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Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CLICK HOLDING CORP.,
CLICK ACQUISITION CORP.
AND
DOUBLECLICK INC.
DATED AS OF APRIL 23, 2005
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TABLE OF CONTENTS
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ARTICLE I THE
MERGER.............................................................................................
1
1.1 Effective Time of the
Merger..........................................................................
1
1.2
Closing...............................................................................................
1
1.3 Effects of the
Merger.................................................................................
2
1.4 Certificate of
Incorporation..........................................................................
2
1.5
By-laws...............................................................................................
2
1.6 Directors and Officers of the Surviving
Corporation...................................................
2
ARTICLE II CONVERSION OF
SECURITIES..............................................................................
2
2.1 Conversion of Capital
Stock...........................................................................
2
2.2 Exchange of
Certificates..............................................................................
3
2.3 Company Stock
Options.................................................................................
5
2.4 Dissenting
Shares.....................................................................................
6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY........................................................
6
3.1 Organization, Standing and
Power......................................................................
7
3.2
Capitalization........................................................................................
8
3.3
Subsidiaries..........................................................................................
9
3.4 Authority; No Conflict; Required Filings and
Consents................................................. 11
3.5 SEC Filings; Financial Statements; Information
Provided............................................... 13
3.6 No Undisclosed
Liabilities............................................................................
14
3.7 Absence of Certain Changes or
Events..................................................................
14
3.8
Taxes.................................................................................................
14
3.9 Owned and Leased Real
Properties......................................................................
17
3.10 Title to Tangible Personal
Property...................................................................
17
3.11 Intellectual
Property.................................................................................
17
3.12
Contracts.............................................................................................
19
3.13
Litigation............................................................................................
20
3.14 Environmental
Matters.................................................................................
21
3.15 Employee Benefit
Plans................................................................................
22
3.16 Compliance With
Laws..................................................................................
24
3.17
Permits...............................................................................................
24
3.18 Labor
Matters.........................................................................................
25
3.19
Insurance.............................................................................................
25
3.20 Opinion of Financial
Advisor..........................................................................
25
3.21 Section 203 of the
DGCL...............................................................................
25
3.22 Brokers;
Fees.........................................................................................
25
3.23 Transactions with
Affiliates..........................................................................
26
3.24 Privacy and
Security..................................................................................
26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE
TRANSITORY SUBSIDIARY............................. 27
4.1 Organization, Standing and
Power......................................................................
27
4.2 Authority; No Conflict; Required Filings and
Consents................................................. 27
4.3 Information
Provided..................................................................................
28
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4.4 Operations of the Buyer and the Transitory
Subsidiary................................................. 29
4.5
Litigation............................................................................................
29
4.6
Financing.............................................................................................
29
4.7 Management
Arrangements...............................................................................
30
ARTICLE V CONDUCT OF
BUSINESS....................................................................................
30
5.1 Covenants of the
Company..............................................................................
30
5.2
Confidentiality.......................................................................................
34
5.3 Financing
Commitments.................................................................................
34
5.4 Zero Coupon
Notes.....................................................................................
36
ARTICLE VI ADDITIONAL
AGREEMENTS.................................................................................
36
6.1 No
Solicitation.......................................................................................
36
6.2 Proxy
Statement.......................................................................................
40
6.3 Nasdaq
Quotation......................................................................................
40
6.4 Access to
Information.................................................................................
40
6.5 Stockholders
Meeting..................................................................................
41
6.6 Legal
Requirements....................................................................................
41
6.7 Public
Disclosure.....................................................................................
42
6.8
Indemnification.......................................................................................
43
6.9 Notification of Certain
Matters.......................................................................
44
6.10 Exemption from Liability Under Section
16.............................................................
44
6.11 Employee
Compensation.................................................................................
45
6.12 Accrued Personal, Sick or Vacation
Time...............................................................
45
6.13 Service
Credit........................................................................................
45
6.14 No Benefit to Third
Party.............................................................................
46
6.15
Resignations..........................................................................................
46
ARTICLE VII CONDITIONS TO
MERGER.................................................................................
46
7.1 Conditions to Each Party's Obligation To Effect the
Merger............................................ 46
7.2 Additional Conditions to Obligations of the Buyer and the
Transitory Subsidiary....................... 46
7.3 Additional Conditions to Obligations of the
Company................................................... 47
ARTICLE VIII TERMINATION AND
AMENDMENT...........................................................................
48
8.1
Termination...........................................................................................
48
8.2 Effect of
Termination.................................................................................
49
8.3 Fees and
Expenses.....................................................................................
50
8.4
Amendment.............................................................................................
51
8.5 Extension;
Waiver.....................................................................................
51
ARTICLE IX
MISCELLANEOUS.........................................................................................
51
9.1 Nonsurvival of Representations, Warranties and
Agreements............................................. 51
9.2
Notices...............................................................................................
51
9.3 Entire
Agreement......................................................................................
52
9.4 No Third Party
Beneficiaries..........................................................................
52
9.5
Assignment............................................................................................
53
9.6
Severability..........................................................................................
