Exhibit 10.1
AGREEMENT AND
PLAN OF MERGER
BY AND
AMONG
ACXIOM
CORPORATION
ADAM MERGER
CORPORATION
AND
DIGITAL
IMPACT, INC.
Dated as of
March 25, 2005
TABLE OF
CONTENTS
Page
ARTICLE I THE
OFFER.............................................................................1
1.1 The
Offer..............................................................................1
1.2 Company
Action.........................................................................1
1.3 Company Boards of Directors and Committees; Section 14(f)
of Exchange Act..............1
ARTICLE II THE
MERGER...........................................................................1
2.1 The
Merger.............................................................................1
2.2 Effective Time;
Closing................................................................1
2.3 Effect of the
Merger...................................................................1
2.4 Certificate of Incorporation and
Bylaws................................................1
2.5 Directors and
Officers.................................................................1
2.6 Effect on Capital
Stock................................................................1
2.7 Surrender of
Certificates..............................................................1
2.8 No Further Ownership Rights in Company Common
Stock....................................1
2.9 Lost, Stolen or
Destroyed..............................................................1
2.10 Further
Action.........................................................................1
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.......................................1
3.1 Organization; Standing and Power; Charter Documents;
Subsidiaries......................1
3.2 Capital
Structure......................................................................1
3.3 Authority; Non-Contravention; Necessary
Consents.......................................1
3.4 SEC Filings; Financial
Statements......................................................1
3.5 Absence of Certain Changes or
Events...................................................1
3.6
Taxes..................................................................................1
3.7 Intellectual
Property..................................................................1
3.8 Compliance;
Permits....................................................................1
3.9
Litigation.............................................................................1
3.10 Employee Benefit
Plans.................................................................1
3.11 Environmental
Matters..................................................................1
3.12
Contracts..............................................................................1
3.13 Takeover
Statutes......................................................................1
3.14 Rights
Plan............................................................................1
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3.15 Brokers' and Finders'
Fees.............................................................1
3.16 Off-Balance Sheet Transactions and Public
Accountant...................................1
3.17 No Undisclosed
Liabilities.............................................................1
3.18 Potential Conflict of
Interest.........................................................1
3.19
Properties.............................................................................1
3.20
Insurance..............................................................................1
3.21 Opinion of Financial
Advisor...........................................................1
3.22 Required
Vote..........................................................................1
3.23 Employment
Agreements..................................................................1
3.24 Other
Agreements.......................................................................1
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND
PURCHASER...............................1
4.1 Organization; Standing and Power; Charter Documents;
Subsidiaries......................1
4.2 Authority; Non-Contravention; Necessary
Consents.......................................1
4.3 SEC Filings; Financial
Statements......................................................1
4.4
Funds..................................................................................1
4.5 No Company
Shares......................................................................1
4.6 Brokers' and Finders'
Fees.............................................................1
ARTICLE V CONDUCT PRIOR TO THE EFFECTIVE
TIME...................................................1
5.1 Conduct of Business by the
Company.....................................................1
ARTICLE VI ADDITIONAL
AGREEMENTS................................................................1
6.1 Acquisition
Proposals..................................................................1
6.2 Proxy
Statement........................................................................1
6.3 Meeting of
Stockholders................................................................1
6.4 Board
Recommendation...................................................................1
6.5 Confidentiality; Access to
Information.................................................1
6.6 Public
Disclosure......................................................................1
6.7 Regulatory Filings; Reasonable
Efforts.................................................1
6.8 Notification of Certain
Matters........................................................1
6.9 Third-Party
Consents...................................................................1
6.10 Employees and Employee
Benefits........................................................1
6.11
Indemnification........................................................................1
6.12 Prohibition on Acquiring
Shares........................................................1
6.13 Section 16
Matters.....................................................................1
6.14 Purchaser
Compliance...................................................................1
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6.15 Stockholder
Litigation.................................................................1
ARTICLE VII CONDITIONS TO THE
MERGER............................................................1
7.1 Conditions to the Obligations of Each Party to Effect the
Merger.......................1
ARTICLE VIII TERMINATION, AMENDMENT AND
WAIVER..................................................1
8.1 Termination Prior to Appointment
Time..................................................1
8.2 Notice of Termination; Effect of
Termination...........................................1
8.3 Fees and
Expenses......................................................................1
8.4
Amendment..............................................................................1
8.5 Extension;
Waiver......................................................................1
ARTICLE IX GENERAL
PROVISIONS...................................................................1
9.1 Non-Survival of Representations and
Warranties.........................................1
9.2
Notices................................................................................1
9.3 Interpretation;
Knowledge..............................................................1
9.4
Counterparts...........................................................................1
9.5 Entire Agreement; Third-Party
Beneficiaries............................................1
9.6
Severability...........................................................................1
9.7 Other Remedies; Specific
Performance...................................................1
9.8 Governing
Law..........................................................................1
9.9 Rules of
Construction..................................................................1
9.10
Assignment.............................................................................1
9.11 Waiver of Jury
Trial...................................................................1
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AGREEMENT AND
PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is
made and entered into as of March 25, 2005, by and among Acxiom
Corporation, a Delaware corporation ("Parent"), Adam Merger
Corporation, a Delaware corporation and direct wholly-owned
subsidiary
of Parent ("Purchaser"), and Digital Impact, Inc. a Delaware
corporation (the "Company").
RECITALS
A. It is proposed that Purchaser shall, as promptly as
practicable, commence a tender offer to acquire all of the
outstanding shares of Company common stock, all upon the terms and
subject to the conditions set forth herein.
B. It is also proposed that, following the consummation
of the Offer (as defined in Section 1.1(a)), Purchaser will
merge with and into the Company and each Company Share (as defined
in Section 2.6(a)) that is not tendered and accepted pursuant to
the Offer will thereupon be cancelled and converted into the right
to receive cash in an amount equal to the Offer Price (as
defined in Section 1.1(a)), all upon the terms and subject to the
conditions set forth herein.
C. As a condition and further inducement to Parent and
Purchaser to enter into this Agreement and incur the obligations
set forth herein, certain stockholders of the Company (each, a
"Stockholder") concurrently herewith are entering into a
Stockholder
Agreement (the "Stockholder Agreement"), dated as of the date
hereof, with Parent and Purchaser, in the form attached hereto as
Exhibit A, pursuant to which each such Stockholder has, among other
things, upon the terms and subject to the conditions set forth
therein, irrevocably agreed to tender such shares of Company Common
Stock.
D. Each of the Boards of Directors of Parent,
Purchaser, and Company, has (i)determined that this Agreement is
advisable, (ii) determined that this Agreement and the transactions
contemplated hereby (including the Offer and the Merger), taken
together, are in the best interests of their respective
stockholders, and (iii) approved this Agreement and the
transactions
contemplated hereby (including the Offer and the Merger), all upon
the terms and subject to the conditions set forth herein.
E. As a condition and further inducement to Parent and
Purchaser to enter into this Agreement and incur the
obligations set forth herein, certain individuals have entered into
employment agreements (the "Employment Agreements") with Parent
in the form attached hereto as Exhibits B-1 through B-3.
NOW, THEREFORE, in consideration of the covenants,
promises and representations set forth herein, and for other good
and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I
THE
OFFER
1.1 The Offer.
(a) Terms of the Offer; Conditions to Offer.
