.9 Compliance; Permits; Restrictions.
\n ———————————<\/p>\n
(a) Neither Parent nor any of its subsidiaries is, in any material
\nrespect, in conflict with, or in default or violation of (i) any law, rule,
\nregulation, order, judgment or decree applicable to Parent or any of its
\nsubsidiaries or by which its or any of their respective properties is bound or
\naffected, or (ii) any material note, bond, mortgage, indenture, contract,
\nagreement, lease, license, permit, franchise or other instrument or obligation
\nto which Parent or any of its subsidiaries is a party or by which Parent or any
\nof its subsidiaries or its or any of their respective properties is bound or
\naffected. To the knowledge of Parent, no investigation or review by any
\nGovernmental Entity is pending or threatened against Parent or its subsidiaries,
\nnor has any Governmental Entity indicated in writing an intention to conduct the
\nsame. There is no material agreement, judgment, injunction, order or decree
\nbinding upon Parent or any of its subsidiaries which has or could reasonably be
\nexpected to have the effect of prohibiting or materially impairing any business
\npractice of Parent or any of its subsidiaries, any acquisition of material
\nproperty by Parent or any of its subsidiaries or the conduct of business by
\nParent as currently conducted.<\/p>\n
(b) Parent and its subsidiaries hold all permits, licenses, variances,
\nexemptions, orders and approvals from governmental authorities which are
\nmaterial to the operation of the business of Parent (collectively, the “Parent
\nPermits”). Parent and its subsidiaries are in compliance in all material
\nrespects with the terms of the Parent Permits.<\/p>\n
3.10 Litigation. As of the date of this Agreement, there is no action,
\n ———-
\nsuit, proceeding, claim, arbitration or investigation pending, or as to which
\nParent or any of its subsidiaries has received any notice of assertion nor, to
\nParent’s knowledge, is there a threatened action, suit, proceeding, claim,
\narbitration or investigation against Parent or any of its subsidiaries which
\nreasonably would be likely to be material to Parent, or which in any manner
\nchallenges or seeks to prevent, enjoin, alter or delay any of the transactions
\ncontemplated by this Agreement.<\/p>\n
3.11 Brokers’ and Finders’ Fees. Except for fees payable to Morgan Stanley
\n ————————–
\n& Co. Incorporated pursuant to an engagement letter dated July 24, 2000, a copy
\nof which has been provided to Company, 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
3.12 Employee Benefit Plans.
\n ———————-<\/p>\n
-28-<\/p>\n
(a) All employee compensation, incentive, fringe or benefit plans,
\nprograms, policies, commitments, agreements or other arrangements (whether or
\nnot set forth in a written document and including, without limitation, all
\n“employee benefit plans” within the meaning of Section 3(3) of ERISA) covering
\nany active or former employee, director or consultant of Parent (“Parent
\nEmployee” which shall for this purpose mean an employee of Company or any ERISA
\nAffiliate (as defined below)), any subsidiary of Parent or any trade or business
\n(whether or not incorporated) which is an ERISA Affiliate, or with respect to
\nwhich Parent has or, to its knowledge, may in the future have liability, are
\nlisted in Section 3.12(a) of the Parent Schedule (the “Parent Plans”). Parent
\nhas provided or will make available to Company: (i) correct and complete copies
\nof all documents embodying each Parent Plan including (without limitation) all
\namendments thereto, all related trust documents, and all material written
\nagreements and contracts relating to each such Parent Plan; (ii) the most recent
\nannual reports (Form Series 5500 and all schedules and financial statements
\nattached thereto), if any, required under ERISA or the Code in connection with
\neach Parent Plan; (iii) the most recent summary plan description together with
\nthe summary(ies) of material modifications thereto, if any, required under ERISA
\nwith respect to each Parent Plan; (iv) all IRS determination, opinion,
\nnotification and advisory letters; (v) all material correspondence to or from
\nany governmental agency relating to any Parent Plan; (vi) all forms and related
\nnotices required by COBRA; (vii) the most recent discrimination tests for each
\nParent Plan; (viii) the most recent actuarial valuations, if any, prepared for
\neach Parent Plan; (ix) if the Parent Plan is funded, the most recent annual and
\nperiodic accounting of the Parent Plan assets; and (x) all communication to
\nParent Employees relating to any Parent Plan and any proposed Parent Plan, in
\neach case relating to any amendments, terminations, establishments, increases or
\ndecreases in benefits, acceleration of payments or vesting schedules, or other
\nevents which would result in any material liability to Parent or any ERISA
\nAffiliate.<\/p>\n
(b) Each Parent Plan has been maintained and administered in all
\nmaterial respects in compliance with its terms and with the requirements
\nprescribed by any and all statutes, orders, rules and regulations (foreign or
\ndomestic), including but not limited to ERISA and the Code, which are applicable
\nto such Parent Plans. No suit, action or other litigation (excluding claims for
\nbenefits incurred in the ordinary course of Parent Plan activities) has been
\nbrought, or to the knowledge of Parent, is threatened, against or with respect
\nto any such Parent Plan. There are no audits, inquiries or proceedings pending
\nor, to the knowledge of Parent, threatened by the IRS or the DOL with respect to
\nany Parent Plans. All contributions, reserves or premium payments required to be
\nmade or accrued as of the date hereof to the Parent Plans have been timely made
\nor accrued. Any Parent Plan intended to be qualified under Section 401(a) of the
\nCode and each trust intended to qualify under Section 501(a) of the Code (i) has
\neither obtained a favorable determination, notification, advisory and\/or opinion
\nletter, as applicable, as to its qualified status from the IRS or still has a
\nremaining period of time under applicable Treasury Regulations or IRS
\npronouncements in which to apply for such letter and to make any amendments
\nnecessary to obtain a favorable determination, and (ii) incorporates or has been
\namended to incorporate all provisions required to comply with the Tax Reform Act
\nof 1986 and subsequent legislation. To the knowledge of Parent, no condition or
\ncircumstance exists giving rise to a material likelihood that any such Parent
\nPlan <\/p>\n
-29-<\/p>\n
would not be treated as qualified by the IRS. Parent does not have any plan
\nor commitment to establish any new Parent Plan, to modify any Parent Plan
\n(except to the extent required by law or to conform any such Parent Plan to the
\nrequirements of any applicable law, in each case as previously disclosed to
\nCompany in writing, or as required by the terms of any Parent Plan or this
\nAgreement), or to enter into any new Parent Plan. Each Parent Plan can be
\namended, terminated or otherwise discontinued after the Effective Time in
\naccordance with its terms, without liability to Company, Parent or any of its
\nERISA Affiliates (other than ordinary administration expenses).<\/p>\n
(c) Neither Parent, any of its subsidiaries, nor any of their ERISA
\nAffiliates has at any time ever maintained, established, sponsored, participated
\nin, or contributed to any plan subject to Title IV of ERISA or Section 412 of
\nthe Code and at no time has Parent contributed to or been requested to
\ncontribute to any “multiemployer plan,” as such term is defined in ERISA.
\nNeither Parent, any of its subsidiaries, nor any officer or director of Parent
\nor any of its subsidiaries is subject to any material liability or penalty under
\nSection 4975 through 4980B of the Code or Title I of ERISA. No “prohibited
\ntransaction,” within the meaning of Section 4975 of the Code or Sections 406 and
\n407 of ERISA, and not otherwise exempt under Section 4975 of the Code and
\nSection 408 of ERISA, has occurred with respect to any Parent Plan which could
\nsubject Parent or its ERISA Affiliates to material liability.<\/p>\n
(d) None of the Parent Plans promises or provides retiree medical or
\nother retiree welfare benefits to any person except as required by applicable
\nlaw, and neither Parent nor any of its subsidiaries has represented, promised or
\ncontracted (whether in oral or written form) to provide such retiree benefits to
\nany Parent Employee, former employee, director, consultant or other person,
\nexcept to the extent required by statute.<\/p>\n
(e) Except as would not have a Material Adverse Effect, Parent is in
\ncompliance in all material respects with all applicable material foreign,
\nfederal, state and local laws, rules and regulations respecting employment,
\nemployment practices, terms and conditions of employment and wages and hours.<\/p>\n
(f) Neither the execution and delivery of this Agreement nor the
\nconsummation of the transactions contemplated hereby will (i) result in any
\npayment (including severance, unemployment compensation, golden parachute, bonus
\nor otherwise) becoming due to any stockholder, director or Parent Employee or
\nany of its subsidiaries under any Parent Plan or otherwise, (ii) materially
\nincrease any benefits otherwise payable under any Parent Plan, or (iii) result
\nin the acceleration of the time of payment or vesting of any such benefits.<\/p>\n
3.13 Absence of Liens and Encumbrances. Parent and each of its
\n ———————————
\nsubsidiaries has good and valid title to, or, in the case of leased properties
\nand assets, valid leasehold interests in, all of its material tangible
\nproperties and assets, real, personal and mixed, used in its business, free and
\nclear of any liens or encumbrances except as reflected in the Parent Financials
\nand except for liens for taxes not yet due and payable and such imperfections of