53
9.7 Counterparts and
Signature............................................................................
53
9.8
Interpretation........................................................................................
53
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9.9 Governing
Law.........................................................................................
54
9.10
Remedies..............................................................................................
54
9.11 Submission to
Jurisdiction............................................................................
54
9.12 WAIVER OF JURY
TRIAL..................................................................................
54
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Exhibit A - Company Certificate of Incorporation
Exhibit B - Transitory Subsidiary By-laws
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TABLE OF DEFINED TERMS
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Reference in
Terms Agreement
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Acquired Company Plan Section 3.15(a)
Acquisition Proposal Section 6.1(f)
Affiliate Section 3.2(c)
Agreement Preamble
Alternative Acquisition Agreement Section 6.1(b)(ii)
Antitrust Laws Section 6.6(b)
Antitrust Order Section 6.6(b)
Bankruptcy and Equity Exception Section 3.4(a)
Business Day Section 1.2
Buyer Preamble
Buyer Material Adverse Effect Section 4.1
Certificate Section 2.2(b)
Certificate of Merger Section 1.1
Change in the Company Recommendation Section 6.1(b)
Closing Section 1.2
Closing Date Section 1.2
Code Section 2.2(f)
Commitment Letters Section 4.3(a)
Company Preamble
Company Balance Sheet Section 3.5(b)
Company Board Section 3.4(a)
Company Charter Documents Section 3.1(b)
Company Common Stock Section 2.1(b)
Company Disclosure Schedule Article III
Company Employees Section 3.15(a)
Company Employee Plans Section 3.15(a)
Company Leases Section 3.9(b)
Company Material Adverse Effect Section 3.1(a)
Company Material Contract Section 3.12(a)
Company Meeting Section 3.4(d)
Company Permits Section 3.17
Company Preferred Stock Section 3.2(a)
Company Recommendation Section 6.2
Company SEC Reports Section 3.5(a)
Company Stock Options Section 2.3(a)(i)
Company Stock Plans Section 2.3(a)(i)
Company Stockholder Approval Section 3.4(a)
Company Voting Proposal Section 3.4(a)
Company Warrants Section 3.2(b)
Confidentiality Agreement Section 5.2
Continuing Employees Section 6.11
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Reference in
Terms Agreement
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Contract Section 3.4(b)
Costs Section 6.8(a)
Debt Commitment Letter Section 4.6(a)
DGCL Preamble
Dissenting Shares Section 2.4(a)
Effective Time Section 1.1
Employee Benefit Plan Section 3.15(a)
Environmental Law Section 3.14(b)
Equity Commitment Letter Section 4.6(a)
Equity Participants Section 4.6(a)
ERISA Section 3.15(a)
ERISA Affiliate Section 3.15(a)
Exchange Act Section 3.3(a)
Exchange Agent Section 2.2(a)
Exchange Fund Section 2.2(a)
Foreign Benefit Plan Section 3.15(i)
GAAP Section 3.5(b)
Governmental Entity Section 3.4(c)
Hazardous Substance Section 3.14(c)
HSR Act Section 3.4(c)
Indebtedness Section 3.2(f)
Indemnified Parties Section 6.8(a)
Insurance Cap Section 6.8(c)
Intellectual Property Section 3.11(a)
Intellectual Property Licenses Section 3.11(b)
IRS Section 3.8(b)
Leases Section 3.9(b)
Liens Section 3.4(b)
Material Subsidiary Section 3.3(a)
Merger Preamble
Merger Consideration Section 2.1(c)
Notes Indenture Section 5.4
Option Consideration Section 2.3(b)
Outside Date Section 8.1(b)
Owned Real Property Section 3.9(a)
Pre-Closing Period Section 5.1
Privacy Rights Section 3.24(a)
Proxy Statement Section 3.5(c)
PSV Policies Section 6.12
Required Company Stockholder Vote Section 3.4(d)
Representatives Section 6.1(a)
SEC Section 3.3(a)
Securities Act Section 3.2(c)
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Reference in
Terms Agreement
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Senior Lenders Section 4.6(a)
Subsidiary Section 3.3(a)
Subsidiary Charter Documents Section 3.3(c)
Superior Proposal Section 6.1(f)
Surviving Corporation Section 1.3
Surviving Corporation Employee Plan Section 6.13
Tax Returns Section 3.8(a)
Taxes Section 3.8(a)
Transitory Subsidiary Preamble
2005 Annual Operating Plan Section 5.1(d)
Zero Coupon Notes Section 3.2(c)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered
into as
of April 23, 2005, by and among Click Holding Corp., a Delaware
corporation
(the "Buyer"), Click Acquisition Corp., a Delaware corporation
and a wholly
owned subsidiary of the Buyer (the "Transitory Subsidiary"), and
DoubleClick
Inc., a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of the Buyer and the Company
deem it
advisable and in the best interests of each corporation and
their respective
stockholders that the Buyer acquire the Company in order to
advance the
long-term business interests of the Buyer and the Company;
WHEREAS, the acquisition of the Company shall be effected
through a merger
(the "Merger") of the Transitory Subsidiary with and into the
Company in
accordance with the terms of this Agreement and the Delaware
General Corporation
Law (the "DGCL"), as a result of which the Company shall become
a wholly owned
subsidiary of the Buyer; and
WHEREAS, the respective Boards of Directors of the Buyer, the
Transitory
Subsidiary and the Company deem it advisable and in the best
interests of their
respective stockholders to consummate the Merger on the terms
and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
respective
representations, warranties, covenants and agreements set forth
below, and for
other good and valuable consideration, the receipt and
sufficiency of which are
hereby acknowledged, the Buyer, the Transitory Subsidiary and
the Company agree
as follows:
ARTICLE I
THE MERGER
1.1 Effective Time of the Merger. Subject to the provisions of
this
Agreement, at or prior to the Closing, the Buyer and the Company
shall jointly
prepare and cause to be filed with the Secretary of State of
Delaware a
certificate of merger (the "Certificate of Merger") in such form
as is required
by, and executed by the Company in accordance with, the relevant
provisions of
the DGCL and shall make all other filings or recordings required
under the DGCL.