Provided that this Agreement shall not have been earlier
terminated in accordance with Article VIII, as promptly as
practicable after the date hereof (but in no event more than five
(5)
business days after the public announcement of this Agreement),
Purchaser shall (and Parent shall cause Purchaser to) commence
(within the meaning of Rule 14d-2 under the Securities and Exchange
Act of 1934, as amended (the "Exchange Act")) a tender offer
(the "Offer") to purchase all of the Company Shares (as defined in
Section 2.6(a)) at a price per Company Share, subject to the
terms of Section 1.1(b), equal to a price of Three Dollars and
Fifty Cents ($3.50) per Company Share, net to the holder thereof in
cash (such amount, or any different amount per Company Share that
may be paid pursuant to the Offer, is the "Offer Price"). The
obligation of Purchaser to accept for payment any Company Shares
tendered pursuant to the Offer (and the obligation of Parent to
cause Purchaser to accept for payment any Company Shares tendered)
shall be subject only to (i) the condition (the "Minimum
Condition") that, prior to the then scheduled expiration of the
Offer (as it may be extended from time to time pursuant to Section
1.1(c)) there be validly tendered in accordance with the terms of
the Offer and not withdrawn a number of Company Shares that,
together with the Company Shares then owned by Parent and Purchaser
(if any), represents 50.1% of all then outstanding Company
Shares calculated on a fully diluted basis (including, without
limitation, all Company Shares issuable upon the conversion of any
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convertible securities or uponthe exercise of any options, warrants
or rights, excluding, however, any securities not convertible or
exercisable on or prior to August 31, 2005(including for this
purpose any securities which become convertible or exercisable on
or
prior to August 31, 2005 as a result of conversion pursuant to
Section 2.6(e)) shall have been validly tendered in accordance with
the terms of the Offer and not withdrawn prior to the expiration of
the Offer and (ii) the satisfaction or waiver in accordance with
the terms of this Agreement of each of the other conditions set
forth in Annex A. Parent and Purchaser expressly reserve the right
to waive any such condition, to increase the Offer Price, and to
make any other changes in the terms and conditions of the Offer;
provided, however, that unless previously approved by the Company
in writing, neither Parent nor Purchaser may make any change to
the terms and conditions of the Offer that (i) decreases the Offer
Price, (ii) changes the form of consideration to be paid in the
Offer, (iii) reduces the number of Company Shares to be purchased
in the Offer, (iv) imposes conditions to the Offer in addition to
the conditions to the Offer set forth in Annex A, (v) amends the
conditions to the Offer set forth in Annex A so as to broaden the
scope of such conditions to the Offer,(vi) extends the Offer except
as provided in Section 1.1(c), (vii) amends or waives the
Minimum Condition, or (viii) makes any other change to any of the
terms and conditions of the Offer that is adverse to the holders
of Company Shares in the reasonable and good faith judgment of the
Company. The conditions to the Offer set forth in Annex A are
for the sole benefit of Parent and Purchaser and may be waived by
Parent and Purchaser, in whole or in part, at any time and from
time to time, in their sole discretion, other than the Minimum
Condition, which may be waived by Parent and Purchaser only with
the
prior written consent of the Company. The failure by Parent and
Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, and each such right
shall be deemed an ongoing right that may be asserted at any
time and from time to time.
(b) Adjustments to Offer Price. The Offer Price
shall be adjusted appropriately to reflect the effect of any stock
split, reverse stock split, stock dividend (including any dividend
or distribution of securities convertible into Company Common
Stock), extraordinary cash dividends, reorganization,
recapitalization, reclassification, combination, exchange of shares
or other
like change with respect to Company Common Stock occurring on or
after the date hereof and prior to Purchaser's acceptance for
payment of, and payment for, Company Shares pursuant to the Offer.
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(c) Extension and Expiration of Offer. Subject to
the terms and conditions of the Offer and this Agreement, the Offer
shall expire at midnight, New York Time, on the date that is twenty
(20) business days (calculated in accordance with
Section 14d-1(g)(3) under the Exchange Act) after the date the
Offer is commenced (within the meaning of Rule 14d-2 under the
Exchange Act); provided, however, that (i) Purchaser shall extend
the Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange
Commission ("SEC") or its staff, or of the Nasdaq Stock Market,
Inc.
("Nasdaq"), that is applicable to the Offer, and (ii) in the event
that any of the conditions to the Offer set forth on Annex A are
not satisfied or waived as of any then scheduled expiration date of
the Offer, Purchaser shall extend the Offer for successive
extension periods of not more than ten (10) business days each,
until such time as either (A) all of the conditions to the Offer
are satisfied or waived, or (B) this Agreement is terminated
pursuant to the terms of Article VIII; provided, however, that
notwithstanding the foregoing clauses (i) and (ii) of this Section
1.1(c), in no event shall (x) Purchaser be required to extend
the Offer beyond the Initial Termination Date or the Extended
Termination Date, as applicable or (y) Purchaser be required to
extend the Offer beyond the termination of this Agreement in
accordance with Article VIII.
(d) Payment for Company Shares. Subject to the terms
and conditions of the Offer and this Agreement, Purchaser shall
(and Parent shall cause Purchaser to) accept for payment, and pay
for, all Company Shares validly tendered and not withdrawn
pursuant to the Offer, as promptly as practicable after the
applicable expiration date of the Offer (as it may be extended in
accordance with Section 1.1(c)). The Offer Price payable in
respect of each Company Share validly tendered and not withdrawn
pursuant to the Offer shall be paid net to the holder thereof in
cash, subject to reduction only for any applicable withholding in
accordance with Section 2.7(d).
(e) Subsequent Offering Period. Purchaser may (but
shall not be required to), only with the prior written consent of
the Company, extend the Offer for a subsequent offering period
(within the meaning of Rule 14d-11 under the Exchange Act) of not
less than three (3) nor more than twenty (20) business days
immediately following the expiration of the Offer. Subject to the
terms and conditions of the Offer and this Agreement, Purchaser
shall (and Parent shall cause Purchaser to) accept for payment, and
pay for,all Company Shares validly tendered and not withdrawn
pursuant to the Offer as so extended by such subsequent offering
period, as promptly as practicable after any such Company Shares
are tendered during such subsequent offering period. The Offer
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Price payable in respect of each Company Share validly tendered and
not withdrawn pursuant to the Offer, as so extended by such
subsequent offering period, shall be paid net to the holder thereof
in cash, subject to reduction only for any applicable
withholding in accordance with Section 2.7(d).
(f) Transfers of Ownership. If the payment equal to
the Offer Price or Merger Consideration in cash is to be made to a
Person (as defined in Section 9.3(f)) other than the Person in
whose name the surrendered certificate formerly evidencing Shares
is
registered on the stock transfer books of the Company, it shall be
a condition of payment that the certificate so surrendered shall
be endorsed properly or otherwise be in proper form for transfer
and that the Person requesting such payment shall have paid all
transfer and other taxes required by reason of the payment of the
Offer Price or Merger Consideration to a Person other than the
registered holder of the certificate surrendered, or shall have
established to the satisfaction of Parent that such taxes either
have been paid or are not applicable.
(g) Schedule TO; Offer Documents. On the date the
Offer is commenced (within the meaning of Rule 14d-2 under the
Exchange Act), Parent and Purchaser shall (i) file with the SEC a
Tender Offer Statement on Schedule TO (together with all
amendments and supplements thereto, and including all exhibits
thereto, the "Schedule TO") with respect to the Offer, which shall
contain as an exhibit or incorporate by reference an Offer to
Purchase, or portions thereof (the "Offer to Purchase"), and forms
of
the letter of transmittal and summary advertisement, if any, in
respect of the Offer (together with any supplements or amendments
thereto, the "Offer Documents"), and (ii) cause the Offer Documents
to be disseminated to all holders of Company Shares
(collectively, the "Company Securityholders"). Subject to the
provisions of Section 6.1, the Schedule TO and the Offer Documents
may include a description of the determinations, approvals and
Recommendations (as defined in Section 1.2(a)) of the Board of
Directors of the Company (the "Company Board") set forth in Section
1.2(a). The Company shall promptly furnish to Parent and
Purchaser in writing all information concerning the Company that
may be required by applicable federal securities laws or
reasonably requested by Parent and Purchaser for inclusion in the
Schedule TO or the Offer Documents. Parent and Purchaser shall
provide the Company and its counsel a reasonable opportunity to
review and comment on the Schedule TO and the Offer Documents prior
to the filing thereof with the SEC. Parent and Purchaser shall
advise the Company, promptly after it receives notice thereof, of
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any request by the SEC or its staff for an amendment or revision of
the Schedule TO or the Offer Documents, or comments thereon or
responses thereto, or request by the SEC or its staff for
additional information in connection therewith and shall provide to
the
Company and its counsel all written comments or requests for
information that Parent, Purchaser or their counsel may receive
from
the SEC or its staff with respect to the Schedule TO and the Offer
Documents promptly after receipt thereof. Parent and Purchaser
shall respond to any such comments or requests from the SEC
regarding the Schedule TO and the Offer Documents. No filing of,
or
amendment or supplement to, or correspondence with the SEC or its
staff with respect to the Schedule TO and the Offer Documents
shall be made by Parent and Purchaser without providing the Company
a reasonable opportunity to participate in the formulation
thereof and to review and comment thereon. If at any time prior to
the Appointment Time, any information relating to the Parent,
Purchaser, Company or any of their respective directors, officers
or affiliates, should be discovered by Parent, Purchaser or the
Company (including any correction to any of the information
provided by them for use in the Schedule TO or other Offer
Documents)
which should be set forth in an amendment or supplement to the
Schedule TO or other Offer Documents so that the Schedule TO or
other
Offer Documents would not include any misstatement of a material
fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading, the party which discovers such
information shall promptly notify the other party or parties
hereto, as the case may be, and an appropriate amendment or
supplement
to the Schedule TO or the other Offer Documents describing such
information shall be promptly prepared and filed with the SEC and
disseminated to the Company Securityholders, in each case as and to
the extent required by applicable law.