\ntitle and encumbrances, if any, which would not be material to Parent.<\/p>\n
-30-<\/p>\n
3.14 Environmental Matters.
\n ———————<\/p>\n
(a) Hazardous Materials Activities. Except as would not reasonably be
\n ——————————
\nlikely to result in a material liability to Parent (in any individual case or in
\nthe aggregate), (i) neither Parent 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 Parent nor any of its subsidiaries has engaged in
\nHazardous Materials Activities in violation of any rule, regulation, treaty or
\nstatute promulgated by any Governmental Entity in effect prior to or as of the
\ndate hereof to prohibit, regulate or control Hazardous Materials or any
\nHazardous Material Activity.<\/p>\n
(b) Environmental Liabilities. No action, proceeding, revocation
\n ————————-
\nproceeding, amendment procedure, writ, injunction or claim is pending, or to
\nParent’s knowledge, threatened concerning any Parent Permit relating to any
\nenvironmental matter, Hazardous Material or any Hazardous Materials Activity of
\nParent or any of its subsidiaries. Parent is not aware of any fact or
\ncircumstance which could involve Parent or any of its subsidiaries in any
\nenvironmental litigation or impose upon Parent or any of its subsidiaries any
\nenvironmental liability.<\/p>\n
3.15 Labor Matters. (i) There are no controversies pending or, to the
\n ————-
\nknowledge of each of Parent and its respective subsidiaries, threatened, between
\nParent or any of its subsidiaries and any of their respective employees which
\ncould reasonably be expected to result in a cash payment obligation by Parent in
\nexcess of $250,000; (ii) as of the date of this Agreement, neither Parent nor
\nany of its subsidiaries is a party to any collective bargaining agreement or
\nother labor union contract applicable to persons employed by Parent or its
\nsubsidiaries nor does Parent or its subsidiaries know of any activities or
\nproceedings of any labor union to organize any such employees; and (iii) as of
\nthe date of this Agreement, neither Parent nor any of its subsidiaries has any
\nknowledge of any strikes, slowdowns, work stoppages or lockouts, or threats
\nthereof, by or with respect to any employees of Parent or any of its
\nsubsidiaries.<\/p>\n
3.16 Agreements, Contracts and Commitments. Neither Company nor any of its
\n ————————————-
\nsubsidiaries is a party to or is bound by:<\/p>\n
(a) any employment or consulting agreement, contract or commitment
\nwith any officer or director or higher level employee or member of Parent’s
\nBoard of Directors, other than those that are terminable by Parent or any of its
\nsubsidiaries on no more than thirty (30) days’ notice without liability or
\nfinancial obligation to Parent;<\/p>\n
(b) any agreement or plan, including, without limitation, any stock
\noption plan, stock appreciation right plan or stock purchase plan, any of the
\nbenefits of which will be increased, or the vesting of benefits of which will be
\naccelerated, by the occurrence of any of the transactions contemplated by this
\nAgreement or the value of any of the benefits of which will be calculated on the
\nbasis of any of the transactions contemplated by this Agreement;<\/p>\n
-31-<\/p>\n
(c) any agreement of indemnification or any guaranty other than any
\nagreement of indemnification entered into in the ordinary course of business of
\nParent and substantially in the form provided to Company;<\/p>\n
(d) any agreement, contract or commitment containing any covenant
\nlimiting in any material respect the right of Parent or any of its subsidiaries
\nto engage in any line of business (other than with respect to limitations on the
\ndistribution by Parent of certain content and service providers), or to compete
\nwith any person or granting any exclusive distribution rights of Parent
\nservices;<\/p>\n
(e) any agreement, contract or commitment currently in force relating
\nto the disposition or acquisition by Parent or any of its subsidiaries after the
\ndate of this Agreement of a material amount of assets not in the ordinary course
\nof business or pursuant to which Parent has any material ownership interest in
\nany corporation, partnership, joint venture or other business enterprise other
\nthan Parent’s subsidiaries;<\/p>\n
(f) (i) any dealer, distributor, joint marketing or development
\nagreement currently in force under which Parent or any of its subsidiaries have
\ncontinuing material obligations to jointly market any product, technology or
\nservice and which may not be canceled without penalty upon notice of ninety (90)
\ndays or less, or (ii) any material agreement pursuant to which Parent or any of
\nits subsidiaries have continuing material obligations to jointly develop any
\nintellectual property that will not be owned, in whole or in part, by Parent or
\nany of its subsidiaries and which may not be canceled without penalty upon
\nnotice of ninety (90) days or less except for agreements, contracts or
\ncommitments with an annual value of less than $100,000;<\/p>\n
(g) any agreement, contract or commitment currently in force to
\nprovide source code to any third party for any product or technology that is
\nmaterial to Parent and its subsidiaries taken as a whole;<\/p>\n
(h) any agreement, contract or commitment currently in force to
\nlicense any third party to manufacture or reproduce any Parent product, service
\nor technology or any agreement, contract or commitment currently in force to
\nsell or distribute any Parent products, service or technology except those
\nagreements with customers, distributors or sales representatives made in the
\nnormal course of business and substantially in the form previously provided to
\nCompany;<\/p>\n
(i) any mortgages, indentures, guarantees, loans or credit
\nagreements, security agreements or other agreements or instruments relating to
\nthe borrowing of money or extension of credit;<\/p>\n
(j) any settlement agreement entered into within five (5) years prior
\nto the date of this Agreement; or<\/p>\n
-32-<\/p>\n
(k) any other agreement, contract or commitment that involves annual
\nexpenditures or receipts of $2,500,000 or more individually.<\/p>\n
Neither Parent nor any of its subsidiaries, nor to Parent’s knowledge any
\nother party to a Parent Contract (as defined below), is in breach, violation or
\ndefault under, and neither Parent nor any of its subsidiaries has received
\nwritten notice that it has breached, violated or defaulted under, any of the
\nmaterial terms or conditions of any of the agreements, contracts or commitments
\nto which Parent or any of its subsidiaries is a party or by which it is bound
\nthat are required to be disclosed in the Parent Schedule (any such agreement,
\ncontract or commitment, a “Parent Contract”) in such a manner as would permit
\nany other party to cancel or terminate any such Parent Contract, or would permit
\nany other party to seek material damages or other remedies (for any or all of
\nsuch breaches, violations or defaults, in the aggregate).<\/p>\n
3.17 Statements; Joint Proxy Statement\/Prospectus. None of the information
\n ——————————————–
\nsupplied or to be supplied by Parent for inclusion or incorporation by reference
\nin (i) the S-4 will at the time it becomes effective under the Securities Act,
\ncontain any untrue statement of a material fact or omit to state any material
\nfact required to be stated therein or necessary in order to make the statements
\ntherein not misleading and (ii) the Joint Proxy Statement\/Prospectus shall not,
\non the date the Joint Proxy Statement\/Prospectus is first mailed to Parent’s
\nstockholders and Company’s stockholders, at the time of the Parent Stockholders’
\nMeeting or the Company Stockholders’ Meeting and at the Effective Time, contain
\nany untrue statement of a material fact or omit to state any material fact
\nrequired to be stated therein or necessary in order to make the statements
\ntherein, in light of the circumstances under which they are made, not false or
\nmisleading, or omit to state any material fact necessary to correct any
\nstatement in any earlier communication with respect to the solicitation of
\nproxies for the Parent Stockholders’ Meeting or the Company Stockholders’
\nMeeting which has become false or misleading. The Joint Proxy
\nStatement\/Prospectus will comply as to form in all material respects with the
\nprovisions of the Exchange Act and the rules and regulations thereunder. If at
\nany time prior to the Effective Time, any event relating to Parent or any of its
\naffiliates, officers or directors should be discovered by Parent which should be
\nset forth in an amendment to the S-4 or a supplement to the Joint Proxy
\nStatement\/Prospectus, Parent shall promptly inform Company. Notwithstanding the
\nforegoing, Parent makes no representation or warranty with respect to any
\ninformation supplied by Company which is contained in any of the foregoing
\ndocuments.<\/p>\n
3.18 Board Approval. The Board of Directors of Parent has, as of the date
\n ————–
\nof this Agreement, (i) determined that the Merger is fair to and in the best
\ninterests of Parent and its stockholders, (ii) determined to recommend that the
\nstockholders of Parent approve the Share Issuance and (iii) duly approved the
\nMerger, this Agreement and the transactions contemplated hereby.<\/p>\n
3.19 State Takeover Statutes. The Board of Directors of Parent has approved
\n ———————–
\nthe Company Voting Agreement and the transactions contemplated thereby, and such
\napproval is sufficient to render inapplicable to the Company Voting Agreement
\nand the transactions contemplated thereby the provisions of Section 203 of
\nDelaware Law to the extent, if any, such section is applicable to the <\/p>\n
-33-<\/p>\n
Company Voting Agreement and the transactions contemplated thereby. No other
\nstate takeover statute or similar statute or regulation applies to or purports
\nto apply to the Company Voting Agreement or the transactions contemplated
\nthereby.<\/p>\n
3.20 Fairness Opinion. Parent has received a written opinion from Morgan
\n —————-
\nStanley & Co. Incorporated, dated as of the date hereof, to the effect that as
\nof the date hereof, the Exchange Ratio is fair to Parent from a financial point
\nof view and has delivered to 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 Company. During the period from the date of this
\n ——————————
\nAgreement and continuing until the earlier of the termination of this Agreement
\npursuant to its terms or the Effective Time, Company and each of its
\nsubsidiaries shall, except to the extent that Parent shall otherwise consent in
\nwriting, carry on its business in the ordinary course in substantially the same
\nmanner as heretofore conducted and in substantial 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 officers and employees, and (iii) preserve its
\nrelationships with customers, suppliers, distributors, licensors, licensees and
\nothers with which it has business dealings material to Company’s business.<\/p>\n
In addition, without the prior written consent of Parent, during the period
\nfrom the date of this Agreement and continuing until the earlier of the
\ntermination of this Agreement pursuant to its terms or the Effective Time,
\nCompany shall not do any of the following and shall not permit its subsidiaries
\nto do any of the following:<\/p>\n
(a) Except as required by law or pursuant to the terms of a Plan in
\neffect as of the date hereof, waive any stock repurchase rights, accelerate,
\namend or change the period of exercisability of options or restricted stock, or
\nreprice options granted under any employee, consultant, director or other stock
\nplans or authorize cash payments in exchange for any options granted under any
\nof such plans;<\/p>\n
(b) Grant any severance or termination pay to any officer or employee
\nexcept pursuant to written agreements outstanding, or policies existing, on the
\ndate hereof and as previously disclosed in writing or made available to Parent,
\nor adopt any new severance plan, or amend or modify or alter in any manner any
\nseverance plan, agreement or arrangement existing on the date hereof;<\/p>\n
-34-<\/p>\n
(c) Other than in the ordinary course of business consistent with past
\npractices, transfer or license to any person or entity or otherwise extend,
\namend or modify any rights to the Company Intellectual Property, or enter into
\ngrants to transfer or license to any person future patent rights; provided that
\n ——–
\nin no event shall Company license on an exclusive basis or sell any Company
\nIntellectual Property (other than in connection with the abandonment of
\nimmaterial Company Intellectual Property after at least five business days’
\nwritten notice to Parent);<\/p>\n
(d) Declare, set aside or pay any dividends on or make any other
\ndistributions (whether in cash, stock, equity securities or property) in respect
\nof any capital stock or split, combine or reclassify any capital stock or issue
\nor authorize the issuance of any other securities in respect of, in lieu of or
\nin substitution for any capital stock;<\/p>\n
(e) Purchase, redeem or otherwise acquire, directly or indirectly, any
\nshares of capital stock of Company or its subsidiaries, except repurchases of
\nunvested shares at cost in connection with the termination of the employment
\nrelationship with any employee pursuant to stock option or purchase agreements
\nin effect on the date hereof (or any such agreements entered into in the
\nordinary course consistent with past practice by Company with employees hired
\nafter the date hereof);<\/p>\n
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber or
\npropose any of the foregoing with respect to any shares of capital stock or any
\nsecurities convertible into shares of capital stock, or subscriptions, rights,
\nwarrants or options to acquire any shares of capital stock or any securities
\nconvertible into shares of capital stock, or enter into other agreements or
\ncommitments of any character obligating it to issue any such shares or
\nconvertible securities, or any equity-based awards (whether payable in shares,
\ncash or otherwise) other than (x) the issuance, delivery and\/or sale of (i)
\nshares of Company Common Stock pursuant to the exercise of stock options or
\nwarrants outstanding as of the date of this Agreement, and (ii) shares of
\nCompany Common Stock issuable to participants in the ESPP consistent with the
\nterms thereof, (y) the granting of stock options in the ordinary course of
\nbusiness in such amounts and in all other respects and consistent with past
\npractices and with similar vesting terms except as set forth on Schedule 4.1(f),
\nand (z) shares of Company Common Stock in connection with acquisition completed
\nprior to the date hereof and with acquisitions permitted under Section 4.1(h).<\/p>\n
(g) Cause, permit or submit to a vote of Company’s stockholders any
\namendments to the Company Charter Documents (or similar governing instruments of
\nany of its subsidiaries);<\/p>\n
(h) Acquire or agree to acquire by merging or consolidating with, or
\nby purchasing any equity interest in or a portion of the assets of, or by any
\nother manner, any business or any corporation, partnership, association or other
\nbusiness organization or division thereof, or otherwise acquire or agree to
\nenter into any joint ventures, strategic partnerships or strategic investments;
\nprovided, that Company shall not be prohibited from (i) making strategic
\n——– —-
\ninvestments with a value of up to $20,000,000 per investment, provided, that
\n ——– —-
\nCompany gives Parent prior notice <\/p>\n
-35-<\/p>\n
of any such strategic investment with a value of $5,000,000 per investment or