The Merger shall become effective upon the filing of the
Certificate of Merger
with the Secretary of State of Delaware or at such later time as
is established
by the Buyer and the Company and set forth in the Certificate of
Merger (the
"Effective Time").
1.2 Closing. The closing of the Merger (the "Closing") shall
take place at
10:00 a.m., Eastern time, on a date to be specified by the Buyer
and the Company
(the "Closing Date"), which shall be no later than the second
Business Day after
satisfaction or waiver of the conditions set forth in Article
VII (other than
delivery of items to be delivered at the Closing and other than
satisfaction of
those conditions that by their nature are to be satisfied at the
Closing, it
being understood that the occurrence of the Closing shall remain
subject to the
delivery of such items and the satisfaction or waiver of such
conditions at the
Closing), at the offices of Wilmer Cutler Pickering Hale and
Dorr LLP, 399 Park
Avenue, New York, New York, unless another
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date, place or time is agreed to in writing by the Buyer and the
Company. For
purposes of this Agreement, a "Business Day" shall be any day
other than (a) a
Saturday or Sunday or (b) a day on which banking institutions
located in New
York, New York are permitted or required by law, executive order
or governmental
decree to remain closed.
1.3 Effects of the Merger. At the Effective Time, the separate
existence
of the Transitory Subsidiary shall cease and the Transitory
Subsidiary shall be
merged with and into the Company (the Company surviving the
Merger is sometimes
referred to herein as the "Surviving Corporation"). The Merger
shall have the
effects set forth in Section 259 of the DGCL.
1.4 Certificate of Incorporation. At the Effective Time, the
Certificate
of Incorporation of the Company, as in effect immediately prior
to the Effective
Time, shall be amended and restated to read in its entirety as
set forth in
Exhibit A attached hereto and, as so amended and restated, shall
be the
Certificate of Incorporation of the Surviving Corporation until
thereafter
amended in accordance with the provisions thereof and as
provided by applicable
law.
1.5 By-laws. At the Effective Time, the By-laws of the
Transitory
Subsidiary, as in effect immediately prior to the Effective Time
and as set
forth in Exhibit B attached hereto, shall become the By-laws of
the Surviving
Corporation until thereafter amended as provided by applicable
law, the
Certificate of Incorporation of the Surviving Corporation and
such By-laws.
1.6 Directors and Officers of the Surviving Corporation.
(a) The directors of the Transitory Subsidiary immediately prior
to
the Effective Time shall be the initial directors of the
Surviving Corporation,
each to hold office in accordance with the Certificate of
Incorporation and
By-laws of the Surviving Corporation.
(b) The officers of the Company immediately prior to the
Effective
Time shall be the initial officers of the Surviving Corporation,
each to hold
office in accordance with the Certificate of Incorporation and
By-laws of the
Surviving Corporation.
ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock. As of the Effective Time, by
virtue of
the Merger and without any action on the part of the holder of
any shares of the
capital stock of the Company or capital stock of the Transitory
Subsidiary:
(a) Capital Stock of the Transitory Subsidiary. Each share of
the
common stock, par value $0.01 per share, of the Transitory
Subsidiary issued and
outstanding immediately prior to the Effective Time shall be
converted into and
become one fully paid and nonassessable share of common stock,
$0.01 par value
per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Buyer-Owned Stock. All
shares
of common stock, $0.001 par value per share, of the Company
("Company Common
Stock") that
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are owned by the Company as treasury stock and any shares of
Company Common
Stock owned by the Buyer, the Transitory Subsidiary or any other
wholly owned
Subsidiary of the Buyer immediately prior to the Effective Time
shall be
cancelled and shall cease to exist and no stock of the Buyer or
other
consideration shall be delivered in exchange therefor.