1.2 Company Action.
(a) Company Determinations, Approvals and
Recommendations. The Company hereby consents to the Offer and
represents
and warrants to Parent and Purchaser that, at meeting duly called
and held prior to the date hereof, the Company Board has, upon
the terms and subject to the conditions set forth herein, (i)
determined that this Agreement and the transactions contemplated
hereby are advisable, (ii) determined that this Agreement and the
transactions contemplated hereby (including the Offer and the
Merger), taken together, are fair to and in the best interests of
the Company Securityholders, (iii) approved this Agreement and
the transactions contemplated hereby (including the Offer and the
Merger) which approval constituted approval under Section 203 of
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the Delaware General Corporation Law ("DGCL") as a result of which
this Agreement and the transactions contemplated hereby
(including the Offer and the Merger), are not and will not be
subject to any restrictions under Section 203 of the DGCL, and (iv)
resolved to recommend that the Company Securityholders accept the
Offer, tender their Company Shares to Purchaser pursuant to the
Offer and adopt this Agreement in accordance with the applicable
provisions of laws of the State of Delaware ("Delaware Law") (the
actions described in clauses (i) through (iv) are referred to
collectively as the "Recommendations"); provided, however, that
Recommendations may be withheld, withdrawn, amended or modified in
accordance with the terms of Section 6.1(d). As of the date
hereof, the Recommendations were unanimous. The Company hereby
consents to the inclusion of the foregoing determinations and
approvals in the Offer Documents and, to the extent that the
foregoing Recommendations are not withheld, withdrawn, amended or
modified in accordance with Section 6.1, the Company hereby
consents to the inclusion of such Recommendations in the Offer
Documents. Each director and executive officer of the Company has
executed a Stockholders Agreement.
(b) Schedule 14D-9. The Company shall (i) file with
the SEC, concurrently with the filing by Parent and Purchaser of
the Schedule TO, a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements
thereto,
and including all exhibits thereto, the "Schedule 14D-9"), and (ii)
cause the Schedule 14D-9 to be mailed to the Company
Securityholders, together with the Offer Documents, promptly after
the commencement of the Offer (within the meaning of Rule 14d-2
under the Exchange Act). Subject to the provisions of Section
6.1(d), the Company agrees the Schedule 14D-9 shall include a
description of the determinations and approvals, and shall include
the Recommendations of the Company's Board set forth in Section
1.2(a). Each of Parent and Purchaser shall promptly furnish to the
Company in writing all information concerning Parent and
Purchaser that may be required by applicable federal securities
laws or reasonably requested by the Company for inclusion in the
Schedule 14D-9. The Company shall provide Parent, Purchaser and
their counsel reasonable opportunity to review and comment on the
Schedule 14D-9 prior to the filing thereof with the SEC. The
Company shall advise Parent, promptly after it receives notice
thereof, of any request by the SEC or its staff for an amendment or
revision of the with respect to the Schedule 14D-9, or comments
thereon or responses thereto, or request by the SEC or its staff
for additional information in connection therewith and shall
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provide to Parent and its counsel all written comments or requests
for information that the Company or its counsel may receive from
the SEC or its staff with respect to the Schedule 14D-9 promptly
after receipt thereof. The Company shall respond to any such
comments or requests from the SEC regarding the Schedule 14D-9. No
filing of, or amendment or supplement to, or correspondence with
the SEC or its staff with respect to the Schedule 14D-9 shall be
made by the Company without providing Parent a reasonable
opportunity to participate in the formulation thereof and to review
and comment thereon. If at any time prior to the Appointment
Time, any information relating to the Company, Parent, Purchaser,
or any of their respective directors, officers or affiliates,
should be discovered by Parent, Purchaser or the Company (including
any correction to any of the information provided by them for
use in the Schedule 14D-9 which should be set forth in an amendment
or supplement to the Schedule 14D-9 so that the Schedule 14D-9
would not include any misstatement of a material fact or omit to
state any material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading), the party which discovers such information shall
promptly
notify the other party or parties hereto, as the case may be, and
an appropriate amendment or supplement to the Schedule 14D-9
describing such information shall be promptly prepared and filed
with the SEC and disseminated to the Company Securityholders, in
each case as and to the extent required by applicable law.
(c) Company Information. In connection with the
Offer, the Company shall, or shall cause its transfer agent to,
promptly following a request by Parent, furnish Parent with such
information, including, without limitation, a list, as of the most
recent practicable date, of the Company Securityholders, mailing
labels and any available listing or computer files containing the
names and addresses of all record and beneficial holders of Company
Shares, and lists of security positions of Company Shares held
in stock depositories (including, without limitation, updated lists
of stockholders, mailing labels, listings or files of securities
positions, to the extent available), and with such assistance, as
Parent or its agents may reasonably request in order to
disseminate and otherwise communicate the Offer to the record and
beneficial holders of Company Shares. Such information shall be
provided in such format, including electronic form (if such
information is existing in electronic form), as may be reasonably
requested by Parent and as is practicable. Subject to any and all
Legal Requirements, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent and Purchaser and their agents
shall (i) hold in confidence the information contained in any such
lists of stockholders, mailing labels and listings or files of
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securities positions, (ii)use such information only in connection
with the Offer and the Merger and, (iii) if (A) this Agreement
shall be terminated pursuant to Article VIII and (B) Parent and
Purchaser shall withdraw the Offer or the Offer shall otherwise
expire or terminate in accordance with the terms hereof without
Purchaser (or Parent on Purchaser's behalf) having accepted for
payment any Company Shares pursuant to the Offer, deliver (and
shall use their respective reasonable efforts to cause their agents
to deliver) to the Company any and all copies and any extracts or
summaries from such information then in their possession or
control.
1.3 Company Boards of Directors and Committees;
Section 14(f) of Exchange Act.
(a) Composition of Company Board. Effective
upon the acceptance for payment by Purchaser of the Company Shares
pursuant to the Offer (the "Appointment Time"), Parent shall be
entitled to designate the number of directors, rounded up to the
next whole number, on the Company Board that equals the product of:
(i) the total number of directors on the Company Board (giving
effect to the election of any additional directors pursuant to this
Section 1.3); and (ii) the percentage that the number of Company
Shares owned by Parent and/or Purchaser (including Company Shares
accepted for payment) bears to the total number of Company Shares
outstanding. Promptly following a request by Parent, the Company
shall take all action reasonably necessary to cause Parent's
designees to be elected or appointed to the Company Board,
including, without limitation, at the option of Parent, increasing
the
number of directors (and amending the Bylaws if so required), or
seeking and accepting resignations of incumbent directors, or both;
provided, however, that prior to the Effective Time (as defined in
Section 2.2), the Company Board shall always have at least two
members who were directors of the Company prior to consummation of
the Offer and who are not affiliated with Parent or Purchaser
(each, a "Continuing Director"). In the event that a Continuing
Director shall resign from the Company Board prior to the Effective
Time, Parent, Purchaser and the Company shall permit the remaining
Continuing Directors to appoint the resigning director's
successor, who shall thereafter be deemed to be a Continuing
Director for all purposes of and under this Agreement. If the
number
of Continuing Directors is reduced to fewer than two for any reason
prior to the Effective Time, the remaining and departing
Continuing Directors shall be entitled to designate a person to
fill the vacancy or vacancies such that there shall be at least two
Continuing Directors, who shall thereafter be deemed to be a
Continuing Director for all purposes of and under this Agreement.