\nmore; (ii) making or agreeing to make any acquisitions the value of which does
\nnot exceed 2.5% of Company’s market capitalization per acquisition (which value
\nand market capitalization shall be determined upon the signing of agreements
\nrelating to such transaction); or (iii) entering into business development deals
\nin the ordinary course of business;<\/p>\n
(i) Sell, lease, license, encumber or otherwise dispose of any
\nproperties or assets except in the ordinary course of business consistent with
\npast practice, except for the sale, lease, licensing, encumbering or disposition
\n(other than through licensing permitted by clause (c)) of property or assets
\nwhich are not material, individually or in the aggregate, to the business of
\nCompany and its subsidiaries;<\/p>\n
(j) Incur any indebtedness for borrowed money or guarantee any such
\nindebtedness of another person, issue or sell any debt securities or options,
\nwarrants, calls or other rights to acquire any debt securities of Company, enter
\ninto any “keep well” or other agreement to maintain any financial statement
\ncondition or enter into any arrangement having the economic effect of any of the
\nforegoing other than in connection with the financing of working capital
\nconsistent with past practice;<\/p>\n
(k) Except as may be required under Section 5.8(b) and (c), adopt or
\namend any Company Plan or any employee stock purchase or employee stock option
\nplan; or enter into any employment contract or collective bargaining agreement
\n(other than offer letters and letter agreements entered into in the ordinary
\ncourse of business consistent with past practice with employees who are
\nterminable “at will”); pay any special bonus or special remuneration to any
\ndirector or employee; or increase the salaries, wage rates, compensation or
\nother fringe benefits (including rights to severance or indemnification) of its
\ndirectors, officers, employees or consultants except, in each case, as may be
\nrequired by law and except for (i) salary increases in the ordinary course of
\nbusiness consistent with past practice for non-officer employees, (ii) salary
\nincreases for officers in an amount not exceeding 10% of such officer’s salary
\non the date hereof and (iii) as set forth on Sechedule 4.1(k);<\/p>\n
(l) (i) Pay, discharge, settle or satisfy any litigation (whether or
\nnot commenced prior to the date of this Agreement) or any material claims,
\nliabilities or obligations (absolute, accrued, asserted or unasserted,
\ncontingent or otherwise), other than the payment, discharge, settlement or
\nsatisfaction, in the ordinary course of business consistent with past practice
\nor in accordance with their terms, of liabilities recognized or disclosed in the
\nCompany Balance Sheet or incurred since the date of such financial statements or
\ndisclosed in Section 2.8 or 2.9 of the Company Schedule, or (ii) waive the
\nbenefits of, agree to modify in any manner, terminate, release any person from
\nor knowingly fail to enforce the confidentiality or nondisclosure provisions of
\nany agreement to which Company or any of its subsidiaries is a party or of which
\nCompany or any of its subsidiaries is a beneficiary, in the case of both (i) and
\n(ii) of this Section 4.2(l), which payment, discharge, satisfaction, waiver,
\ntermination, modification, release or failure to enforce has a value to Company<\/p>\n
-36-<\/p>\n
in excess of $3,000,000; provided, that Company shall provide prior notice to
\n ——– —-
\nParent of any such action with a value to Company in excess of $1,000,000;<\/p>\n
(m) Except in the ordinary course of business consistent with past
\npractice, materially modify, amend or terminate any Contract disclosed in 2.16
\nof the Company Schedule or waive, delay the exercise of, release or assign any
\nmaterial rights or claims thereunder without providing prior notice to Parent ; <\/p>\n
(n) Except as required by GAAP, revalue any of its assets or make any
\nchange in accounting methods, principles or practices;<\/p>\n
(o) Engage in any action that would reasonably be expected to (i)
\ncause the Merger to fail to qualify as a “reorganization” under Section 368(a)
\nof the Code or (ii) interfere with Parent’s ability to account for the Merger as
\na pooling of interests, whether or not (in each case) otherwise permitted by the
\nprovisions of this Article IV;<\/p>\n
(p) Make any Tax election or accounting method change (except as
\nrequired by GAAP) inconsistent with past practice that, individually or in the
\naggregate, is reasonably likely to adversely affect in any material respect the
\nTax liability or Tax attributes of Company or any of its subsidiaries, settle or
\ncompromise any material Tax liability or consent to any extension or waiver of
\nany limitation period with respect to Taxes; or<\/p>\n
(q) Agree in writing or otherwise to take any of the actions
\ndescribed in Section 4.1 (a) through (p) above.<\/p>\n
4.2 Conduct of Business by Parent. During the period from the date of this
\n —————————–
\nAgreement and continuing until the earlier of the termination of this Agreement
\npursuant to its terms or the Effective Time, Parent and each of its subsidiaries
\nshall, except to the extent that Company shall otherwise consent in writing,
\ncarry on its business in the ordinary course in substantially the same manner as
\nheretofore conducted and in substantial compliance with all applicable laws and
\nregulations, pay its debts and taxes when due subject to good faith disputes
\nover such debts or taxes, pay or perform other material obligations when due
\nsubject to good faith disputes over such obligations, and use its commercially
\nreasonable efforts consistent with past practices and policies to (i) preserve
\nintact its present business organization, (ii) keep available the services of
\nits present officers and employees, and (iii) preserve its relationships with
\ncustomers, suppliers, distributors, licensors, licensees and others with which
\nit has business dealings material to Parent’s business.<\/p>\n
In addition, without the prior written consent of Company, during the
\nperiod from the date of this Agreement and continuing until the earlier of the
\ntermination of this Agreement pursuant to its terms or the Effective Time,
\nParent shall not do any of the following and shall not permit its subsidiaries
\nto do any of the following:<\/p>\n
-37-<\/p>\n
(a) Except as required by law or pursuant to the terms of a Plan in
\neffect as of the date hereof, waive any stock repurchase rights, accelerate,
\namend or change the period of exercisability of options or restricted stock, or
\nreprice options granted under any employee, consultant, director or other stock
\nplans or authorize cash payments in exchange for any options granted under any
\nof such plans;<\/p>\n
(b) Grant any severance or termination pay to any officer or employee
\nexcept pursuant to written agreements outstanding, or policies existing, on the
\ndate hereof and as previously disclosed in writing or made available to Company,
\nor adopt any new severance plan, or amend or modify or alter in any manner any
\nseverance plan, agreement or arrangement existing on the date hereof;<\/p>\n
(c) Other than in the ordinary course of business consistent with past
\npractices, transfer or license to any person or entity or otherwise extend,
\namend or modify any rights to the Parent Intellectual Property, or enter into
\ngrants to transfer or license to any person future patent rights; provided that
\n ——–
\nin no event shall Parent license on an exclusive basis or sell any Parent
\nIntellectual Property (other than in connection with the abandonment of
\nimmaterial Parent Intellectual Property after at least five business days’
\nwritten notice to Company);<\/p>\n
(d) Declare, set aside or pay any dividends on or make any other
\ndistributions (whether in cash, stock, equity securities or property) in respect
\nof any capital stock or split, combine or reclassify any capital stock or issue
\nor authorize the issuance of any other securities in respect of, in lieu of or
\nin substitution for any capital stock;<\/p>\n
(e) Purchase, redeem or otherwise acquire, directly or indirectly, any
\nshares of capital stock of Parent or its subsidiaries, except repurchases of
\nunvested shares at cost in connection with the termination of the employment
\nrelationship with any employee pursuant to stock option or purchase agreements
\nin effect on the date hereof (or any such agreements entered into in the
\nordinary course consistent with past practice by Parent with employees hired
\nafter the date hereof);<\/p>\n
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber or
\npropose any of the foregoing with respect to any shares of capital stock or any
\nsecurities convertible into shares of capital stock, or subscriptions, rights,
\nwarrants or options to acquire any shares of capital stock or any securities
\nconvertible into shares of capital stock, or enter into other agreements or
\ncommitments of any character obligating it to issue any such shares or
\nconvertible securities, other than (x) the issuance, delivery and\/or sale of (i)
\nshares of Parent Common Stock pursuant to the exercise of stock options or
\nwarrants outstanding as of the date of this Agreement, and (ii) shares of Parent
\nCommon Stock issuable to participants in the ESPP consistent with the terms
\nthereof, (y) the granting of stock options to employees in the ordinary course
\nof business in such amounts and in all other respects and consistent with past
\npractices and with similar vesting terms, and (z) shares of Parent Common Stock
\nin connection with acquisitions completed prior to the date hereof and with
\nacquisitions permitted under Section 4.2(f);<\/p>\n
-38-<\/p>\n
(g) Cause, permit or submit to a vote of Parent’s stockholders any
\namendments to the Parent Charter Documents (or similar governing instruments of
\nany of its subsidiaries, except as set forth herein);<\/p>\n
(h) Acquire or agree to acquire by merging or consolidating with, or
\nby purchasing any equity interest in or a portion of the assets of, or by any
\nother manner, any business or any corporation, partnership, association or other
\nbusiness organization or division thereof, or otherwise acquire or agree to
\nenter into any joint ventures, strategic partnerships or strategic investments;<\/p>\n
provided, that Parent shall not be prohibited from (i) making strategic
\n——– —-
\ninvestments with a value of up to $20,000,000, provided, that Parent gives
\n ——– —-
\nCompany prior notice of any such strategic investment with a value of $5,000,000
\nor more; (ii) making or agreeing to make any acquisitions the value of which
\ndoes not exceed 2.5% of Parent’s market capitalization per acquisition (which
\nvalue and market capitalization shall be determined upon the signing of
\nagreements relating to such transaction); or (iii) entering into business
\ndevelopment deals in the ordinary course of business;<\/p>\n
(i) Sell, lease, license, encumber or otherwise dispose of any
\nproperties or assets except in the ordinary course of business consistent with
\npast practice, except for the sale, lease, licensing, encumbering or disposition
\n(other than through licensing permitted by clause (a)) of property or assets
\nwhich are not material, individually or in the aggregate, to the business of
\nParent and its subsidiaries;<\/p>\n
(j) Incur any indebtedness for borrowed money or guarantee any such
\nindebtedness of another person, issue or sell any debt securities or options,
\nwarrants, calls or other rights to acquire any debt securities of Parent, enter
\ninto any “keep well” or other agreement to maintain any financial statement
\ncondition or enter into any arrangement having the economic effect of any of the
\nforegoing other than in connection with the financing of working capital
\nconsistent with past practice;<\/p>\n
(k) Except as may be required under Section 5.8(b) and (c), adopt or
\namend any Parent Plan or any employee stock purchase or employee stock option
\nplan; or enter into any employment contract or collective bargaining agreement
\n(other than offer letters and letter agreements entered into in the ordinary
\ncourse of business consistent with past practice with employees who are
\nterminable “at will”); pay any special bonus or special remuneration to any
\ndirector or employee; or increase the salaries, wage rates, compensation or
\nother fringe benefits (including rights to severance or indemnification) of its
\ndirectors, officers, employees or consultants except, in each case, as may be
\nrequired by law and except for (i) salary increases in the ordinary course of
\nbusiness consistent with past practice for non-officer employees, (ii) salary
\nincreases for officers in an amount not exceeding 10% of such officer’s salary
\non the date hereof and (iii) as set forth on Schedule 4.1(k);<\/p>\n
(l) (i) Pay, discharge, settle or satisfy any litigation (whether or
\nnot commenced prior to the date of this Agreement) or any material claims,
\nliabilities or obligations (absolute, accrued, asserted or unasserted,
\ncontingent or otherwise), other than the payment, discharge, <\/p>\n
-39-<\/p>\n
settlement or satisfaction, in the ordinary course of business consistent with
\npast practice or in accordance with their terms, of liabilities recognized or
\ndisclosed in the most recent Parent Balance Sheet, or incurred since the date of
\nsuch financial statements or disclosed in Section 3.8 or 3.9 of the Parent
\nSchedule, or (ii) waive the benefits of, agree to modify in any manner,
\nterminate, release any person from or knowingly fail to enforce the
\nconfidentiality or nondisclosure provisions of any agreement to which Parent or
\nany of its subsidiaries is a party or of which Parent or any of its subsidiaries
\nis a beneficiary, in the case of both (i) and (ii) of this Section 4.2(l), which
\npayment, discharge, satisfaction, waiver, termination, modification, release or
\nfailure to enforce has a value to Parent in excess of $3,000,000; provided, that
\n ——– —-
\nParent shall provide prior notice to Company of any such action with a value to
\nParent in excess of $1,000,000;<\/p>\n
(m) Except in the ordinary course of business consistent with past
\npractice, materially modify, amend or terminate any Contract disclosed in 3.16
\nof the Parent Schedule or waive, delay the exercise of, release or assign any
\nmaterial rights or claims thereunder without providing prior notice to Company;<\/p>\n
(n) Except as required by GAAP, revalue any of its assets or make any
\nchange in accounting methods, principles or practices;<\/p>\n
(o) Engage in any action that would reasonably be expected to (i)
\ncause the Merger to fail to qualify as a “reorganization” under Section 368(a)
\nof the Code or (ii) interfere with Parent’s ability to account for the Merger as
\na pooling of interests, whether or not (in each case) otherwise permitted by the
\nprovisions of this Article IV;<\/p>\n
(p) Make any Tax election or accounting method change (except as
\nrequired by GAAP) inconsistent with past practice that, individually or in the
\naggregate, is reasonably likely to adversely affect in any material respect the
\nTax liability or Tax attributes of Parent or any of its subsidiaries, settle or
\ncompromise any material Tax liability or consent to any extension or waiver of
\nany limitation period with respect to Taxes; or<\/p>\n
(q) Agree in writing or otherwise to take any of the actions described
\nin Section 4.2 (a) through (p) above.<\/p>\n
ARTICLE V
\n ADDITIONAL AGREEMENTS<\/p>\n
5.1 Joint Proxy Statement\/Prospectus; S-4; Other Filings; Board
\n ———————————————————–
\nRecommendations.