(c) Merger Consideration for Company Common Stock. Subject
to
Section 2.2, each share of Company Common Stock (other than (i)
shares to be
cancelled in accordance with Section 2.1(b), (ii) shares owned
by any wholly
owned Subsidiary of the Company which shall remain outstanding
and (iii)
Dissenting Shares (as defined in Section 2.4(a) below)) issued
and outstanding
immediately prior to the Effective Time shall be automatically
converted into
the right to receive $8.50 in cash per share (the "Merger
Consideration"). As of
the Effective Time, all such shares of Company Common Stock
shall no longer be
outstanding and shall automatically be cancelled and shall cease
to exist, and
each holder of a certificate representing any such shares of
Company Common
Stock shall cease to have any rights with respect thereto,
except the right to
receive the Merger Consideration pursuant to this Section 2.1(c)
upon the
surrender of such certificate in accordance with Section 2.2,
without interest.
(d) Adjustments to Merger Consideration. The Merger
Consideration
shall be adjusted to reflect fully the effect of any
reclassification, stock
split, reverse split, stock dividend (including any dividend or
distribution of
securities convertible into Company Common Stock),
reorganization,
recapitalization or other like change with respect to Company
Common Stock
occurring (or for which a record date is established) after the
date hereof and
prior to the Effective Time.
2.2 Exchange of Certificates. The procedures for exchanging
certificates
representing shares of Company Common Stock for the Merger
Consideration
pursuant to the Merger are as follows:
(a) Exchange Agent. At or prior to the Effective Time (or
with
respect to the Merger Consideration expected to be funded out of
cash, cash
equivalents and marketable securities of the Company, as
promptly as practicable
thereafter), the Buyer (or with respect to Merger Consideration
expected to be
funded out of such cash, cash equivalents and marketable
securities of the
Company, the Company) shall deposit with American Stock Transfer
& Trust Company
or another bank or trust company mutually acceptable to the
Buyer and the
Company (the "Exchange Agent"), for the benefit of the holders
of shares of
Company Common Stock outstanding immediately prior to the
Effective Time, for
payment through the Exchange Agent in accordance with this
Section 2.2, cash in
an amount sufficient to make payment of the Merger Consideration
pursuant to
Section 2.1(c) in exchange for all of the outstanding shares of
Company Common
Stock (the "Exchange Fund").
(b) Exchange Procedures. Promptly after the Effective Time,
the
Buyer shall cause the Exchange Agent to mail to each holder of
record of a
certificate which immediately prior to the Effective Time
represented
outstanding shares of Company Common Stock (each, a
"Certificate") (i) a letter
of transmittal in customary form and (ii) instructions for
effecting the
surrender of the Certificates in exchange for the Merger
Consideration payable
with respect
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thereto. Upon surrender of a Certificate for cancellation to the
Exchange Agent,
together with such letter of transmittal, duly executed, the
holder of such
Certificate shall be entitled to receive in exchange therefor
the Merger
Consideration that such holder has the right to receive pursuant
to the
provisions of this Article II, and the Certificate so
surrendered shall
immediately be cancelled. In the event of a transfer of
ownership of Company
Common Stock which is not registered in the transfer records of
the Company, the
Merger Consideration may be paid to a person other than the
person in whose name
the Certificate so surrendered is registered, if such
Certificate is presented
to the Exchange Agent, accompanied by all documents required to
evidence and
effect such transfer and by evidence that any applicable stock
transfer taxes
have been paid. Until surrendered as contemplated by this
Section 2.2, each
Certificate shall be deemed at any time after the Effective Time
to represent
only the right to receive upon such surrender the Merger
Consideration as
contemplated by this Section 2.2.
(c) No Further Ownership Rights in Company Common Stock. All
Merger
Consideration paid upon the surrender for exchange of
Certificates evidencing
shares of Company Common Stock in accordance with the terms
hereof shall be
deemed to have been paid in satisfaction of all rights
pertaining to such shares
of Company Common Stock, and from and after the Effective Time
there shall be no
further registration of transfers on the stock transfer books of
the Surviving
Corporation of the shares of Company Common Stock which were
outstanding
immediately prior to the Effective Time. If, after the Effective
Time,
Certificates are presented to the Surviving Corporation or the
Exchange Agent
for any reason, they shall be cancelled and exchanged as
provided in this
Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange
Fund
which remains undistributed to the holders of Company Common
Stock for one year
after the Effective Time shall be delivered to the Buyer, upon
demand, and any
holder of Company Common Stock who has not previously complied
with this Section
2.2 shall look only to the Buyer (subject to abandoned property,
escheat and
similar laws) for payment of its claim for Merger Consideration
without
interest.
(e) No Liability. To the extent permitted by applicable law,
none of
the Buyer, the Transitory Subsidiary, the Company, the Surviving
Corporation or
the Exchange Agent shall be liable to any holder of shares of
Company Common
Stock delivered to a public official pursuant to any applicable
abandoned
property, escheat or similar law.
(f) Withholding Rights. Each of the Buyer and the Surviving
Corporation shall be entitled to deduct and withhold from the
consideration
otherwise payable pursuant to this Agreement to any holder of
shares of Company
Common Stock such amounts as it is required to deduct and
withhold with respect
to the making of such payment under the Internal Revenue Code of
1986, as
amended (the "Code"), or any other applicable state, local or
foreign tax law.