If
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there shall be no Continuing Directors prior to the Effective Time,
the majority of the members of the Company Board who are not
Continuing Directors shall designate two persons to fill the
vacancies such that there shall be two Continuing Directors, who
shall
thereafter be deemed to be a Continuing Director for all purposes
of and under this Agreement. The Company shall, upon Parent's
request following the Appointment Time, also cause persons elected
or designated by Parent to constitute the same percentage
(rounded up to the next whole number) as is on the Company Board of
(i) each committee of the Company Board (other than as it
relates to action which may be taken or is required to be taken by
the Continuing Directors pursuant to Section 1.3(c), (ii) each
board of directors (or similar body) of each Company Subsidiary and
(iii) each committee (or similar body) of each such board, in
each case only to the extent permitted by applicable law or the
rules of any stock exchange on which the Company Shares are listed.
(b) Section 14(f) of the Exchange Act. The
Company's obligation to appoint Parent's designees to the Company
Board
shall be subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder. The Company shall promptly take all
action required pursuant to this Section 1.3 and Section 14(f) and
Rule 14f-1 in order to fulfill its obligations under this
Section 1.3, and shall include in the Schedule 14D-9 such
information with respect to the Company and its directors and
officers as
is required under such Section 14(f) and Rule 14f-1 in order to
fulfill its obligations under this Section 1.3. Parent shall
provide to the Company in writing, and be solely responsible for
any information with respect to itself and its nominees, directors,
officers and affiliates, required by such Section 14(f) and Rule
14f-1.
(c) Required Approvals of Continuing Directors.
Notwithstanding anything to the contrary set forth in this
Agreement,
after the Appointment Time but prior to the Effective Time, the
approval of a majority of such Continuing Directors shall be
required in order to (i) amend or terminate this Agreement, or
agree or consent to any amendment or termination of this Agreement,
in any case on behalf of the Company, (ii) extend the time for
performance of, or waive, any of the obligations or other acts of
Parent or Purchaser under this Agreement, (iii) waive any of the
Company's rights, benefits or privileges under this Agreement if
such action would adversely affect the interests of the Company
Securityholders (other than Parent, Purchaser and their affiliates
(other than the Company and its Subsidiaries)), or (iv) make any
other determination with respect to any action to be taken or not
to be taken by or on behalf of the Company relating to this
Agreement or the transactions contemplated hereby, including the
Offer
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and the Merger, if such action would adversely affect the interests
of the Company Securityholders (other than Parent, Purchaser and
their affiliates (other than the Company and its Subsidiaries)); or
(v) approve any other action by the Company which is reasonably
likely to materially and adversely affect the interests of the
Company Securityholders (other than Parent, Purchaser and their
affiliates (other than the Company and its Subsidiaries) with
respect to the transactions contemplated by this Agreement. Without
limitation, any decrease in the amount of Merger Consideration or
any change in the form of Merger Consideration shall be deemed to
materially and adversely affect the interests of the Company
Securityholders (other than Parent, Purchaser and their affiliates
(other than the Company and its Subsidiaries)).
ARTICLE II
THE
MERGER
2.1 The Merger. At the Effective Time (as defined in
Section 2.2) and subject to and upon the terms and conditions of
this Agreement and the applicable provisions of Delaware Law,
Purchaser shall be merged with and into the Company (the "Merger"),
the separate corporate existence of Purchaser shall cease and the
Company shall continue as the surviving corporation. The Company,
as the surviving corporation after the Merger, is hereinafter
sometimes referred to as the "Surviving Corporation."
2.2 Effective Time; Closing. Subject to the
provisions of this Agreement, the parties hereto shall cause the
Merger to
be consummated by filing a Certificate of Merger (or a Certificate
of Ownership and Merger, as applicable) in customary form with
the Secretary of State of the State of Delaware in accordance with
the relevant provisions of Delaware Law (the "Certificate of
Merger") (the time of such filing with the Secretary of State of
the State of Delaware (or such later time as may be agreed in
writing by the Company and Parent and specified in the Certificate
of Merger) being the "Effective Time") as soon as practicable on
or after the Closing Date (as defined below). The closing of the
Merger (the "Closing") shall take place at a location, time and
date to be specified by the parties, which shall be no later than
the second (2nd) business day after the satisfaction or waiver of
the conditions set forth in Article VII (other than those
conditions that, by their terms, are not capable of being satisfied
or
waived until the Closing), or at such other time, date and location
as the parties hereto agree in writing (the "Closing Date").
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2.3 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in this Agreement and
the applicable provisions of Delaware Law.
2.4 Certificate of Incorporation and Bylaws. At the
Effective Time, the Certificate of Incorporation of the Company
shall be amended and restated in its entirety to be identical to
the Certificate of Incorporation of Purchaser, as in effect
immediately prior to the Effective Time, until thereafter amended
in accordance with Delaware Law and as provided in such
Certificate of Incorporation; provided, however, that at the
Effective Time, Article I of the Certificate of Incorporation of
the
Surviving Corporation shall be amended and restated in its entirety
to read as follows: "The name of the corporation is Digital
Impact, Inc." and the Certificate of Incorporation shall be amended
so as to comply with Section 6.11(a). At the Effective Time,
the Bylaws of the Company shall be amended and restated in their
entirety to be identical to the Bylaws of Purchaser, as in effect
immediately prior to the Effective Time, until thereafter amended
in accordance with Delaware Law and as provided in such Bylaws;
provided, however, that at the Effective Time, the Bylaws of the
Surviving Corporation shall be amended so as to comply with
Section 6.11(a).
2.5 Directors & Officers. The initial directors
of the Surviving Corporation shall be the directors of Purchaser
immediately prior to the Effective Time, until their respective
successors are duly elected or appointed and qualified. The
initial
officers of the Surviving Corporation shall be the officers of
Company immediately prior to the Effective Time, until their
respective successors are duly appointed.
2.6 Effect on Capital Stock. Subject to the terms and
conditions of this Agreement, at the Effective Time, by virtue
of the Merger and without any action on the part of Parent,
Purchaser, the Company or the holders of any shares of capital
stock of
the Company, the following shall occur:
(a) Company Common Stock. Each share of the
Common Stock, par value $0.001 per share, of the Company
(together with the associated Company Right (as defined in Section
3.2(a)) under the Company Rights Agreement (as defined in
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Section 3.2(a)) ("Company Common Stock") issued and outstanding
immediately prior to the Effective Time (the "Company Shares"),
other than (i) any shares of Company Common Stock to be cancelled
pursuant to Section 2.6(c) and (ii) the Appraisal Shares (as
defined in Section 2.6(b)), will be cancelled and extinguished and
automatically converted into the right to receive the Offer Price
in cash, without interest (the "Merger Consideration"), upon
surrender of the certificate representing such share of Company
Common
Stock in the manner provided in Section 2.7 (or in the case of a
lost, stolen or destroyed certificate, upon delivery of an
affidavit (and bond, if required) in the manner provided in Section
2.9).
(b) Appraisal Rights. Notwithstanding
anything in this Agreement to the contrary, shares (the "Appraisal
Shares") of Company Common Stock issued and outstanding immediately
prior to the Effective Time that are held by any holder who is
entitled to demand and properly demands appraisal of such shares
pursuant to, and who complies in all respects with, the provisions
of Section 262 of DGCL ("Section 262") shall not be converted into
the right to receive the Merger Consideration as provided in
Section 2.6(a), but instead such holder shall be entitled to
payment of the fair value of such shares in accordance with the
provisions of Section 262. At the Effective Time, the Appraisal
Shares shall no longer be outstanding and shall automatically be
cancelled and shall cease to exist, and each holder of Appraisal
Shares shall cease to have any rights with respect thereto, except
the right to receive the fair value of such shares in accordance
with the provisions of Section 262. Notwithstanding the foregoing,
if any such holder shall fail to perfect or otherwise shall waive,
withdraw or lose the right to appraisal under Section 262 or a
court of competent jurisdiction shall determine that such holder is
not entitled to the relief provided by Section 262, then the
right of such holder to be paid the fair value of such holder's
Appraisal Shares under Section 262 shall cease and such Appraisal
Shares shall be deemed to have been converted at the Effective Time
into, and shall have become, the right to receive the Merger
Consideration as provided in Section 2.6(a). The Company shall
serve prompt notice to Parent of any demands for appraisal of any
shares of Company Common Stock, withdrawals of such demands and any
other instruments served pursuant to the Delaware Law received
by the Company, and Parent shall have the right to participate in
all negotiations and proceedings with respect to such demands.