\n—————<\/p>\n
(a) As promptly as practicable after the execution of this Agreement,
\nParent and Company shall jointly prepare and Parent shall file with the SEC the
\nS-4, which shall include a document or documents that will constitute (i) the
\nprospectus forming part of the registration statement on the S-4 and (ii) the
\nJoint Proxy Statement\/Prospectus. Each of the parties hereto shall use all
\ncommercially reasonable efforts to cause the S-4 to become effective as promptly
\nas <\/p>\n
-40-<\/p>\n
practicable after the date hereof, and, prior to the effective date of the S-4,
\nthe parties hereto shall take all action required under any applicable laws in
\nconnection with the issuance of shares of Parent Common Stock pursuant to the
\nMerger. Each of Parent and Company shall provide promptly to the other such
\ninformation concerning its business and financial statements and affairs as, in
\nthe reasonable judgment of the providing party or its counsel, may be required
\nor appropriate for inclusion in the Joint Proxy Statement\/Prospectus and the S-
\n4, or in any amendments or supplements thereto, and cause its counsel and
\nauditors to cooperate with the other’s counsel and auditors in the preparation
\nof the Joint Proxy Statement\/Prospectus and the S-4. As promptly as practicable
\nafter the effective date of the S-4, the Joint Proxy Statement\/Prospectus shall
\nbe mailed to the stockholders of Company and of Parent. Each of the parties
\nhereto shall cause the Joint Proxy Statement\/Prospectus to comply as to form and
\nsubstance with respect to such party in all material respects with the
\napplicable requirements of (i) the Exchange Act, (ii) the Securities Act, (iii)
\nthe rules and regulations of the Nasdaq. As promptly as practicable after the
\ndate of this Agreement, each of Company and Parent will prepare and file any
\nother filings required to be filed by it under the Exchange Act, the Securities
\nAct or any other Federal, foreign or Blue Sky or related laws relating to the
\nMerger and the transactions contemplated by this Agreement (the “Other
\nFilings”). Prior to the Effective Time, Parent shall use its commercially
\nreasonable efforts to obtain all regulatory approvals needed to ensure that the
\nParent Common Stock to be issued in the Merger will be registered or qualified
\nunder the securities law of every jurisdiction in the United States in which any
\nregistered holder of Company Common Stock has an address of record on the record
\ndate for determining the stockholders entitled to notice of and to vote at the
\nCompany Stockholders’ Meeting; provided that Parent shall not be required to
\nconsent generally to the service of process in any jurisdiction in which it is
\nnot so subject. Each of Company and Parent will notify the other promptly upon
\nthe receipt of any comments from the SEC or its staff or any other government
\nofficials of the receipt of notice that the S-4 has become effective, of the
\nissuance of any stop order, of the suspension of the qualification of the Parent
\nCommon Stock issuable in connection with the Merger for offering or sale in any
\njurisdiction, or of any request by the SEC or its staff or any other government
\nofficials for amendments or supplements to the S-4, the Joint Proxy
\nStatement\/Prospectus or any Other Filing or for additional information and,
\nexcept as may be prohibited by any Governmental Entity or by any Legal
\nRequirement, will supply the other with copies of all correspondence between
\nsuch party or any of its representatives, on the one hand, and the SEC or its
\nstaff or any other government officials, on the other hand, with respect to the
\nS-4, the Joint Proxy Statement\/Prospectus, the Merger or any Other Filing. Each
\nof Company and Parent will cause all documents that it is responsible for filing
\nwith the SEC or other regulatory authorities under this Section 5.2(a) to comply
\nin all material respects with all applicable requirements of law and the rules
\nand regulations promulgated thereunder.<\/p>\n
(b) The Joint Proxy Statement\/Prospectus shall (i) solicit the
\napproval of this Agreement and the Merger and include the recommendation of the
\nBoard of Directors of Company to Company’s stockholders that they vote in favor
\nof approval of this Agreement and the Merger, subject to the right of the Board
\nof Directors of Company to withdraw its recommendation and recommend a Superior
\nOffer in compliance with Section 5.2(c) of this Agreement, and (ii) include <\/p>\n
-41-<\/p>\n
the opinion of Merrill Lynch & Co. referred to in Section 2.19; provided,
\nhowever, that the Board of Directors of Company shall submit this Agreement to
\nCompany’s stockholders whether or not at any time subsequent to the date hereof
\nsuch board determines that it can no longer make such recommendation. The Joint
\nProxy Statement\/Prospectus shall (A) solicit the approval of the Share Issuance
\nand include the recommendation of the Board of Directors of Parent to Parent’s
\nstockholders that they vote in favor of approval of the Share Issuance, and (B)
\ninclude the opinion of Morgan Stanley & Co. Incorporated referred to in Section
\n3.12. Nothing contained in this Agreement shall prevent the Board of Directors
\nof Company from complying with Rule 14d-9 and Rule 14e-2 under the Exchange Act.<\/p>\n
(c) Each of Parent and Company shall promptly inform the other of any
\nevent which is required to be set forth in an amendment or supplement to the
\nJoint Proxy Statement\/Prospectus, the S-4 or any Other Filing and each of Parent
\nand Company shall amend or supplement the Joint Proxy Statement\/Prospectus to
\nthe extent required by law to do so. No amendment or supplement to the Joint
\nProxy Statement\/Prospectus or the S-4 shall be made without the approval of
\nParent and Company, which approval shall not be unreasonably withheld or
\ndelayed. Each of the parties hereto shall advise the other parties hereto,
\npromptly after it receives notice thereof, of the time when the S-4 has become
\neffective or any supplement or amendment has been filed, of the issuance of any
\nstop order, of the suspension of the qualification of the Parent Common Stock
\nissuable in connection with the Merger for offering or sale in any jurisdiction,
\nor of any request by the SEC for amendment of the Joint Proxy
\nStatement\/Prospectus or the S-4 or comments thereon and responses thereto or
\nrequests by the SEC for additional information.<\/p>\n
5.2 Stockholder Meetings.
\n ——————–<\/p>\n
(a) Company shall call and hold the Company Stockholders’ Meeting and
\nParent shall call and hold the Parent Stockholders’ Meeting as promptly as
\npracticable after the date hereof for the purpose of voting upon the approval of
\nthis Agreement and the Merger or the Share Issuance, as the case may be,
\npursuant to the Joint Proxy Statement\/Prospectus, and Company and Parent shall
\nuse commercially reasonable efforts to hold the Company Stockholders’ Meeting
\nand the Parent Stockholders’ Meeting on the same day and as soon as practicable
\nafter the date on which the S-4 becomes effective. Nothing herein shall prevent
\nCompany or Parent from adjourning or postponing the Company Stockholders’
\nMeeting or the Parent Stockholders’ Meeting, as the case may be, if there are
\ninsufficient shares of Company Common Stock or Parent Common Stock, as the case
\nmay be, necessary to conduct business at their respective meetings of the
\nstockholders. Unless Company’s Board of Directors has withdrawn its
\nrecommendation of this Agreement and the Merger in compliance with Section
\n5.2(c), Company shall use commercially reasonable efforts to solicit from its
\nstockholders proxies in favor of the approval of this Agreement and the Merger
\npursuant to the Joint Proxy Statement\/Prospectus and shall take all other action
\nnecessary or advisable to secure the vote or consent of stockholders required by
\nDelaware Law or applicable stock exchange requirements to obtain such approval.
\nParent shall use commercially reasonable efforts to solicit from its
\nstockholders proxies in favor of the Share Issuance pursuant to the Joint Proxy
\nStatement\/Prospectus and shall take all other action necessary or advisable to
\nsecure the vote or <\/p>\n
-42-<\/p>\n
consent of stockholders required by Delaware Law or applicable stock exchange
\nrequirements to obtain such approval. Unless Company’s Board of Directors has
\nwithdrawn its recommendation of this Agreement and the Merger in compliance with
\nSection 5.2(c), each of the parties hereto shall take all other action
\nreasonably necessary or advisable to promptly and expeditiously secure any vote
\nor consent of stockholders required by applicable Law and such party’s
\nCertificate of Incorporation and Bylaws to effect the Merger. Company’s
\nobligation to call, give notice of, convene and hold the Company Stockholders’
\nMeeting in accordance with this Section 5.2(a) shall not be limited to or
\notherwise affected by the commencement, disclosure, announcement or submission
\nto Company of any Acquisition Proposal or any change in the Board of Directors
\nrecommendation regarding the Merger.<\/p>\n
(b) Subject to Section 5.2(c): (i) the Board of Directors of Company shall
\nrecommend that Company’s stockholders vote in favor of and adopt and approve
\nthis Agreement and the Merger at the Company Stockholders’ Meeting; (ii) the
\nJoint Proxy Statement\/Prospectus shall include a statement to the effect that
\nthe Board of Directors of Company has recommended that Company’s stockholders
\nvote in favor of and adopt and approve this Agreement and the Merger at the
\nCompany Stockholders’ Meeting; and (iii) neither the Board of Directors of
\nCompany nor any committee thereof shall withdraw, amend or modify, or propose or
\nresolve to withdraw, amend or modify in a manner adverse to Parent, the
\nrecommendation of the Board of Directors of Company that Company’s stockholders
\nvote in favor of and adopt and approve this Agreement and the Merger.<\/p>\n
(c) Nothing in this Agreement shall prevent the Board of Directors of
\nCompany from withholding, withdrawing, amending or modifying its recommendation
\nin favor of adopting and approving this Agreement and the Merger or from not
\nincluding its recommendation in favor of adopting and approving this Agreement
\nand the Merger in the Joint Proxy Statement\/Prospectus if (i) a Superior Offer
\n(as defined below) is made to Company and not withdrawn, (ii) neither Company
\nnor any of its representatives shall have violated any of the restrictions set
\nforth in Section 5.4 and Company is not then in breach of this Agreement, and
\n(iii) the Board of Directors of Company concludes in good faith, after
\nconsultation with and receiving advice from its outside counsel, that, in light
\nof such Superior Offer, the withholding, withdrawal, amendment or modification
\nof such recommendation is necessary in order for the Board of Directors of
\nCompany to comply with its fiduciary obligations to Company’s stockholders under
\napplicable law; provided, however, that prior to any commencement thereof
\n ——– ——-
\nCompany shall have given Parent at least forty eight (48) hours notice thereof
\nand the opportunity to meet with Company and its counsel. Nothing contained in
\nthis Section 5.2 shall limit Company’s obligation to hold and convene the
\nCompany Stockholders’ Meeting (regardless of whether the recommendation of the
\nBoard of Directors of Company shall have been withdrawn, amended or modified).
\nFor purposes of this Agreement, “Superior Offer” shall mean an unsolicited, bona
\nfide written offer made by a third party to consummate any of the following
\ntransactions: (i) a merger, consolidation, business combination,
\nrecapitalization, liquidation, dissolution or similar transaction involving
\nCompany pursuant to which the stockholders of Company immediately preceding such
\ntransaction hold less than 51% of the equity interest in the surviving or
\nresulting entity of such transaction; (ii) a sale or other disposition by
\nCompany of assets <\/p>\n
-43-<\/p>\n
(excluding inventory and used equipment sold in the ordinary course of business)
\nrepresenting in excess of 51% of the fair market value of Company’s business
\nimmediately prior to such sale, or (iii) the acquisition by any person or group
\n(including by way of a tender offer or an exchange offer or issuance by
\nCompany), directly or indirectly, of beneficial ownership or a right to acquire
\nbeneficial ownership of shares representing in excess of 51% of the voting power
\nof the then outstanding shares of capital stock of Company, in each case on
\nterms that the Board of Directors of Company determines, in its reasonable
\njudgment (based on written advice of a financial advisor of nationally
\nrecognized reputation) to be more favorable to Company stockholders from a
\nfinancial point of view than the terms of the Merger; provided, however, that
\n ——– ——-
\nany such offer shall not be deemed to be a “Superior Offer” if any financing
\nrequired to consummate the transaction contemplated by such offer is not
\ncommitted and is not likely in the judgment of Company’s Board of Directors to
\nbe obtained by such third party on a timely basis.<\/p>\n
5.3 Confidentiality; Access to Information.
\n ————————————–<\/p>\n
(a) Confidentiality Agreement. The parties acknowledge that Company
\n ————————-
\nand Parent have previously executed a Confidentiality Agreement, dated as of
\nJuly 12, 2000 (the “Confidentiality Agreement”), which Confidentiality Agreement
\nwill continue in full force and effect in accordance with its terms.<\/p>\n
(b) Access to Information. Company will afford Parent and its
\n ———————
\naccountants, counsel and other representatives reasonable access during normal
\nbusiness hours, upon reasonable notice, to the properties, books, records and
\npersonnel of Company during the period prior to the Effective Time to obtain all
\ninformation concerning the business, including the status of product development
\nefforts, properties, results of operations and personnel of Company, as Parent
\nmay reasonably request; provided, that Parent will conduct any such review in a
\n ——–
\nmanner that does not interfere with the normal business operations of Company.