To the extent that amounts are so withheld by the Surviving
Corporation or the
Buyer, as the case may be, such withheld amounts (i) shall be
remitted by the
Buyer or the Surviving Corporation, as the case may be, to the
applicable
Governmental Entity, and (ii) shall be treated for all purposes
of this
Agreement as having been paid to the holder of the shares of
Company Common
Stock in respect of which such deduction and withholding was
made by the
Surviving Corporation or the Buyer, as the case may be.
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(g) Lost Certificates. If any Certificate shall have been
lost,
stolen or destroyed, upon the making of an affidavit of that
fact by the person
claiming such Certificate to be lost, stolen or destroyed, the
Exchange Agent
shall issue in exchange for such lost, stolen or destroyed
Certificate the
Merger Consideration deliverable in respect thereof pursuant to
this Agreement.
(h) Stock Transfer Books. At the close of business, New York
City
time, on the day the Effective Time occurs, the stock transfer
books of the
Company shall be closed and there shall be no further
registration of transfers
of shares thereafter on the records of the Company. From and
after the Effective
Time, the holders of Certificates representing shares of Company
Common Stock
outstanding immediately prior to the Effective Time shall cease
to have any
rights with respect to such shares, except as otherwise provided
in this
Agreement or by applicable law. On or after the Effective Time,
any Certificates
presented to the Exchange Agent or the Buyer for any reason
shall be canceled
against delivery of the Merger Consideration to which the
holders thereof are
entitled pursuant to Section 2.1(c).
2.3 Company Stock Options.
(a) The Company shall take such action as shall be required:
(i) to cause the vesting of any unvested options to purchase
Company Common Stock ("Company Stock Options") granted under any
stock option
plans or other equity-related plans of the Company (the "Company
Stock Plans")
to be accelerated in full effective immediately prior to the
Effective Time;
(ii) to effectuate the cancellation, as of the Effective
Time,
of all Company Stock Options outstanding immediately prior to
the Effective Time
(without regard to the exercise price of such Company Stock
Options); and
(iii) to cause each outstanding Company Stock Option to
represent on the first Business Day following the Effective Time
solely the
right to receive, in accordance with this Section 2.3, a lump
sum cash payment
in the amount of the Option Consideration (as defined below), if
any, with
respect to such Company Stock Option to no longer represent the
right to
purchase Company Common Stock or any other equity security of
the Company, the
Buyer, the Surviving Corporation or any other person or any
other consideration.
(b) Each holder of a Company Stock Option shall receive from
the
Buyer, in respect and in consideration of each Company Stock
Option so
cancelled, on the first Business Day following the Effective
Time, an amount
(net of applicable taxes) equal to the product of (i) the
excess, if any, of (A)
the Merger Consideration per share of Company Common Stock over
(B) the exercise
price per share of Company Common Stock subject to such Company
Stock Option,
multiplied by (ii) the total number of shares of Company Common
Stock subject to
such Company Stock Option (whether or not then vested or
exercisable), without
any interest thereon (the "Option Consideration"). In the event
that the
exercise price of any Company Stock Option is equal to or
greater than the
Merger Consideration, such Company Stock Option shall be
cancelled and have no
further force or effect.
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(c) As soon as practicable following the execution of this
Agreement, the Company shall mail to each person who is a holder
of Company
Stock Options a letter describing the treatment of and payment
for such Company
Stock Options pursuant to this Section 2.3 and providing
instructions for use in
obtaining payment for such Company Stock Options.
2.4 Dissenting Shares.
(a) Notwithstanding anything to the contrary contained in
this
Agreement, shares of Company Common Stock held by a holder who
is entitled to
demand and has made a demand for appraisal of such shares of
Company Common
Stock in accordance with the DGCL and has not voted in favor of
the adoption of
the Merger Agreement (any such shares being referred to as
"Dissenting Shares"
until such time as such holder fails to perfect or otherwise
loses such holder's
appraisal rights under the DGCL with respect to such shares)
shall not be
converted into or represent the right to receive Merger
Consideration in
accordance with Section 2.1, but shall be entitled only to such
rights as are
granted by the DGCL to a holder of Dissenting Shares.
(b) If any Dissenting Shares shall lose their status as such
(through failure to perfect or otherwise), then, as of the later
of the
Effective Time or the date of loss of such status, such shares
shall
automatically be converted into and shall represent only the
right to receive
Merger Consideration in accordance with Section 2.1, without
interest thereon,
upon surrender of the Certificates representing such shares.