Prior to the Effective Time, the Company shall not, without the
prior written consent of Parent, which consent shall not be
unreasonably withheld, delayed or conditioned make any payment with
respect to, or settle or offer to settle, any such demands, or
agree to do or commit to do any of the foregoing.
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(c) Cancellation of Treasury and Parent Owned
Stock. Each share of Company Common Stock held by the Company or
Parent, or any direct or indirect wholly-owned Subsidiary of the
Company or of Parent, immediately prior to the Effective Time shall
be cancelled and extinguished without any conversion thereof.
(d) Capital Stock of Purchaser. Each share of
common stock, par value $0.001, of Purchaser issued and
outstanding prior immediately to the Effective Time shall be
converted into one validly issued, fully paid and nonassessable
share
of common stock, par value $0.001 per share, of the Surviving
Corporation.
(e) Stock Options; Employee Stock Purchase
Plans; Restricted Stock.
(i) Each unexercised Company Option
outstanding at the Effective Time shall be assumed by Parent and
converted into an option to purchase common stock of Parent, par
value $0.01 per share (the "Parent Common Stock") in accordance
with this Section 2.6(e)(i). Each unexercised Company Option so
converted shall continue to have, and be subject to, the same terms
and conditions (including vesting schedule) as set forth in the
applicable Company Stock Option Plan and any agreements thereunder
immediately prior to the Effective Time, except that, as of the
Effective Time, (i) each Company Option shall be exercisable for
that number of whole shares of Parent Common Stock determined by
multiplying the number of shares of Company Common Stock subject
to the outstanding Company Option by the Exchange Ratio, rounded
down to the nearest whole number of shares of Parent Common Stock
and (ii) the per share exercise price for the shares of Parent
Common Stock issuable upon exercise of such Company Option so
converted shall be equal to the quotient determined by dividing the
exercise price per Company Share at which such Company Option
was exercisable immediately prior to the Effective Time by the
Exchange Ratio, rounded up to the nearest whole cent. The
"Exchange
Ratio" shall mean the quotient determined by dividing the Offer
Price by the Market Price per share of Parent Common Stock. No
later than five business days after the Closing, Parent shall
register the shares of Parent Common Stock issuable upon exercise
of
Company Option converted pursuant to this Section 2.6(e)(i) by
filing a registration statement on Form S-8 (or any successor form)
or another appropriate form with the SEC, and Parent shall use
commercial best efforts to maintain the effectiveness of such
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registration statement and maintain the current status of the
prospectus with respect thereto for so long as such options remain
outstanding. For purposes of this Section, "Market Price" per share
of Parent Common Stock shall be the average closing price per
share of Parent Common Stock on the Nasdaq for the ten trading days
selected by Parent and the Company by lot out of the 20 trading
days ending on and including the fifth trading day prior to the
Effective Time (the "Random Trading Days"). Parent and the Company
shall select the Random Trading Days at 5:00 p.m. New York time on
such fifth trading day. It is intended that Company Options
assumed by Parent shall qualify following the Effective Time as
incentive stock options as defined in Section 422 of the Code to
the
extent Company Options qualified as incentive stock options
immediately prior to the Effective Time and the provisions of this
Section shall be applied consistent with such intent.
(ii) Prior to the Effective Time, the
Company Purchase Plan shall be terminated. The rights of
participants in the Company Purchase Plan with respect to any
offering period then underway under such Company Purchase Plan
shall
be determined by treating the last business day prior to, or if
more administratively advisable, the last payroll date of Company
immediately prior to, the termination of the Company Purchase Plan,
as the last day of such offering period and by making such other
pro-rata adjustments as may be necessary to reflect the shortened
offering period but otherwise treating such shortened offering
period as a fully effective and completed offering period for all
purposes under such Company Purchase Plan. Prior to the Effective
Time, Company shall take all actions (including, if appropriate,
amending the terms of such Company Purchase Plan) that are
necessary to give effect to the transactions contemplated by this
Section 2.6(e)(ii).
(iii) Each share of restricted (i.e.
subject to a lapsing right of repurchase or risk of forfeiture)
Company Common Stock granted under the Company's 1998 Stock Plan,
1999 Director Equity Plan, or under certain Protective Covenants
Agreements by and between the Company and each of Noel McMichael
and Paul Owen, executed in connection with the acquisition of
Marketleap.com, Inc. (the "Restricted Company Stock"), issued and
outstanding as of immediately prior to the Effective Time shall
be converted into the right to receive the Merger Consideration
subject to the applicable terms and conditions of the corresponding
Restricted Company Stock award agreement and Company Stock Option
Plan pursuant to which such Restricted Company Stock has been
granted. Merger Consideration in respect of Restricted Company
Stock shall be payable at such times as Restricted Company Stock
would have become vested pursuant to the applicable vesting
schedules contained in the Restricted Company Stock award
agreements in
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effect as of the date hereof, subject to acceleration as provided
in employment or other agreements between the Company and each
holder of Restricted Company Stock or the Company Stock Option Plan
under which it was granted.
(f) Adjustments to Merger Consideration. The
Merger Consideration shall be adjusted to reflect fully the
appropriate effect of any stock split, reverse stock split, stock
dividend (including any dividend or distribution of securities
convertible into Company Common Stock), reorganization,
recapitalization, reclassification or other like change with
respect to
Company Common Stock having a record date on or after the date
hereof and prior to the Effective Time.
2.7 Surrender of Certificates.
(a) Payment Agent. Promptly following the
date of this Agreement, Parent shall select a bank or trust company
reasonably satisfactory to the Company to act as the payment agent
(the "Payment Agent") in the Merger, and shall enter into a
customary agreement with the Payment Agent, in a form reasonably
satisfactory to the Company.
(b) Parent to Provide Cash. From time to
time after the Effective Time, Parent shall promptly provide, or
cause the Surviving Corporation to promptly provide, to the Paying
Agent funds in amounts and at the times necessary for the payment
of the Merger Consideration pursuant to this Article II upon
surrender of Certificates (such funds amount being referred to
herein
as the "Merger Fund").
(c) Payment Procedures. As soon as reasonably
practicable after the Effective Time, Parent and Purchaser shall
cause the Payment Agent to mail (and shall make available for
collection by hand) to each holder of record (as of immediately
prior
to the Effective Time) of a certificate or certificates (the
"Certificates") which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (other than
Appraisal Shares) whose shares were converted into the right to
receive the Merger Consideration pursuant to this Article II: (i) a
letter of transmittal (in customary form which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates
to the Payment Agent) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger
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Consideration payable in respect thereof pursuant to this Article
II (which instructions shall provide that, at the election of the
surrendering holder, Certificates may be surrendered, and the
Merger Consideration in exchange therefor collected, by hand
delivery)
Upon surrender of Certificates for cancellation to the Payment
Agent, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, and
such other documents as may reasonably be required by the Payment
Agent, the holder of such Certificates shall be entitled to receive
in exchange therefor the amount of Merger Consideration to which
such holder is entitled pursuant to this Article II, and the
Certificates so surrendered shall forthwith be cancelled. Until so
surrendered, outstanding Certificates will be deemed from and after
the Effective Time, for all corporate purposes, to evidence the
right to receive the Merger Consideration payable in respect
thereof pursuant to this Article II.