\nNo information or knowledge obtained by Parent in any investigation pursuant to
\nthis Section 5.3 will affect or be deemed to modify any representation or
\nwarranty contained herein or the conditions to the obligations of the parties to
\nconsummate the Merger. Parent will afford Company and its accountants, counsel
\nand other representatives reasonable access during normal business hours, upon
\nreasonable notice, to the properties, books, records and personnel of Parent
\nduring the period prior to the Effective Time to obtain all information
\nconcerning the business, including the status of product development efforts,
\nproperties, results of operations and personnel of Parent, as Company may
\nreasonably request; provided, that Company will conduct any such review in a
\n ——–
\nmanner that does not interfere with the normal business operations of Parent.<\/p>\n
5.4 No Solicitation.
\n —————<\/p>\n
(a) From and after the date of this Agreement until the Effective Time or
\ntermination of this Agreement pursuant to Article VII, Company and its
\nsubsidiaries will not, nor will they authorize or permit any of their respective
\nofficers, directors, affiliates or employees or any investment banker, attorney
\nor other advisor or representative retained by any of them to, directly or<\/p>\n
-44-<\/p>\n
indirectly (i) solicit, initiate, encourage or induce the making, submission or
\nannouncement of any Acquisition Proposal (as defined below), (ii) participate in
\nany discussions or negotiations regarding, or furnish to any person any non-
\npublic information with respect to, or take any other action to facilitate any
\ninquiries or the making of any proposal that constitutes or may reasonably be
\nexpected to lead to, any Acquisition Proposal, (iii) engage in discussions with
\nany person with respect to any Acquisition Proposal, (iv) subject to Section
\n5.2(c), approve, endorse or recommend any Acquisition Proposal or (v) enter into
\nany contract relating to any Acquisition Transaction (as defined below);<\/p>\n
provided, however, this Section 5.4(a) shall not prohibit Company or its Board
\n——– ——-
\nof Directors from (A) furnishing information regarding Company and its
\nsubsidiaries to, entering into a confidentiality agreement with or entering into
\ndiscussions with, any person or group in response to a Superior Offer submitted
\nby such person or group (and not withdrawn), (B) taking the actions described in
\nSection 5.2(c) as permitted thereby, (C) recommending a Superior Offer to
\nCompany’s stockholders or (D) terminating this Agreement pursuant to Section
\n7.1(b) in order to immediately thereafter enter into a definitive agreement with
\nrespect to such Superior Offer, if, in the case of either (A), (B), (C) or (D),
\n(1) neither Company nor any representative of Company and its subsidiaries shall
\nhave violated any of the restrictions set forth in this Section 5.4, (2) the
\nBoard of Directors of Company concludes in good faith, after consultation with
\nits outside legal counsel, that such action is necessary in order for the Board
\nof Directors of Company to comply with its fiduciary obligations to Company’s
\nstockholders under applicable law, (3) (x) at least two business days prior to
\nfurnishing any such nonpublic information to, or entering into discussions or
\nnegotiations with, such person or group, Company gives Parent written notice of
\nthe identity of such person or group and of Company’s intention to furnish
\nnonpublic information to, or enter into discussions or negotiations with, such
\nperson or group and (y) Company receives from such person or group an executed
\nconfidentiality agreement containing customary limitations on the use and
\ndisclosure of all written and oral information furnished to such person or group
\nby or on behalf of Company, and (4) contemporaneously with furnishing any such
\ninformation to such person or group, Company furnishes such information to
\nParent (to the extent such information has not been previously furnished by
\nCompany to Parent). Nothing in this Section 5.4(a) shall prevent Company or its
\nBoard of Directors from complying with Rule 14e-2 promulgated under the Exchange
\nAct with regard to an Acquisition Proposal with respect to which no violation of
\nthis Section 5.4 shall have occurred. Company and its subsidiaries will
\nimmediately cease any and all existing activities, discussions or negotiations
\nwith any parties conducted heretofore with respect to any Acquisition Proposal.
\nWithout limiting the foregoing, it is understood that any violation of the
\nrestrictions set forth in the preceding two sentences by any officer or director
\nof Company or any of its subsidiaries or any investment banker, attorney or
\nother advisor or representative of Company or any of its subsidiaries shall be
\ndeemed to be a breach of this Section 5.4 by Company. In addition to the
\nforegoing, Company shall (i) provide Parent with at least twenty four (24) hours
\nprior notice (or such lesser prior notice as provided to the members of
\nCompany’s Board of Directors) of any meeting of Company’s Board of Directors at
\nwhich Company’s Board of Directors is reasonably expected to consider a Superior
\nOffer.<\/p>\n
-45-<\/p>\n
For purposes of this Agreement, “Acquisition Proposal” shall mean any offer
\nor proposal (other than an offer or proposal by Parent) relating to any
\nAcquisition Transaction. For the purposes of this Agreement, “Acquisition
\nTransaction” shall mean any transaction or series of related transactions other
\nthan the transactions contemplated by this Agreement involving: (A) any
\nacquisition or purchase from Company by any person or “group” (as defined under
\nSection 13(d) of the Exchange Act and the rules and regulations thereunder) of
\nmore than a 15% interest in the total outstanding voting securities of Company
\nor any of its subsidiaries or any tender offer or exchange offer that if
\nconsummated would result in any person or “group” (as defined under Section
\n13(d) of the Exchange Act and the rules and regulations thereunder) beneficially
\nowning 15% or more of the total outstanding voting securities of Company or any
\nof its subsidiaries or any merger, consolidation, business combination or
\nsimilar transaction involving Company pursuant to which the stockholders of
\nCompany immediately preceding such transaction hold less than 85% of the equity
\ninterests in the surviving or resulting entity of such transaction; (B) any
\nsale, lease (other than in the ordinary course of business), exchange,
\ntransfer, license (other than in the ordinary course of business), acquisition
\nor disposition of more than 15% of the assets of Company; or (C) any liquidation
\nor dissolution of Company.<\/p>\n
(b) In addition to the obligations of Company set forth in paragraph
\n(a) of this Section 5.4, Company as promptly as practicable shall advise Parent
\norally and in writing of any request received by Company for information which
\nCompany reasonably believes would lead to an Acquisition Proposal or of any
\nAcquisition Proposal, or any inquiry received by Company with respect to, or
\nwhich Company reasonably believes would lead to any Acquisition Proposal, the
\nmaterial terms and conditions of such request, Acquisition Proposal or inquiry,
\nand the identity of the person or group making any such request, Acquisition
\nProposal or inquiry. Company will keep Parent informed in all material respects
\nof the status and details (including material amendments or proposed amendments)
\nof any such request, Acquisition Proposal or inquiry.<\/p>\n
5.5 Public Disclosure. Parent and Company will consult with each other,
\n —————–
\nand to the extent practicable, agree, before issuing any press release or
\notherwise making any public statement with respect to the Merger, this Agreement
\nor an Acquisition Proposal and will not issue any such press release or make any
\nsuch public statement prior to such consultation, except as may be required by
\nlaw or any listing agreement with a national securities exchange or Nasdaq, in
\nwhich case reasonable efforts to consult with the other party will be made prior
\nto such release or public statement. The parties have agreed to the text of the
\njoint press release announcing the signing of this Agreement.<\/p>\n
5.6 Commercially Reasonable Efforts; Notification.
\n ———————————————<\/p>\n
(a) Upon the terms and subject to the conditions set forth in this
\nAgreement, each of the parties agrees to use reasonable commercially reasonable
\nefforts to take, or cause to be taken, all actions, and to do, or cause to be
\ndone, and to assist and cooperate with the other parties in doing, all things
\nnecessary, proper or advisable to consummate and make effective, in the most
\nexpeditious manner practicable, the Merger and the other transactions
\ncontemplated by this Agreement, <\/p>\n
-46-<\/p>\n
including to accomplish the following: (i) causing the conditions precedent set
\nforth in Article VI to be satisfied; (ii) obtaining all necessary actions or
\nnonactions, waivers, consents, approvals, orders and authorizations from
\nGovernmental Entities; (iii) making all necessary registrations, declarations
\nand filings (including registrations, declarations and filings with Governmental
\nEntities, if any); (iv) avoiding any suit, claim, action, investigation or
\nproceeding by any Governmental Entity challenging the Merger or any other
\ntransaction contemplated by this Agreement; (v) obtaining all consents,
\napprovals or waivers from third parties required as a result of the transactions
\ncontemplated in this Agreement; (vi) defending any suits, claims, actions,
\ninvestigations or proceedings, whether judicial or administrative, challenging
\nthis Agreement or the consummation of the transactions contemplated hereby,
\nincluding seeking to have any stay or temporary restraining order entered by any
\ncourt or other Governmental Entity vacated or reversed; and (vii) executing or
\ndelivering any additional instruments reasonably necessary to consummate the
\ntransactions contemplated by, and to fully carry out the purposes of, this
\nAgreement. In connection with and without limiting the foregoing, subject to the
\nother terms and conditions hereof, Company and its Board of Directors shall, if
\nany state takeover statute or similar statute or regulation is or becomes
\napplicable to the Merger, this Agreement or any of the transactions contemplated
\nby this Agreement, use commercially reasonable efforts and take all acts
\nnecessary to ensure that the Merger and the other transactions contemplated by
\nthis Agreement may be consummated as promptly as practicable on the terms
\ncontemplated by this Agreement and otherwise to minimize the effect of such
\nstatute 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 Company or any subsidiary or
\naffiliate thereof to agree to any divestiture by itself or any of its affiliates
\nof shares of capital stock or of any business, assets or property, or the
\nimposition of any material limitation on the ability of any of them to conduct
\ntheir business or to own or exercise control of such assets, properties and
\nstock.<\/p>\n
(b) Company shall give prompt notice to Parent upon becoming aware
\nthat any representation or warranty made by it contained in this Agreement has
\nbecome untrue or inaccurate, or of any failure of Company to comply with or
\nsatisfy in any material respect any covenant, condition or agreement to be
\ncomplied with or satisfied by it under this Agreement, in each case, where the
\nconditions set forth in Section 6.3(a) or Section 6.3(b) would not be satisfied
\nas a result thereof; provided, however, that no such notification shall affect
\n ——– ——-
\nthe representations, warranties, covenants or agreements of the parties or the
\nconditions to the obligations of the parties under this Agreement.<\/p>\n
(c) Parent shall give prompt notice to Company upon becoming aware
\nthat any representation or warranty made by it or Merger Sub contained in this
\nAgreement has become untrue or inaccurate, or of any failure of Parent or Merger
\nSub to comply with or satisfy in any material respect any covenant, condition or
\nagreement to be complied with or satisfied by it under this Agreement, in each
\ncase, where the conditions set forth in Section 6.2(a) or Section 6.2(b) would
\nnot be satisfied as a result thereof; provided, however, that no such
\n ——– ——-
\nnotification shall affect the <\/p>\n
-47-<\/p>\n
representations, warranties, covenants or agreements of the parties or the
\nconditions to the obligations of the parties under this Agreement.<\/p>\n
5.7 Third Party Consents. As soon as practicable following the date
\n ——————–
\nhereof, Parent and Company will each use its commercially reasonable efforts to
\nobtain any consents, waivers and approvals under any of its or its subsidiaries’
\nrespective agreements, contracts, licenses or leases required to be obtained in
\nconnection with the consummation of the transactions contemplated hereby.<\/p>\n
5.8 Stock Options; ESPP and Employee Benefits.
\n —————————————–<\/p>\n
(a) Stock Options. At the Effective Time, each outstanding option to
\n ————-
\npurchase shares of Company Common Stock (each, a “Company Stock Option”) under
\nthe Company Option Plans, whether or not vested, shall be assumed by Parent.