(c) The Company shall give the Buyer: (i) prompt notice of
any
written demand for appraisal received by the Company prior to
the Effective Time
pursuant to the DGCL, any withdrawal of any such demand and any
other demand,
notice or instrument delivered to the Company prior to the
Effective Time
pursuant to the DGCL that relate to such demand; and (ii) the
opportunity to
participate in and direct all negotiations and proceedings with
respect to any
such demand, notice or instrument. The Company shall not make
any payment or
settlement offer prior to the Effective Time with respect to any
such demand,
notice or instrument unless the Buyer shall have given its
written consent to
such payment or settlement offer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyer and the
Transitory
Subsidiary that the statements contained in this Article III are
true and
correct, except as set forth in the disclosure schedule
delivered by the Company
to the Buyer and the Transitory Subsidiary and dated as of the
date of this
Agreement (the "Company Disclosure Schedule"). The Company
Disclosure Schedule
shall be arranged in sections and paragraphs corresponding to
the numbered and
lettered sections and paragraphs contained in this Article III,
and the
disclosure in any Section or paragraph shall qualify (a) the
corresponding
Section or paragraph in this Article III and (b) the
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<PAGE>
other sections and paragraphs in this Article III to the extent
that it is
readily apparent from a reading of such disclosure that it also
qualifies or
applies to such other sections and paragraphs.
3.1 Organization, Standing and Power.
(a) The Company (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its
incorporation, (ii) has all requisite corporate power and
authority to own,
lease and operate its properties and assets and to carry on its
business as now
being conducted and (iii) is duly qualified to do business and,
where applicable
as a legal concept, is in good standing as a foreign corporation
in each
jurisdiction in which the character of the properties it owns,
operates or
leases or the nature of its activities makes such qualification
necessary,
except (with respect to clause (iii) only) for such failures to
be so qualified
or in good standing, individually or in the aggregate, that are
not reasonably
likely to result in a Company Material Adverse Effect. For
purposes of this
Agreement, the term "Company Material Adverse Effect" means any
material adverse
change, event, circumstance or development with respect to, or
material adverse
effect on, the business, condition (financial or otherwise) or
results of
operations of the Company and its Subsidiaries, taken as a
whole, or any event
that would reasonably be expected to prevent the consummation of
the
transactions consummated hereby; provided, however, that none of
the following,
to the extent occurring after the date hereof, shall constitute,
or shall be
considered in determining whether there has occurred, a Company
Material Adverse
Effect:
(i) changes that are the result of economic factors
affecting
the national or world economy or acts of war or terrorism,
except to the extent
that such changes have a materially disproportionate effect on
the Company and
its Subsidiaries relative to other similarly situated
participants in the
industries or markets in which they operate;
(ii) changes that are the result of factors generally
affecting the industries or markets in which the Company
operates, except to the
extent that such changes have a materially disproportionate
effect on the
Company and its Subsidiaries relative to other similarly
situated participants
in the industries or markets in which they operate;
(iii) changes in law, rule or regulations or generally
accepted accounting principles or the interpretation
thereof;
(iv) any action taken pursuant to or in accordance with this
Agreement (including, without limitation, Section 6.6) or at the
request of the
Buyer;
(v) any fees or expenses reasonably incurred in connection
with the transactions contemplated by this Agreement;
(vi) any failure by the Company to meet any published
estimates of revenues or earnings for any period ending on or
after the date of
this Agreement and prior to the Closing (it being understood
that the facts and
circumstances giving rise to such failure may be deemed to
constitute and shall
be taken into account in determining whether there has been a
Company Material
Adverse Effect); and
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<PAGE>
(vii) a decline in the price of the Company Common Stock on
The NASDAQ National Market (it being understood that the facts
and circumstances
giving rise to such decline may be deemed to constitute and
shall be taken into
account in determining whether there has been a Company Material
Adverse
Effect).
(b) The Company has delivered or made available to the Buyer:
(i) a
true and correct copy of the Certificate of Incorporation and
Bylaws of the
Company, each as amended to date (together, the "Company Charter
Documents"),
and each such instrument is in full force and effect and no
other organizational
documents are applicable to or binding upon the Company. The
Company is not in
violation in any material respect of any of the provisions of
the Company
Charter Documents.
3.2 Capitalization.
(a) The authorized capital stock of the Company as of the date
of
this Agreement consists of 400,000,000 shares of Company Common
Stock and
5,000,000 shares of preferred stock, $0.001 par value per share
("Company
Preferred Stock"). As of April 22, 2005, (i) 126,115,021 shares
of Company
Common Stock were issued and outstanding, (ii) 14,864,755 shares
of Company
Common Stock were held in the treasury of the Company, (iii) no
shares of
Company Preferred Stock were issued or outstanding and (iv)
16,662,979 shares of
Company Common Stock were reserved for issuance under the
Company Stock Plans.
From April 22, 2005 until the date of this Agreement, no shares
of Company
Common Stock or Company Preferred Stock have been issued, except
for shares of
Company Common Stock pursuant to the exercise of Company Stock
Options.