(d) Required Withholding. Each of the Payment
Agent, Parent and the Surviving Corporation shall be entitled to
deduct and withhold from any consideration payable or otherwise
deliverable pursuant to this Agreement such amounts as may be
required to be deducted or withheld therefrom under the Code or any
provision of state, local or foreign tax law. To the extent
such amounts are so deducted or withheld, the amount of such
consideration shall be treated for all purposes under this
Agreement
as having been paid to the Person to whom such consideration would
otherwise have been paid and (ii) Parent shall provide, or cause
the Payment Agent to provide, to such Person written notice of the
amounts so deducted or withheld.
(e) No Liability. Notwithstanding anything to
the contrary in this Section 2.7, neither the Payment Agent,
the Surviving Corporation nor any party hereto shall be liable to a
holder of shares of Company Common Stock for any amount properly
paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(f) Investment of Merger Fund. The Payment
Agent shall invest the cash in the Merger Fund as directed by
Parent on a daily basis; provided that no such investment or loss
thereon shall affect the amounts payable to Company stockholders
pursuant to this Article II. Any interest and other income
resulting from such investment shall become a part of the Merger
Fund,
and any amounts in excess of the amounts payable to Company
stockholders pursuant to this Article II shall promptly be paid to
Parent.
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(g) Termination of Merger Fund. Any portion
of the Merger Fund which remains undistributed to the holders of
Certificates eighteen (18) months after the Effective Time shall,
at the request of the Surviving Corporation, be delivered to the
Surviving Corporation or otherwise on the instruction of the
Surviving Corporation, and any holders of the Certificates who have
not
surrendered such Certificates in compliance with this Section 2.7
shall after such delivery to Surviving Corporation look only to
the Surviving Corporation for the Merger Consideration pursuant to
this Article II.
2.8 No Further Ownership Rights in Company Common
Stock. From and after the Effective Time, all cash paid upon the
surrender for exchange of shares of Company Common Stock in
accordance with the terms hereof shall be deemed to have been paid
in
full satisfaction of all rights pertaining to such shares of
Company Common Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of
Company Common Stock which were outstanding immediately prior to
the Effective Time, other than transfers to reflect, in accordance
with settlement procedures, trades effected prior to the
Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall
be cancelled and exchanged as provided in this Article II.
2.9 Lost, Stolen or Destroyed Certificates. In the
event any Certificates shall have been lost, stolen or destroyed,
the Payment Agent shall pay in exchange for such lost, stolen or
destroyed Certificates, upon the making of an affidavit of that
fact by the holder thereof, the amount in cash as may be payable
therefor pursuant to Section 2.6.
2.10 Further Action. At and after the Effective Time,
the officers and directors of Parent and the Surviving
Corporation will be authorized to execute and deliver, in the name
and on behalf of the Company and Purchaser, any deeds, bills of
sale, assignments or assurances and to take and do, in the name and
on behalf of the Company and Purchaser, any other actions and
things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to
and under any of the rights, properties or assets acquired or to be
acquired by the Surviving Corporation as a result of, or in
connection with, the Merger.
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ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and
Purchaser, except as disclosed in the Company SEC Reports (as
defined in
Section 3.4(a)) filed on or prior to the date hereof and except as
disclosed in the disclosure letter supplied by Company to Parent
dated as of the date hereof (the "Company Disclosure Letter"), as
follows:
3.1 Organization; Standing and Power; Charter
Documents; Subsidiaries.
(a) Organization; Standing and Power. The
Company and each of its Subsidiaries is a corporation or other
organization duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or
organization, has the requisite power and authority to own, lease
and operate its properties and to carry on its business as now
being conducted, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such
qualification necessary other than in such jurisdictions where the
failure
to be so organized, existing, qualified and in good standing,
individually or in the aggregate, would not reasonably be expected
to
have a Material Adverse Effect on the Company (as defined in
Section 9.3(e)). For purposes of this Agreement, "Subsidiary,"
when
used with respect to any party, shall mean any corporation or other
organization, whether incorporated or unincorporated, at least a
majority of the securities or other interests of which by their
terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its
subsidiaries, or by such party and one or more of its subsidiaries.
(b) Charter Documents. The Company has
delivered or made available to Parent: (i) a true and correct copy
of
the Certificate of Incorporation and Bylaws of the Company, each as
amended to date (collectively, the "Company Charter Documents")
and (ii) the certificate of incorporation and bylaws, or like
organizational documents (collectively, "Subsidiary Charter
Documents"), of each of its Subsidiaries, and each such instrument
is in full force and effect. The Company is not in violation of
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any of the provisions of the Company Charter Documents and each of
its Subsidiaries are not in violation of their respective
Subsidiary Charter Documents,except as would not reasonably be
expected to have a Material Adverse Effect on the Company.
(c) Subsidiaries. Exhibit 21.1 to the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2004 includes all the Subsidiaries of the Company which
are Subsidiaries as of the date hereof. All the outstanding
shares of capital stock of, or other equity interests in, each such
Subsidiary have been validly issued and are fully paid and
nonassessable and are, except as set forth in such Exhibit 21.1,
owned directly or indirectly by the Company, free and clear of all
pledges, claims, liens, charges,encumbrances, options and security
interests of any kind or nature whatsoever, including any
restriction on the right to vote, sell or otherwise dispose of such
capital stock or other ownership interests, except for
restrictions imposed by applicable securities laws (collectively,
"Liens"), except in each case as would not have a Material
Adverse Effect on the Company.
3.2 Capital Structure.
(a) Capital Stock. The authorized capital
stock of the Company consists of: (i) 100,000,000 shares of Common
Stock, par value $0.001 per share, and (ii) 5,000,000 shares of
preferred stock, par value $0.001 per share (the "Company Preferred
Stock"), 1,000,000 of which shares have been designated as Series A
Participating Preferred Stock ("Company Series A Preferred
Stock") and have been reserved for issuance upon exercise of
preferred stock purchase rights (the "Company Rights") issuable
pursuant to that certain Preferred Stock Rights Agreement, dated as
of March 4, 2005 between the Company and ComputerShare Investor
Services LLC (the "Company Rights Agreement"). At the close of
business on March 23, 2005: (i) 37,237,172 shares of Company Common
Stock were issued and outstanding, (ii) 633,339 shares of Company
Common Stock were issued and held by the Company in its treasury,
and (iii) no shares of Company Series A Preferred Stock were issued
and outstanding. All of the outstanding shares of capital
stock of the Company are, and all shares of capital stock of the
Company which may be issued as contemplated or permitted by this
Agreement will be, when issued, duly authorized and validly issued,
fully paid and nonassessable and not subject to any statutory
preemptive rights.
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(b) Stock Options. As of the close of
business on March 23, 2005: (i) 6,584,328 shares of Company Common
Stock
are subject to issuance pursuant to outstanding options to purchase
Company Common Stock under the Company Stock Option Plans
(equity or other equity-based awards, whether payable in cash,
shares or otherwise granted under or pursuant to the Company Stock
Option Plans are referred to in this Agreement, but excluding the
Restricted Company Stock, are referred to in this Agreement as
"Company Options"), and (ii) as of March 23, 2005, 5,687,339 shares
of Company Common Stock are reserved for future issuance under
the Company Purchase Plans. All shares of Company Common Stock
subject to issuance under the Company Stock Option Plans and the
Company Purchase Plan, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable,
would be duly authorized,validly issued, fully paid and
nonassessable. There are no outstanding or authorized stock
appreciation,
phantom stock, profit participation or other similar rights with
respect to the capital stock of the Company. The Company has made
available to Parent true and correct lists, dated as of March 23,
2005 of all holders of Company Options, the number of Company
Options held, exercise prices and the number of Company Options
vested as of March 23, 2005.
(c) Voting Debt. No bonds, debentures, notes
or other indebtedness of the Company having the right to vote on
any maters on which stockholders of the Company may vote ("Voting
Debt") is issued or outstanding as of the date hereof.
(d) Other Securities. Except as otherwise set
forth in this Section 3.2, as of the date hereof, except for the
exercises or conversions of options, warrants or other securities
outstanding as of the date hereof, there are no securities,
options, warrants,calls, rights, commitments, agreements,
arrangements, rights of first refusal or undertakings of any kind
to which
the Company or any of its Subsidiaries is a party or by which any
of them is bound obligating the Company or any of its Subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock, Voting Debt or other
voting
securities of the Company or any of its Subsidiaries, or obligating
the Company or any of its Subsidiaries to issue, grant, extend
or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking.