\nEach Company Stock Option so assumed by Parent under this Agreement will
\ncontinue to have, and be subject to, the same terms and conditions of such
\nCompany Stock Options immediately prior to the Effective Time (including,
\nwithout limitation, any repurchase rights or vesting provisions and provisions
\nregarding the acceleration of vesting on certain transactions, other than the
\ntransactions contemplated by this Agreement), except that (i) each Company Stock
\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 Stock Option immediately prior to the Effective Time
\nmultiplied by the Exchange Ratio, rounded down to the nearest whole number of
\nshares of Parent Common Stock and (ii) the per share exercise price for the
\nshares of Parent Common Stock issuable upon exercise of such assumed Company
\nStock Option will be equal to the quotient determined by dividing the exercise
\nprice per share of Company Common Stock at which such Company Stock Option was
\nexercisable immediately prior to the Effective Time by the Exchange Ratio,
\nrounded up to the nearest whole cent. Parent shall comply with the terms of all
\nsuch Company Stock Options and use its best efforts to ensure, to the extent
\nrequired by and subject to the provisions of, the Company Option Plans, and to
\nthe extent permitted under the Code, that any Company Stock Options that
\nqualified for tax treatment as incentive stock options under Section 422 of the
\nCode prior to the Effective Time continue to so qualify after the Effective
\nTime. Parent shall take all corporate actions necessary to reserve for issuance
\na sufficient number of shares of Parent Common Stock for delivery upon exercise
\nof assumed Company Stock Options on the terms set forth in this Section 5.8 (a).<\/p>\n
(b) ESPP. As of the Effective Time, the ESPP shall be terminated. The
\n —-
\nrights of participants in the ESPP with respect to any offering period then
\nunderway under the ESPP shall be determined by treating the last business day
\nprior to the Effective Time as the last day of such offering period and by
\nmaking such other pro rata adjustments as may be necessary to reflect the
\nshortened offering period but otherwise treating such shortened offering period
\nas a fully effective and completed offering period for all purposes under the
\nESPP. Prior to the Effective Time, Company shall take all commercially
\nreasonable actions (including but not limited to, if appropriate, amending the
\nESPP) that are necessary to give effect to the transaction contemplated by this
\nSection <\/p>\n
-48-<\/p>\n
5.8(b). As of the Effective Time, participants in the ESPP (“ESPP Participants”)
\nshall become participants in Parent’s Employee Stock Purchase Plan (“Parent
\nESPP”). An offering period for the ESPP Participant’s under the Parent ESPP
\nshall begin as of the Effective Time and continue through January 31, 2000. As
\nof February 1, 2000, ESPP Participants will proceed with participation in
\nParent’s ESPP according to the provisions of the Parent ESPP. Prior to the
\nEffective Time, Parent shall take commercially reasonable efforts (including,
\nbut not limited to, if required, amending the Parent ESPP) that are necessary to
\ngive effect to the transaction contemplated by this Section 5.8(b).<\/p>\n
(c) 401(k). Company shall terminate, effective as of the day
\n ——
\nimmediately preceding the Effective Time, any and all 401(k) plans sponsored or
\nmaintained by Company unless Parent provides written notice to Company prior to
\nthe Effective Time that any such 401(k) plan shall not be terminated. Parent
\nshall receive from Company evidence that Company’s plan(s) and \/ or program(s)
\nhave been terminated pursuant to resolutions of Company’s Board of Directors
\n(the form and substance of such resolutions shall be subject to review and
\napproval of Parent), effective as of the day immediately preceding the Effective
\nTime. Company employees shall be eligible to participate in a 401(k) plan
\nsponsored by Parent as soon as administratively practicable after the Effective
\nTime.<\/p>\n
(d) Benefits; Prior Service. From and after the Effective Time,
\n ———————–
\nCompany employees shall be provided with employee benefits that are the same as
\nthose provided to employees of Parent who are similarly situated. Parent shall
\ncause employees of Company and its subsidiaries to be credited with service with
\nCompany and each of its subsidiaries for purposes of eligibility, vesting and
\naccrual of vacation days, personal days and sick leave under each employee
\nbenefit plan maintained by Parent or its subsidiaries prior to the Effective
\nTime. Parent shall have the absolute discretion to (i) cash-out Company
\nemployees accrued and unused vacation, personal and sick leave days or to (ii)
\ncarry over Company employees’ accrued but unused vacation, personal and sick
\nleave days; provided, that, such service shall not be recognized to the extent
\n ——– —-
\nthat such recognition would result in duplication of benefits.<\/p>\n
5.9 Form S-8. Parent agrees to file a registration statement on Form S-8
\n ——–
\nfor the shares of Parent Common Stock issuable with respect to assumed Company
\nStock Options as soon as is reasonably practicable, and in any event within
\nthree (3) business days, after the Effective Time. Prior to Closing, Company
\nshall use commercially reasonable efforts to provide Parent with all information
\nrequired or reasonably requested by Parent to be included in the Form S-8.<\/p>\n
5.10 Indemnification.
\n —————<\/p>\n
(a) From and after the Effective Time, Parent will cause the Surviving
\nCorporation to fulfill and honor in all respects the obligations of Company (or
\nany predecessor corporation) pursuant to (i) each indemnification agreement
\nbetween Company and its directors or officers in effect immediately prior to the
\nEffective Time (the “Indemnified Parties”) and (ii) any indemnification
\nprovision under the Company Charter Documents as in effect on the date hereof.
\nThe Certificate of Incorporation and Bylaws of the Surviving Corporation will
\ncontain provisions <\/p>\n
-49-<\/p>\n
with respect to exculpation and indemnification that are at least as favorable
\nto the Indemnified Parties as those contained in the Company Charter Documents
\nas in effect on the date hereof, which provisions will not be amended, repealed
\nor otherwise modified for a period of six (6) years from the Effective Time in
\nany manner that would adversely affect the rights thereunder of any Indemnified
\nParty or of individuals who, immediately prior to the Effective Time, were
\nemployees or agents of Company, unless such modification is required by law.<\/p>\n
(b) For a period of six (6) years after the Effective Time, Surviving
\nCorporation shall, and Parent shall cause Surviving Corporation to maintain in
\neffect policies of directors’ and officers’ liability insurance with coverage in
\namount and scope at least as favorable as Company’s existing policies with
\nrespect to claims arising from facts or events that occurred prior to the
\nEffective Time; provided, however, that during such period, Surviving
\n ——– ——-
\nCorporation shall in no event be required to expend pursuant to this Section
\n5.10(b) more than an amount per year equal to 150% of current premiums paid by
\nCompany for such insurance, which current premium amount is set forth in Section
\n5.10(b) of the Company Disclosure Schedule.<\/p>\n
(c) In the event Company or the Surviving Corporation or any of their
\nrespective successors or assigns (i) consolidates with or merges into any other
\nperson and shall not be the continuing or surviving corporation or entity of
\nsuch consolidation or merger or (ii) transfers a material amount of its
\nproperties and assets to any person in a single transaction or a series of
\ntransactions, then, and in each such case, Parent will make or cause to be made
\nproper provision so that the successors and assigns of Company or the Surviving
\nCorporation, as the case may be, assume the indemnification obligations
\ndescribed herein for the benefit of the Indemnified Parties.<\/p>\n
(d) The provisions of this Section 5.10 shall survive the Effective
\nTime and are (i) intended to be for the benefit of, and will be enforceable by,
\neach of the Indemnified Parties and their heirs and representatives and (ii) in
\naddition to, and not in substitution for, any other rights to indemnification or
\ncontribution that any such Indemnified Party may have by contract or otherwise.<\/p>\n
5.11 Affiliate Agreements.
\n ——————–<\/p>\n
(a) Set forth in Section 5.11(a) of the Company Schedule is a list of
\nthose persons who may be deemed to be, in Company’s reasonable judgment,
\naffiliates of Company within the meaning of Rule 145 promulgated under the
\nSecurities Act or Opinion 16 of the Accounting Principles Board applicable to
\nSEC rules and regulations (each, a “Company Affiliate”). Company will provide
\nParent with such information and documents as Parent reasonably requests for
\npurposes of reviewing such list. Company will use its commercially reasonable
\nefforts to deliver or cause to be delivered to Parent, on or as promptly as
\npracticable following the date hereof, from each Company Affiliate that has not
\ndelivered a Company Affiliate Agreement on or prior to the date hereof, an
\nexecuted Company Affiliate Agreement. Each Company Affiliate Agreement will be
\nin full force and effect as of the Effective Time. Parent will be entitled to
\nplace appropriate legends on the certificates evidencing any Parent Common Stock
\nto be received by a Company Affiliate pursuant to the terms of this Agreement,
\nand to issue appropriate stop transfer instructions to the <\/p>\n
-50-<\/p>\n
transfer agent for the Parent Common Stock, consistent with the terms of the
\nCompany Affiliate Agreement.<\/p>\n
(b) Set forth in Section 5.11(b) of the Parent Schedule is a list of
\nthose persons who may be deemed to be, in Parent’s reasonable judgment,
\naffiliates of Parent within the meaning of Opinion 16 of the Accounting
\nPrinciples Board applicable to SEC rules and regulations (each, a “Parent
\nAffiliate”). Parent will provide Company with such information and documents as
\nCompany reasonably requests for purposes of reviewing such list. Parent will
\nuse its commercially reasonable efforts to deliver or cause to be delivered to
\nCompany, on or as promptly as practicable following the date hereof, from each
\nParent Affiliate that has not delivered a Parent Affiliate Agreement on or prior
\nto the date hereof, an executed Parent Affiliate Agreement. Each Parent
\nAffiliate Agreement will be in full force and effect as of the Effective Time.<\/p>\n
5.12 Regulatory Filings; Reasonable Efforts. As soon as may be reasonably
\n ————————————–
\npracticable, Company and Parent each shall file 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 other applicable jurisdiction, as agreed to
\nby the parties. Company and Parent each shall each use all reasonable efforts to
\nobtain early termination of any waiting period under HSR and Company and Parent
\nshall each promptly (a) supply the other with any information which may be
\nrequired in order to effectuate such filings and (b) supply any additional
\ninformation which reasonably may be required by the FTC, the DOJ or the
\ncompetition or merger control authorities of any other jurisdiction and which
\nthe parties may reasonably deem appropriate; provided, however, that Parent
\n ——– ——-
\nshall not be required to agree to any divestiture by Parent or Company or any of
\nParent’s subsidiaries or affiliates of shares of capital stock or of any
\nbusiness, assets or property of Parent or its subsidiaries or affiliates or of
\nCompany, its affiliates, or the imposition of any material limitation on the
\nability of any of them to conduct their businesses or to own or exercise control
\nof such assets, properties and stock.<\/p>\n
5.13 Action by Board of Directors. Prior to the Effective Time, the Board
\n —————————-
\nof Directors of Parent, or an appropriate committee of non-employee directors
\nthereof, shall adopt a resolution consistent with the interpretative guidance of
\nthe SEC so that (i) the assumption of Company Stock Options by Company Insiders
\n(as defined below) pursuant to this Agreement, and (ii) the receipt by Company
\nInsiders of Parent Common Stock in exchange for Company Common Stock pursuant to
\nthe Merger, shall in each case be an exempt transaction for purposes of Section
\n16 of the Exchange Act by any officer or director of Company who may become a
\ncovered person of Parent for purposes of Section 16 of the Exchange Act (a
\n“Company Insider”).
\n ————— <\/p>\n
5.14 Parent of Board of Directors. Prior to the Effective Time, the Board
\n —————————-
\nof Directors of Parent, in accordance with applicable law and the Parent Charter
\nDocuments, shall take all necessary action (which action may include the
\nresignation of existing directors) to cause the Board of Directors of Parent, as
\nof the Effective Time, to consist of not more than 8 directors including the<\/p>\n
-51-<\/p>\n
following three (3) designees: (i) Russell C. Horowitz as a Class I director and
\nVice-Chairman of the Board of Directors of Parent, (ii) William Savoy as a Class
\nII director and (iii) a third designee to be selected by Messrs. Horowitz and
\nSavoy and approved by Parent, which approval may be withheld in Parent’s sole
\ndiscretion, as a Class I director. The Board of Directors of Parent shall use
\ncommercially reasonable efforts to preserve (A) Mr. Horowitz’s designation for
\nso long as he serves as an employee of Parent and (B) Mr. Savoy’s designation
\n(or any replacement designated by Vulcan Ventures Incorporated) for so long as
\nVulcan Ventures Incorporated continues to beneficially own not less than 80% of
\nthe shares of Parent Common Stock beneficially owned by it as of the Effective
\nTime.<\/p>\n
5.15 Nasdaq Listing. Parent agrees to authorize for listing on Nasdaq the
\n ————–
\nshares of Parent Common Stock issuable, and those required to be reserved for
\nissuance, in connection with the transaction contemplated hereby, upon final
\nnotice of issuance.<\/p>\n
5.16 Opinion of Accountants.
\n ———————- <\/p>\n
(a) Company shall use all commercially reasonable efforts to receive
\nfrom KPMG LLP, independent auditors for Company, a copy of a letter addressed to
\nCompany dated as of the Closing Date in substance reasonably satisfactory to
\nParent (which may contain customary qualifications and assumptions) to the
\neffect that KPMG LLP concurs with Company management’s conclusion that no
\nconditions exist related to Company that would preclude Company from being a
\nparty to a business combination for which the “pooling-of-interest” method of
\naccounting is used.<\/p>\n
(b) Parent shall use all commercially reasonable efforts to receive
\nfrom Deloitte & Touche LLP, independent accountants for Parent, a copy of a
\nletter addressed to Parent dated as of the Closing Date in substance reasonably
\nsatisfactory to Parent (which may contain customary qualifications and
\nassumptions) to the effect that Deloitte & Touche LLP concurs with Parent
\nmanagement’s conclusion that the Merger can properly be accounted for as a
\n“pooling-of-interests.”<\/p>\n
5.17 Tax-Free Reorganization. Parent and Merger Sub covenant and agree not
\n ———————–
\n(i) to take any action (or to cause the Surviving Company or any Affiliate of
\nParent or Merger Sub to take any action), and (ii) to fail to take any action
\n(or to cause the Surviving Company or any Affiliates of Parent or Merger Sub not