(b) Section 3.2(b) of the Company Disclosure Schedule sets forth
a
complete and accurate list, as of the date hereof, of: (i) all
Company Stock
Plans, indicating for each Company Stock Plan, as of such date,
the number of
shares of Company Common Stock issued under such Plan, the
number of shares of
Company Common Stock subject to outstanding options under such
Plan and the
number of shares of Company Common Stock reserved for future
issuance under such
Plan; (ii) all outstanding Company Stock Options, indicating
with respect to
each such Company Stock Option the name of the holder thereof,
the Company Stock
Plan under which it was granted, the number of shares of Company
Common Stock
subject to such Company Stock Option, the exercise price, the
date of grant, and
the vesting schedule thereof; and (iii) all outstanding warrants
exercisable for
Company Common Stock ("Company Warrants"), indicating with
respect to each
Company Warrant, the name of the holder thereof, the number of
shares of Company
Common Stock subject to such outstanding warrant, the exercise
price, the date
of the grant and the vesting schedule thereof.
(c) Except (i) for the Company's Zero Coupon Convertible
Subordinated Notes due 2023 (the "Zero Coupon Notes"), (ii) the
Company Warrants
and the Company Stock Options as set forth on Section 3.2(b) of
the Company
Disclosure Schedule and (iii) as reserved for future grants
under Company Stock
Plans, as of the date of this Agreement, (A) there are no equity
securities of
any class of the Company, or any security exchangeable into or
exercisable for
such equity securities, issued, reserved for issuance or
outstanding and (B)
there are no options, warrants, equity securities, calls,
rights, commitments or
Contracts obligating the
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<PAGE>
Company or any of its Subsidiaries to issue, exchange, transfer,
deliver or
sell, or cause to be issued, exchanged, transferred, delivered
or sold,
additional shares of capital stock or other equity interests of
the Company or
any security or rights convertible into or exchangeable or
exercisable for any
such shares or other equity interests, or obligating the Company
or any of its
Subsidiaries to grant, extend, accelerate the vesting of,
otherwise modify or
amend or enter into any such option, warrant, equity security,
call, right,
commitment or agreement. The Company does not have any
outstanding stock
appreciation rights, phantom stock, performance based rights or
similar rights
or obligations. Neither the Company nor any of its Affiliates is
a party to or
is bound by any agreements or understandings with respect to the
voting
(including voting trusts and proxies) or sale or transfer
(including agreements
imposing transfer restrictions) of any shares of capital stock
or other equity
interests of the Company. For purposes of this Agreement, the
term "Affiliate"
when used with respect to any party shall mean any person who is
an "affiliate"
of that party within the meaning of Rule 405 promulgated under
the Securities
Act of 1933, as amended (the "Securities Act"). Except as
contemplated by this
Agreement, there are no registration rights, and there is no
rights agreement,
"poison pill," anti-takeover plan or other similar Contract with
respect to any
equity security of any class of the Company.
(d) All outstanding shares of Company Common Stock are, and
all
shares of Company Common Stock subject to issuance as specified
in Section
3.2(b) above, upon issuance on the terms and conditions
specified in the
instruments pursuant to which they are issuable, will be, duly
authorized,
validly issued, fully paid and nonassessable and not subject to
or issued in
violation of any purchase option, call option, right of first
refusal,
preemptive right, subscription right or any similar right under
any provision of
the DGCL, the Company Charter Documents or any agreement to
which the Company is
a party or is otherwise bound.
(e) There are no obligations, commitments or arrangements,
contingent or otherwise, of the Company, any of its Subsidiaries
or any of its
Affiliates to repurchase, redeem or otherwise acquire any shares
of Company
Common Stock or the capital stock of the Company, any of its
Subsidiaries or any
of its Affiliates.
(f) Section 3.2(f) of the Company Disclosure Schedule sets forth
a
complete and correct list, as of the date of this Agreement, of
each Contract
pursuant to which any Indebtedness (as defined below) of the
Company or its
Subsidiaries is outstanding or may be incurred or guaranteed in
an amount in
excess of $250,000, together with the amount outstanding
thereunder as of the
date of this Agreement. "Indebtedness" means (i) indebtedness
for borrowed
money, whether secured or unsecured, (ii) obligations under
conditional or
installment sale or other title retention agreement or
arrangement relating to
purchased property, (iii) capitalized lease obligations and (iv)
guarantees of
any of the foregoing of another person. No event has occurred
which either
entitles, or could entitle (with or without notice or lapse of
time or both) the
holder of any Indebtedness described in Section 3.2(f) of the
Company Disclosure
Schedule to accelerate, or which does accelerate, the maturity
of any such
Indebtedness.
3.3 Subsidiaries.
(a) Section 3.3(a) of the Company Disclosure Schedule sets
forth, as
of the date of this Agreement, for each Material Subsidiary of
the Company: (i)
its name; (ii) the
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<PAGE>
jurisdiction of organization; and (iii) the number of its
outstanding shares of
capital stock and the record and beneficial owner thereof (or a
statement that
the Company or a Material Subsidiary owns all of the outstanding
shares of
capital stock of such Material Subsidiary). For purposes of this
Agreement, (i)
the term "Subsidiary" means, with respect to any party, any
corporation,
partnership, trust, limited liability company or other
non-corporate business
enterprise in which such party (or another Subsidiary of such
party) holds stock
or other ownership interests representing (A) more that 50% of
the voting power
of all outstanding stock or ownership interests of such entity,
(B) the right to
receive more than 50% of the net assets of such entity available
for
distribution to the holders of outstanding stock or ownership
interests upon a
liquidation or dissolution of such entity or (C) a general or
managing
partnership interest in such entity, and (ii) the term "Material
Subsidiary"
means, with respect to the Company, any subsidiary listed on
Exhibit 21.1 to the
Annual Report on Form 10-K filed by the Company with the
Securities and Exchange
Commission (the "SEC") on March 16, 2005 pursuant to the
Securities Exchange Act
of 1934, as amended (the "Exchange Act").