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3.3 Authority; Non-Contravention; Necessary Consents.
(a) Authority. The Company has all requisite
corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby
(including the Offer and the Merger). The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby has been duly authorized by all necessary
corporate
action on the part of Company and no other corporate proceedings on
the part of Company are necessary to authorize the execution
and delivery of this Agreement or to consummate transactions
contemplated hereby (including the Offer and the Merger), subject
only
to the adoption of this Agreement by the Company's stockholders, if
and to the extent required by applicable law, and the filing of
the Certificate of Merger pursuant to Delaware Law. This Agreement
has been duly executed and delivered by the Company and,
assuming due execution and delivery by Parent and Purchaser,
constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or similar
laws relating to creditors' rights and general principles of
equity.
(b) Non-Contravention. The execution and
delivery of this Agreement by the Company does not, and performance
of this Agreement by the Company will not: (i) conflict with or
violate the Company Charter Documents or any Subsidiary Charter
Documents of any Subsidiary of the Company, (ii) subject to
obtaining the adoption of this Agreement by the Company's
stockholders,
if and to the extent required by applicable law, and compliance
with the requirements set forth in Section 3.3(c), conflict with or
violate any Legal Requirement applicable to the Company or any of
its Subsidiaries or by which the Company or any of its
Subsidiaries or any of their respective properties is bound, or
(iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default)
under, or give to others any rights of payment, termination,
amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the properties or assets of the
Company
or any of its Subsidiaries pursuant to, any Company Material
Contract (as defined in Section 3.12) except, with respect to
clause (ii) or (iii), for any such conflicts, violations, breaches,
defaults or other occurrences which (a) would not substantially
impair the Company from performing its obligations hereunder and
(b) would not have a Material Adverse Effect on Company.
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(c) Necessary Consents. No consent, approval,
order or authorization of, or registration, declaration or
filing with any supranational, national, state, municipal, local or
foreign government, any instrumentality, subdivision, court,
administrative agency or commission or other governmental authority
or instrumentality, or any quasi-governmental or private body
exercising any regulatory, taxing, importing or other governmental
or quasi-governmental authority (a "Governmental Entity") is
required to be obtained or made by the Company or its Subsidiaries
in connection with the execution, delivery and consummation of
this Agreement and the transactions contemplated hereby (including
the Offer and the Merger), except for: (A) the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities
of other states in which Company and/or Parent are qualified to do
business, and (B) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be
required under applicable federal, foreign and state securities
(or related) laws and antitrust and trade competition laws
(including the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as
amended (the "HSR Act")). The consents, approvals, orders,
authorizations, registrations, declarations and filings set forth
in
(A) and (B) are referred to herein as the "Necessary Consents."
3.4 SEC Filings; Financial Statements.
(a) SEC Filings. The Company has timely filed
or furnished all required registration statements, prospectuses,
reports, schedules, forms, statements and other documents required
to be filed or furnished by it with the SEC since March 31, 2002.
The Company has made available to Parent all such registration
statements, prospectuses, reports, schedules, forms, statements and
other documents in the form filed with the SEC. All such required
registration statements, prospectuses, reports, schedules, forms,
statements and other documents (including those that the Company
may file or furnish subsequent to the date hereof), as amended, are
referred to herein as the "Company SEC Reports." As of their
respective dates (or if subsequently amended or supplemented, on
the
date of such amendment or supplement), the Company SEC Reports (i)
were prepared in accordance and complied in all material respects
with the requirements of the Securities Act of 1933, as amended
(the "Securities Act"), the Exchange Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such
Company SEC Reports and (ii) did not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. None of the Company's Subsidiaries is, or
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has at any time been, required to file or furnish any form, reports
or other documents with the SEC, and none of the Company's
Subsidiaries is, or has at any time been, required to file or
furnish any material forms, reports or other documents with any
foreign, state or other securities regulatory body other than
Nasdaq.
(b) Financial Statements. Each of the
consolidated financial statements (including, in each case, any
related
notes thereto) contained in the Company SEC Reports (the "Company
Financials"): (i) complied as to form in all material respects
with the published rules and regulations of the SEC with respect
thereto, (ii) was prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited interim
financial statements, for normal and recurring year-end
adjustments and as may be permitted by the SEC on Form 10-Q, 8-K or
any successor or like form under the Exchange Act), and (iii)
fairly presented (and with respect to unaudited interim financial
statements fairly presented in all material respects) the
consolidated financial position of the Company as at the respective
dates thereof and the consolidated results of the Company's
operations and cash flows for the periods indicated. The balance
sheet of the Company contained in the Company SEC Reports as of
December 31, 2004 is hereinafter referred to as the "Company
Balance Sheet." The books and records of the Company and its
Subsidiaries have been maintained in accordance with past practice
and GAAP. PricewaterhouseCoopers LLP has not resigned or been
dismissed as independent public accountant of the Company as a
result of or in connection with any disagreement with the Company
on
a matter of accounting practices which materially impacts or would
require the restatement of any previously issued financial
statements, covering one or more years or interim periods for which
the Company is required to provide financial statements, such
that they should no longer be relied upon.
(c) The Schedule 14D-9 and, if applicable, the
Proxy Statement (and any amendment thereof or supplement
thereto) will comply as to form in all material respects with
applicable federal securities laws. The Schedule 14D-9 and, if
applicable, the Proxy Statement, on the date filed with the SEC and
the date first published, sent or given to the Company
Securityholders, will not contain any untrue statement of a
material fact or omit to state any material fact required to be
stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading; provided, however, that no representation or warranty
is made by the Company with respect to information supplied by
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Parent or Purchaser in writing for inclusion or incorporation by
reference in the Schedule 14D-9 and the Proxy Statement. The
information provided by the Company in writing to the Parent or
Purchaser for inclusion or incorporation by reference in the
Schedule TO or the Offer Documents will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(d) The Company has designed and implemented
disclosure controls and procedures, within the meaning of
Rule 13a-15(e) of the Exchange Act, to ensure that material
information relating to the Company, including its consolidated
Subsidiaries, is made known to the management of the Company by
others within those entities, and (i) has disclosed, based on its
most recent evaluation, to the Parent and to the Company's outside
auditors and the audit committee of the Company Board (A) all
significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting (as
defined in rule 13a-15(f) of the Exchange Act) which are reasonably
likely to adversely affect the Company's or its Subsidiaries'
ability to record, process, summarize and report financial data,
and (B) any fraud, whether material or not material, that involves
management or other employees of the Company or its Subsidiaries
who have or had a significant role in the Company's internal
controls over financial reporting. The certificates of the Chief
Executive Officer and Chief Financial Officer of the Company
required by Rule 13a-14 under the Exchange Act with respect to the
Company SEC Reports, as applicable, were true and correct as of
the date made.
(e) Each of the Company and its Subsidiaries
maintains accurate books and records reflecting its assets and
liabilities and maintains effective internal accounting controls
over financial reporting as required by Rule 13a-154 or
Rule 15d-15, as applicable, of the Exchange Act, that provide
assurance that (i) transactions are executed with management's
authorization; (ii) transactions are recorded as necessary to
permit preparation of the consolidated financial statements of the
Company and to maintain accountability for the Company's
consolidated assets; (iii) access to the Company's consolidated
assets is
permitted only in accordance with management's authorization; (iv)
the reporting of the Company's consolidated assets is compared
with existing assets at regular intervals; and (v) accounts, notes
and other receivables and inventory are recorded accurately,
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and proper and adequate procedures are implemented to effect the
collection thereof on a current and timely basis. Further, to the
Knowledge of the Company and its Subsidiaries, no facts or
circumstances exist as of the date hereof that would reasonably be
expected to prevent or otherwise delay the assessment of management
of the Company of internal control over financial reporting
that concludes that the internal control over financial reporting
of the Company and its Subsidiaries is effective as required by
Section 404 of the Sarbanes-Oxley Act as of the time such
assessment is required.
(f) The Company has provided or made available
to Parent true and complete copies of all comment letters
received by the Company from the SEC since March 31, 2001 and all
responses to such comment letters by or on behalf of the Company.