\nto fail to take any action), which if taken or not taken, as the case may be,
\nwould reasonably be expected to prevent, the Merger from qualifying as a
\nreorganization within the meaning of Section 368(a) of the Code.<\/p>\n
5.18 Non-Disclosure, Invention Release and Non-Competition Agreements.
\n —————————————————————-<\/p>\n
(a) Company shall use its commercially reasonable efforts to cause
\nemployees of Company and its subsidiaries who will become employees of Parent
\nfrom and after the Effective Time to enter into Parent’s standard form of Non-
\nDisclosure, Invention Release and Non-Competition Agreement prior to the
\nClosing.<\/p>\n
-52-<\/p>\n
(b) Parent shall use its commercially reasonable efforts to cause
\nemployees of Parent and its subsidiaries who have not already entered into
\nParent’s standard form of Non-Disclosure, Invention Release and Non-Competition
\nAgreement to enter into such agreement prior to the Closing.<\/p>\n
ARTICLE VI
\n CONDITIONS TO THE MERGER<\/p>\n
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
\n ————————————————————
\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, any of which may be waived if waived in writing by both
\nParent and Company:<\/p>\n
(a) Stockholder Approval. This Agreement shall have been adopted and
\n ——————–
\nthe Merger shall have been duly approved by the requisite vote under applicable
\nlaw by the stockholders of Company, and the Share Issuance shall have been
\nadopted by the requisite vote under applicable law by the stockholders of
\nParent.<\/p>\n
(b) S-4 Effective; Joint Proxy Statement. The SEC shall have declared
\n ————————————
\nthe S-4 effective. No stop order suspending the effectiveness of the S-4 or any
\npart thereof shall have been issued and no proceeding for that purpose, and no
\nsimilar proceeding in respect of the Joint Proxy Statement\/Prospectus, shall
\nhave been initiated or threatened in writing by the SEC.<\/p>\n
(c) No Order; HSR Act. No Governmental Entity shall have enacted,
\n —————–
\nissued, 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
(d) Tax Opinions. Each of Company and Parent shall have received a
\n ————
\nwritten opinion from its respective tax counsel, in form and substance
\nreasonably satisfactory to Company or Parent, as the case may be, and based on
\ncustomary representations of Parent, Merger Sub and Company and subject to
\ncustomary assumptions and qualifications, to the effect that the Merger will
\nconstitute a reorganization within the meaning of Section 368(a) of the Code and
\nsuch opinion shall not have been withdrawn.<\/p>\n
(e) Nasdaq Listing. The shares of Parent Common Stock to be issued in
\n ————–
\nthe Merger shall have been authorized for listing on Nasdaq, subject to notice
\nof issuance.<\/p>\n
-53-<\/p>\n
6.2 Additional Conditions to Obligations of Company. The obligation of
\n ———————————————–
\nCompany to effect the Merger shall be subject to the satisfaction at or prior to
\nthe Closing Date of each of the following conditions, any of which may be
\nwaived, in writing, exclusively by Company:<\/p>\n
(a) Representations and Warranties. Each representation and warranty
\n ——————————
\nof Parent and Merger Sub contained in this Agreement (i) shall have been
\naccurate in all respects as of the date of this Agreement and (ii) shall be true
\nand correct in all respects on and as of the Closing Date with the same force
\nand effect as if made on the Closing Date except, with respect to clauses (i)
\nand (ii), (A) in each case, or in the aggregate, as does not constitute a
\nMaterial Adverse Effect on Parent; provided, however, such Material Adverse
\n ——– ——-
\nEffect qualifier shall be inapplicable with respect to representations and
\nwarranties contained in Sections 3.4, 3.18, 3.19 and 3.20 (which representations
\nshall have been true and correct in all material respects as of the date of this
\nAgreement and shall have been accurate in all material respects as of the
\nClosing Date) and (B) for those representations and warranties which address
\nmatters only as of a particular date (which representations shall have been true
\nand correct (subject to the qualification as set forth in the preceding clause
\n(A)) as of such particular date) (it being understood that, for purposes of
\ndetermining the accuracy of such representations and warranties, (i) all
\n“Material Adverse Effect” qualifications and other qualifications based on the
\nword “material” or similar phrases contained in such representations and
\nwarranties shall be disregarded and (ii) any update of or modification to the
\nParent Schedule made or purported to have been made after the date of this
\nAgreement shall be disregarded). Company shall have received a certificate with
\nrespect to the foregoing signed on behalf of Parent by an authorized officer of
\nParent.<\/p>\n
(b) Agreements and Covenants. Parent and Merger Sub shall have
\n ————————
\nperformed or complied with, in all material respects, all agreements and
\ncovenants required by this Agreement to be performed or complied with by them on
\nor prior to the Closing Date, and Company shall have received a certificate to
\nsuch effect signed on behalf of Parent by an authorized officer of Parent.<\/p>\n
(c) Material Adverse Change. There shall not have occurred any
\n ———————–
\nMaterial Adverse Effect with respect to Parent since the date hereof.<\/p>\n
6.3 Additional Conditions to the Obligations of Parent and Merger Sub. The
\n —————————————————————–
\nobligations of Parent and Merger Sub to effect the Merger shall be subject to
\nthe satisfaction at or prior to the Closing Date of each of the following
\nconditions, any of which may be waived, in writing, exclusively by Parent:<\/p>\n
(a) Representations and Warranties. Each representation and warranty
\n ——————————
\nof Company contained in this Agreement (i) shall have been true and correct in
\nall respects as of the date of this Agreement and (ii) shall be accurate in all
\nrespects on and as of the Closing Date with the same force and effect as if made
\non and as of the Closing Date except, with respect to clauses (i) and (ii), (A)
\nin each case, or in the aggregate, as does not constitute a Material Adverse
\nEffect on Company; provided, however, such Material Adverse Effect qualifier
\n ——– ——-
\nshall be inapplicable with respect to representations and warranties contained
\nin Sections 2.4, 2.18, 2.19 and 2.20 (which representations <\/p>\n
-54-<\/p>\n
shall have been true and correct in all material respects as of the date of this
\nAgreement and shall be accurate in all material respects as of the Closing Date)
\nand (B) for those representations and warranties which address matters only as
\nof a particular date (which representations shall have been accurate (subject to
\nthe qualification as set forth in the preceding clause (A)) as of such
\nparticular date) (it being understood that, for purposes of determining the
\naccuracy of such representations and warranties, (i) all “Material Adverse
\nEffect” qualifications and other qualifications based on the word “material” or
\nsimilar phrases contained in such representations and warranties shall be
\ndisregarded and (ii) any update of or modification to the Company Schedule made
\nor purported to have been made after the date of this Agreement shall be
\ndisregarded). Parent shall have received a certificate with respect to the
\nforegoing signed on behalf of Company by an authorized officer of Company.<\/p>\n
(b) Agreements and Covenants. Company shall have performed or
\n ————————
\ncomplied with, in all material respects, 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 Company by an authorized officer of Company.<\/p>\n
(c) Material Adverse Change. There shall not have occurred any
\n ———————–
\nMaterial Adverse Effect with respect to Company since the date hereof.<\/p>\n
ARTICLE VII
\n TERMINATION, AMENDMENT AND WAIVER<\/p>\n
7.1 Termination. This Agreement may be terminated at any time prior to
\n ———–
\nthe Effective Time, whether before or after the requisite approval of the
\nstockholders of Company and Parent:<\/p>\n
(a) by mutual written consent duly authorized by the Boards of
\nDirectors of Parent and Company;<\/p>\n
(b) by either Company or Parent if the Merger shall not have been
\nconsummated by January 31, 2001 (such date, or such other date that may be
\nagreed by mutual written consent, being the “Outside Date”) for any reason;
\n ————
\nprovided, however, that the right to terminate this Agreement under this Section
\n——– ——-
\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 if such action or failure to act constitutes a breach of
\nthis Agreement;<\/p>\n
(c) by either Company or Parent if a Governmental Entity shall have
\nissued an order, decree or ruling or taken any other action, in any case having
\nthe effect of permanently restraining, enjoining or otherwise prohibiting the
\nMerger, which order, decree, ruling or other action shall have become final and
\nnonappealable;<\/p>\n
-55-<\/p>\n
(d) by either Company or Parent if either: (i)(A) the Company
\nStockholders’ Meeting (including any adjournments thereof) shall have been held
\nand completed and the stockholders of Company shall have taken a final vote on a
\nproposal to adopt this Agreement and (B) the required approval of the
\nstockholders of Company contemplated by this Agreement shall not have been
\nobtained or (ii) (A) the Parent Stockholders’ Meeting (including any
\nadjournments thereof) shall have been held and completed and the stockholders of
\nParent shall have taken a final vote on a proposal to approve the Share Issuance
\nand (B) the required approval of the stockholders of Parent contemplated by this
\nAgreement shall not have been obtained; provided, however, that the right to
\n ——– ——-
\nterminate this Agreement under this Section 7.1(d) shall not be available to
\nCompany or Parent where the failure to obtain Company or Parent stockholder
\napproval shall have been caused by the action or failure to act of Company or
\nParent, respectively, and such action or failure to act constitutes a breach by
\nCompany or Parent, respectively, of this Agreement;<\/p>\n
(e) by Company, upon a breach of any covenant or agreement on the
\npart of Parent set forth in this Agreement, or if any representation or warranty
\nof Parent shall have been untrue when made or shall have become untrue, in
\neither case such that the conditions set forth in Section 6.2(a) or Section
\n6.2(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
\n ——–
\ninaccuracy in Parent’s representations and warranties or breach by Parent is
\ncurable by Parent through exercise of its commercially reasonable efforts, then
\nCompany may not terminate this Agreement pursuant to this Section 7.1(e) for
\nthirty (30) days after delivery of written notice from Company to Parent of such
\nbreach , provided, that Parent continues to exercise commercially reasonable
\n ——–
\nefforts to cure such breach (it being understood that Company may not terminate
\nthis Agreement pursuant to this Section 7.1(e) if such breach by Parent is cured
\nduring such thirty-day period);<\/p>\n
(f) by Parent, upon a breach of any covenant or agreement on the
\npart of Company set forth in this Agreement, or if any representation or
\nwarranty of Company shall have been untrue when made or shall have become
\nuntrue, in either case such that the conditions set forth in Section 6.3(a) or
\nSection 6.3(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
\n ——–
\nsuch inaccuracy in Company’s representations and warranties or breach by Company
\nis curable by Company through exercise of its commercially reasonable efforts,
\nthen Parent may not terminate this Agreement pursuant to this Section 7.1(f) for
\nthirty (30) days after delivery of written notice from Parent to Company of such
\nbreach, provided, that Company continues to exercise commercially reasonable
\n ——–
\nefforts to cure such breach (it being understood that Parent may not terminate
\nthis Agreement pursuant to this Section 7.1(f) if such breach by Company is
\ncured during such thirty-day period);<\/p>\n
-56-<\/p>\n
(g) by Parent if a Triggering Event (as defined below) shall have<\/p>\n
occurred.; and <\/p>\n
For the purposes of this Agreement, a “Triggering Event” shall be deemed to have
\noccurred if: (i) the Board of Directors of Company or any committee thereof
\nshall for any reason have withheld, withdrawn or refrained from making or shall
\nhave modified, amended or changed in a manner adverse to Parent its
\nrecommendation in favor of the adoption of this Agreement or the approval of the
\nMerger; (ii) Company shall have failed to include in the Joint Proxy
\nStatement\/Prospectus the recommendation of the Board of Directors of Company in
\nfavor of the adoption of this Agreement and the approval of the Merger; (iii)
\nthe Board of Directors of Company fails to reaffirm its recommendation in favor
\nof the adoption of this Agreement within ten (10) business days after Parent
\nrequests in writing that such recommendation be reaffirmed at any time following
\nthe public announcement and during the pendency of an Acquisition Proposal; (iv)
\nthe Board of Directors of Company or any committee thereof shall have
\nrecommended to the stockholders of Company or approved any Acquisition Proposal;
\n(v) Company shall have entered into any agreement or contract accepting any
\nAcquisition Proposal; (vi) Company shall have breached any of the provisions of
\nSection 5.4 of this Agreement or (vii) a tender or exchange offer relating to
\nnot less than 15% of the then outstanding shares of capital stock of Company
\nshall have been commenced by a person unaffiliated with Parent and Company shall
\nnot have sent to its securityholders pursuant to Rule 14e-2 promulgated under
\nthe Securities Act, within ten (10) business days after such tender or exchange
\noffer is first published sent or given, a statement disclosing that Company
\nrecommends rejection of such tender or exchange offer.<\/p>\n
(h) by Company prior to the vote of the stockholders of Company on
\nthe Agreement, if, after receiving a Superior Offer and in the absence of any
\nprior breach of the provisions of Section 5.4 of this Agreement, the Board of
\nDirectors of Company determines in good faith, after consulting with outside
\nlegal counsel, that such action is necessary to comply with the fiduciary duties
\nof the Board of Directors of Company under applicable law; provided, however,
\n ——– ——-
\nthat Company may not terminate this Agreement pursuant to this subsection (h)
\nuntil two (2) business days have elapsed following delivery to Parent of written
\nnotice of such determination of Company (which written notice will inform Parent
\nof the material terms and conditions of the Superior Offer); provided, further,
\n ——– ——-
\nthat such termination under this Section 7.1(h) shall not be effective until
\nCompany has made payment to Parent of the amounts required to be paid pursuant
\nto Section 7.3(b)(i).<\/p>\n
7.2 Notice of Termination; Effect of Termination. Any termination of this
\n ——————————————–
\nAgreement under Section 7.1 will be effective immediately upon (or if the
\ntermination is pursuant to Section 7.1(e) or 7.1(f) and the proviso therein is
\napplicable, thirty (30) days after) the delivery of written notice thereof by
\nthe terminating party to the other parties hereto. In the event of the
\ntermination of this Agreement as provided in Section 7.1, this Agreement shall
\nbe of no further force or effect, with no liability of either party to the
\nother, except (i) as set forth in this Section 7.2, Section 7.3 and Article 8
\n(General Provisions), each of which shall survive the termination of this
\nAgreement, and (ii) nothing herein shall relieve any party from liability for
\nany intentional or willful breach of this Agreement. No termination of this
\nAgreement shall affect the obligations of the parties contained in<\/p>\n
-57-<\/p>\n
the Confidentiality Agreement, all of which obligations shall survive
\ntermination of this Agreement in accordance with their terms.<\/p>\n
7.3 Fees and Expenses.
\n —————–<\/p>\n
(a) General. Except as set forth in this Section 7.3, all fees and
\n ——-
\nexpenses incurred in connection with this Agreement and the transactions
\ncontemplated hereby shall be paid by the party incurring such fees and expenses
\nwhether or not the Merger is consummated; provided, however, that Parent and
\n ——– ——-
\nCompany shall share equally all fees and expenses, other than attorneys’ and
\naccountants fees and expenses, incurred in connection with the printing and
\nfiling (with the SEC) of the Joint Proxy Statement\/Prospectus (including any
\npreliminary materials related thereto) and the S-4 (including financial
\nstatements and exhibits) and any amendments or supplements thereto and any fees
\nrequired to be paid under the HSR Act.<\/p>\n
(b) Company Payments.
\n —————- <\/p>\n
(i) Company shall pay to Parent in immediately available
\nfunds, within one (1) business day after demand by Parent (or prior to, and a
\ncondition to the effectiveness of, termination of this Agreement pursuant to
\nSection 7.1(h)), an amount equal to $120,000,000 (the “Termination Fee”) if this
\nAgreement is terminated by Parent pursuant to Section 7.1(g) or by Company
\npursuant to Section 7.1(h).<\/p>\n
(ii) If (A) this Agreement is terminated by Parent or
\nCompany, as applicable, pursuant to Sections 7.1(b) or (d)(i), (B) prior to such
\ntermination a third party shall have announced an Acquisition Proposal and (C)
\nwithin twelve (12) months following the termination of this Agreement a Company
\nAcquisition (as defined below) is consummated or Company enters into an
\nagreement or binding letter of intent providing for a Company Acquisition, then
\nCompany shall pay Parent in immediately available funds at or prior to
\nconsummating such Company Acquisition an amount equal to the Termination Fee.<\/p>\n
(iii) Company acknowledges that the agreements contained in
\nthis Section 7.3(b) are an integral part of the transactions contemplated by
\nthis Agreement, and that, without these agreements, Parent would not enter into
\nthis Agreement; accordingly, if Company fails to pay in a timely manner the
\namounts due pursuant to this Section 7.3(b) and, in order to obtain such
\npayment, Parent makes a claim that results in a judgment against Company for the
\namounts set forth in this Section 7.3(b), Company shall pay to Parent its
\nreasonable costs and expenses (including reasonable attorneys’ fees and
\nexpenses) in connection with such suit, together with interest on the amounts
\nset forth in this Section 7.3(b) at the prime rate of Citibank, N.A. in effect
\non the date such payment was required to be made. Payment of the fees described
\nin this 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 Company pursuant to which <\/p>\n
-58-<\/p>\n
the stockholders of Company immediately preceding such transaction hold less
\nthan 60% of the aggregate equity interests in the surviving or resulting entity
\nof such transaction, (ii) a sale or other disposition by Company of assets
\nrepresenting in excess of 60% of the aggregate fair market value of Company’s
\nbusiness immediately prior to such sale or (iii) the acquisition by any person
\nor group (including by way of a tender offer or an exchange offer or issuance by
\nCompany), directly or indirectly, of beneficial ownership or a right to acquire
\nbeneficial ownership of shares representing in excess of 50% of the voting power
\nof the then outstanding shares of capital stock of Company.<\/p>\n
7.4 Amendment. Subject to applicable law, this Agreement may be amended
\n ———
\nby the parties hereto at any time by execution of an instrument in writing
\nsigned on behalf of each of Parent and Company.<\/p>\n
7.5 Extension; Waiver. At any time prior to the Effective Time, any party
\n —————–
\nhereto 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
ARTICLE VIII
\n GENERAL PROVISIONS<\/p>\n
8.1 Non-Survival of Representations and Warranties. The representations
\n ———————————————-
\nand warranties of Company, Parent and Merger Sub contained in this Agreement or
\nin any certificate or instrument delivered pursuant to Article VI shall
\nterminate at the Effective Time, and only the covenants that by their terms
\nsurvive the Effective Time shall survive the Effective Time.<\/p>\n
8.2 Notices. All notices and other communications hereunder shall be in
\n ——-
\nwriting and shall be deemed given on the day of delivery if delivered personally
\nor sent via telecopy (receipt confirmed) or on the second business day after
\nbeing sent if delivered by commercial delivery service, 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
-59- <\/p>\n
InfoSpace, Inc.
\n 601 108\/th\/ Avenue NE
\n Suite 1200
\n Bellevue, WA 98004
\n Attention: General Counsel
\n Telecopy No.: (425) 201-6170<\/p>\n
with a copy to:
\n Wilson Sonsini Goodrich & Rosati
\n Professional Corporation
\n 650 Page Mill Road
\n Palo Alto, CA 94304
\n Attention: Barry Taylor, Esq.
\n Lawrence Steele, Esq.
\n Steve Camahort, Esq.
\n Telecopy No.: (650) 493-9300<\/p>\n
(b) if to Company, to:<\/p>\n
Go2Net, Inc.
\n 999 Third Avenue
\n Suite 4700
\n Seattle, WA 98014
\n Attention: Chief Executive Officer
\n Telecopy No.: (206) 447-1625<\/p>\n
with a copy to:<\/p>\n
Hutchins, Wheeler & Dittmar, A Professional Corporation
\n 101 Federal Street
\n Boston, MA 02110
\n Attention: Francis J. Feeney, Esq.
\n Telecopy No.: (617) 951-1295<\/p>\n
8.3 Interpretation.
\n ————–<\/p>\n
(a) When a reference is made in this Agreement to Exhibits, such
\nreference shall be to an Exhibit to this Agreement unless otherwise indicated.
\nWhen a reference is made in this Agreement to a Section, such reference shall be
\nto a Section of this Agreement. Unless otherwise indicated the words “include,”
\n“includes” and “including” when used herein shall be deemed in each case to be
\nfollowed by the words “without limitation.” The table of contents and headings
\ncontained in this Agreement are for reference purposes only and shall not affect
\nin any way the meaning or interpretation of this Agreement. When reference is
\nmade herein to “the business of” an entity, such <\/p>\n
-60-<\/p>\n
reference 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.<\/p>\n
(b) For purposes of this Agreement, the term “knowledge” means with
\nrespect to a party hereto, with respect to any matter in question, that any of
\nthe officers of such party has actual knowledge of such matter.<\/p>\n
(c) For purposes of this Agreement, the term “person” shall mean any
\nindividual, 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
(d) For purposes of this Agreement, the term “Material Adverse Effect”
\nwhen used in connection with an entity means any change, event, violation,
\ninaccuracy, circumstance or effect, individually or when aggregated with other
\nchanges, events, violations, inaccuracies, circumstances or effects, that is
\nmaterially adverse to the business, assets (including intangible assets),
\ncapitalization, financial condition or results of operations of such entity and
\nits subsidiaries taken as a whole; provided, however that (i) no change, event,
\n —————–
\nviolation, inaccuracy, circumstance or effect directly attributable to (A)
\nchanges in general economic conditions or changes affecting the Internet
\nindustry generally or (B) (x) the loss of current or prospective customers that
\nsuch entity successfully bears the burden of proving arose from such entity
\nentering into this Agreement or (y) any other adverse effect that such entity
\nshall have demonstrated is substantially attributable to the transactions
\ncontemplated by this Agreement or the announcement of the transactions
\ncontemplated by this Agreement shall constitute a Material Adverse Effect and
\n(ii) in no event shall a decrease in the trading price of such entity’s common
\nstock in and of itself constitute a Material Adverse Effect.<\/p>\n
(e) For purposes of this Agreement, an “agreement,” “arrangement,”
\n“contract,” “commitment” or “plan” shall mean a legally binding, written
\nagreement, arrangement, contract, commitment or plan, as the case may be.<\/p>\n
8.4 Counterparts. This Agreement may be executed in one or more
\n ————
\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
\n ——————————————-
\ndocuments and instruments and other agreements among the parties hereto as
\ncontemplated by or referred to herein, including the Company Schedule and the
\nParent Schedule (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, however, that the Confidentiality
\nAgreement shall continue in full force and effect<\/p>\n
-61-<\/p>\n
until the Closing and shall survive any termination of this Agreement; and (b)
\nexcept with respect to the Indemnified Parties under Section 5.10, are not
\nintended to confer upon any other person any rights or remedies hereunder.<\/p>\n
8.6 Severability. In the event that any provision of this Agreement, or
\n ————
\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
\n ————————————
\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 injunctions to prevent
\nbreaches of this Agreement and to enforce specifically the terms and provisions
\nhereof in any court of the United States or any state having jurisdiction, this
\nbeing in addition to any other remedy to which they are entitled at law or in
\nequity. In any action at law or suit in equity to enforce this Agreement or the
\nrights of any of the parties hereunder, the prevailing party in such action or
\nsuit shall be entitled to receive a reasonable sum for its attorneys’ fees and
\nall other reasonable costs and expenses incurred in such action or suit.<\/p>\n
8.8 Governing Law. This Agreement shall be governed by and construed in
\n ————-
\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
\n ———————
\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 its
\n ———-
\nrights, interests, or obligations hereunder without the prior written approval
\nof the other parties. Subject to the preceding sentence, this Agreement shall be
\nbinding upon and shall inure to the benefit of the parties hereto and their
\nrespective successors and permitted assigns.<\/p>\n
8.11 Waiver of Jury Trial. EACH OF PARENT, COMPANY AND MERGER SUB HEREBY
\n ——————–
\nIRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, <\/p>\n
-62-<\/p>\n
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
\nARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY
\nOR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
\nHEREOF.<\/p>\n
*****<\/p>\n
-63-<\/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.
\n INFOSPACE, INC.<\/p>\n
By:________________________________<\/p>\n
Name:______________________________<\/p>\n
Title:_____________________________<\/p>\n
GIANTS ACQUISITION CORP.<\/p>\n
By:________________________________<\/p>\n
Name:______________________________<\/p>\n
Title:_____________________________<\/p>\n
GO2NET, INC.<\/p>\n
By:________________________________<\/p>\n
Name:______________________________<\/p>\n
Title:_____________________________<\/p>\n
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