3.5 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Reports on file with the SEC, since
the Balance Sheet Date and through the date hereof, each of the
Company and its Subsidiaries has conducted its respective business
in the ordinary course of business consistent with past practice
and there has not been:
(a) Any Material Adverse Effect on the
Company;
(b) any declaration, setting aside or payment
of any dividend on, or other distribution (whether in cash, stock
or property) in respect of, any of the Company's or any of its
Subsidiaries' capital stock, or any purchase, redemption or other
acquisition by the Company or any of its Subsidiaries of any of the
Company's capital stock or any other securities of the Company
or its Subsidiaries or any options, warrants, calls or rights to
acquire any such shares or other securities except for repurchases
from Employees following their termination pursuant to the terms of
their pre-existing stock option or purchase agreements;
(c) any split, combination or reclassification
of any of the Company's or any of its Subsidiaries' capital
stock;
(d) any grant by the Company or any of its
Subsidiaries to any current or former director, officer or employee
of the Company or any of its Subsidiaries of any increase in
compensation or pay any bonus, except for non-material increases of
cash or equity compensation in the ordinary course of business
granted to employees who are not executive officers of the Company;
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(e) any grant by the Company or any of its
Subsidiaries to any such current or former director, officer or
employee of any increase in severance, retention or termination
pay, except to the extent required under any agreement (or in the
case of any employee not covered by an employment agreement to the
extent granted in accordance with the Company's employment
compensation policies that have been provided in writing to Parent)
in each case in effect as the date hereof;
(f) any amendment or modification to any
Company Options or other equity-based compensation awards;
(g) any material change in financial or tax
accounting methods, principles or practices by the Company or any
of its Subsidiaries except insofar as may have been required by a
change in GAAP or Law and have been disclosed in Company SEC
Reports;
(h) any material Tax election by the Company
or any of its Subsidiaries or settlement or compromise by the
Company or any of its Subsidiaries of any material Tax liability or
refund;
(i) any incurrence, assumption or guarantee by
the Company or any of its Subsidiaries of any Indebtedness
individually or in the aggregate in excess of $1,000,000, other
than in the ordinary course of business;
(j) any creation or assumption by the Company
or any of its Subsidiaries of any Lien on any material asset of
the Company or any of its Subsidiaries other than in the ordinary
course of business;
(k) any making of any loans, advances or
capital contributions to, or investments in, any other Person,
other
than (A) to the Company or any direct or indirect wholly-owned
Subsidiary of the Company, and (B) other than advances of expenses
to employees, consultants or directors made in the ordinary course
of business;
(l) any write off by the Company or any of its
Subsidiaries as uncollectible any notes or accounts receivable,
except for write offs in the ordinary course of business consistent
with past practice;
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(m) any cancellation of any material debts or
waiver of any material claims or rights by the Company or any of
its Subsidiaries;
( n) (A) any direct or indirect acquisition by
the Company or any of its Subsidiaries, or agreement to acquire,
by merging or consolidating with, or by purchasing or by any other
manner, any equity interest in, business of or any substantial
portion of the assets of, any Person or any acquisition by the
Company or any of its Subsidiaries of any assets that are material
to the Company and its Subsidiaries taken as a whole, (B) any sale,
lease, license, Lien or other disposition of any Intellectual
Property of the Company or any of its Subsidiaries, other than
sales and licenses of products to customers in the ordinary course
of business, (C) any incurrence or agreement to incur any new
capital expenditures by the Company or any of its Subsidiaries that
are in excess of $1,000,000 in any calendar quarter, or (D) any
assignment, termination (other than pursuant to its terms) or
relinquishment by the Company or any of its Subsidiaries of any
contract, license or other right which produced net revenue to the
Company in excess of $250,000 during fiscal year 2004;
(o) any violation of any Legal Requirement by
the Company or any of its Subsidiaries applicable to the Company
or any of its Subsidiaries or by which the Company or any of its
Subsidiaries or any of their respective businesses or properties
is bound, except for conflicts, violations and defaults that would
not have a Material Adverse Effect on the Company; or
(p) any authorization, commitment or agreement
to take any action referred to in this Section 3.5.
3.6 Taxes.
(a) For the purposes of this Agreement, the
term "Tax" or, collectively, "Taxes," shall mean any and all
federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities,
including
taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and
additions imposed with respect to such amounts, and any obligations
with respect to such amounts arising as a result of being a
member of an affiliated, consolidated, combined or unitary group
for any period or under any agreements or arrangements with any
other Person and including any liability for taxes of a predecessor
entity. The Company and each of its Subsidiaries have filed
-28-
all material federal, state, local and foreign returns, estimates,
information statements and reports relating to Taxes
("Tax Returns") required to be filed by any of them and have paid,
or have adequately reserved (in accordance with GAAP) for the
payment of, all Taxes required to be paid (whether or not shown on
any Tax Returns), and the most recent financial statements
contained in the Company SEC Reports reflect an adequate reserve
(in accordance with GAAP) for all Taxes payable by the Company and
its Subsidiaries through the date of such financial statements.
(b) No material deficiencies for any Taxes
have been asserted or assessed, or, to the Knowledge (as defined in
Section 9.3(b)) of the Company, proposed, against the Company or
any of its Subsidiaries that are not subject to adequate reserves
(in accordance with GAAP). No audit or other examination of any
Tax Return of the Company or any of its Subsidiaries is presently
in progress, nor has the Company or any of its Subsidiaries been
notified of any request for such an audit or other examination.
(c) Except as set forth in Section 3.6(c) of
the Company Disclosure Letter, none of the Company and its
Subsidiaries is party to any tax-sharing, allocation or
indemnification agreement.
(d) Neither the Company nor any of its
Subsidiaries (A) has been a member of an affiliated group filing a
consolidated federal Tax Return (other than a group the common
parent of which was the Company) or (B) has any liability for the
Taxes of any Person (other than the Company or any of its
Subsidiaries) under Reg. 1.1502-6 (or any similar provision of
state,
local, or foreign law), as a transferee or successor, by contract,
or otherwise.
(e) None of the Company and its Subsidiaries
has constituted either a "distributing corporation" or a
"controlled corporation" (within the meaning of Section 355(a) (1)
(A) of the Code) in a distribution of stock to which Section 355
of the Code (or so much of Section 356 of the Code as relates to
Section 355 of the Code) applies and which occurred within two (2)
years of the date of this Agreement.
(f) Each of the Company and its Subsidiaries
currently computes its taxable income using the accrual method of
accounting and has used the accrual method of accounting to compute
its taxable income for all taxable years ending on or after
-29-
March 31, 1998. None of the Company and its Subsidiaries has
agreed, or is required, to make any material adjustment under
Section 481 of the Code affecting any taxable year ending on or
after March 31, 1998. None of the Company and its Subsidiaries has
made any, or is obligated under any Contract or agreement to make
any, payment that is or was subject to limits on deductibility
under Code Section 162(m).Neither the Company nor any of its
Subsidiaries is a party to any agreement, contract, arrangement, or
plan that has resulted or would result, separately or in the
aggregate, in the payment of any "excess parachute payment" within
the
meaning of Code 280G (or any corresponding provision of state,
local or foreign Tax law) in connection with the transactions
contemplated hereunder.
(g) The Company and its Subsidiaries have made
available to Parent correct and complete copies of (i) all of
their material Tax Returns filed since March 31, 2001, (ii) all
audit reports, letter rulings, technical advice memoranda and
similar documents issued by a Governmental Authority within the
past five (5) years relating to the federal, state, local or
foreign Taxes due from or with respect to the Company and its
Subsidiaries, and (iii) any closing letters or agreements entered
into by the Company or any of its Subsidiaries with any
Governmental Authority within the past five (5) years with respect
to Taxes.
(h) To the Knowledge of the Company, none of
the Company and its Subsidiaries is or has been a party to a
"reportable transaction" as defined in Treasury Regulations Section
1.6011-4(b).
3.7 Intellectual Property.
(a) As used herein, the term "Intellectual
Property" means all trademarks, service marks, trade names,
Internet domain names, designs, insignia, logos, slogans, other
similar designators of source or
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