(b) Each Material Subsidiary of the Company is a
corporation,
partnership or other entity duly organized, validly existing and
in good
standing (to the extent such concepts are applicable) under the
laws of the
jurisdiction of its incorporation or organization, has all
requisite corporate
or other power and authority to own, lease and operate its
properties and assets
and to carry on its business as now being conducted and as
proposed to be
conducted, and is duly qualified to do business and is in good
standing as a
foreign corporation or entity (to the extent such concepts are
applicable) in
each jurisdiction where the character of its properties owned,
operated or
leased or the nature of its activities makes such qualification
necessary,
except for such failures to be so organized, validly existing or
in good
standing, to have such power and authority or to be so qualified
or in good
standing that, individually or in the aggregate, are not
reasonably likely to
result in a Company Material Adverse Effect. All of the
outstanding shares of
capital stock and other equity securities or interests of each
Material
Subsidiary of the Company are duly authorized, validly issued,
fully paid,
nonassessable and free of preemptive rights and all such shares
(other than
directors' qualifying shares in the case of non-U.S.
Subsidiaries, all of which
the Company has the power to cause to be transferred for no or
nominal
consideration to the Company or the Company's designee) are
owned, of record and
beneficially, by the Company or another of its Subsidiaries free
and clear of
all security interests, liens, claims, pledges, agreements,
limitations in the
Company's voting rights, charges or other encumbrances. There
are no outstanding
or authorized options, warrants, rights, agreements or
commitments to which the
Company or any of its Subsidiaries is a party or which are
binding on any of
them providing for the issuance, disposition or acquisition of
any capital stock
of any Material Subsidiary of the Company. There are no
outstanding stock
appreciation, phantom stock or similar rights with respect to
any Material
Subsidiary of the Company. There are no voting trusts, proxies
or other
agreements or understandings with respect to the voting of any
capital stock of
any Material Subsidiary of the Company.
(c) The Company has made available to the Buyer complete and
accurate copies of the charter, by-laws or other organizational
documents of
each Material Subsidiary of the Company (the "Subsidiary Charter
Documents"),
and each such instrument is in full force and effect and no
other organizational
documents are applicable to or binding upon such
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<PAGE>
Subsidiaries. None of the Subsidiaries is in violation in any
material respect
of any of the provisions of its Subsidiary Charter
Documents.
(d) The Company does not control directly or indirectly or have
any
direct or indirect equity participation or similar interest in
any corporation,
partnership, limited liability company, joint venture, trust or
other business
association or entity which is not a Subsidiary of the Company,
other than
securities in a publicly traded company held for investment by
the Company or
any of its Subsidiaries and consisting of less than 5% of the
outstanding
capital stock of such company.
3.4 Authority; No Conflict; Required Filings and Consents.
(a) The Company has all requisite corporate power and authority
to
enter into this Agreement and, subject to the adoption of this
Agreement (the
"Company Voting Proposal") by the Company's stockholders under
the DGCL (the
"Company Stockholder Approval"), to perform its obligations and
consummate the
transactions contemplated by this Agreement. Without limiting
the generality of
the foregoing, the Board of Directors of the Company (the
"Company Board"), at a
meeting duly called and held, with all directors present voting
in favor, (i)
determined that the Merger is fair and in the best interests of
the Company and
its stockholders, (ii) approved and adopted this Agreement and
declared its
advisability in accordance with the provisions of the DGCL, and
(iii) directed
that this Agreement be submitted to the stockholders of the
Company for their
adoption and resolved to recommend that the stockholders of the
Company vote in
favor of the adoption of this Agreement. The execution, delivery
and performance
of this Agreement and the consummation of the transactions
contemplated by this
Agreement by the Company have been duly authorized by all
necessary corporate
action on the part of the Company, subject only to the required
receipt of the
Company Stockholder Approval. This Agreement has been duly
executed and
delivered by the Company and constitutes the valid and binding
obligation of the
Company, enforceable against the Company in accordance with its
terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and
similar laws of general applicability relating to or affecting
creditors' rights
and to general equity principles (the "Bankruptcy and Equity
Exception").
(b) The execution and delivery of this Agreement by the Company
do
not, and the consummation by the Company of the transactions
contemplated by
this Agreement shall not, (i) conflict with, or result in any
violation or
breach of, any provision of the Company Charter Documents or the
Subsidiary
Charter Documents, (ii) conflict with, or result in any
violation or breach of,
or constitute (with or without notice or lapse of time, or both)
a default (or
give rise to a right of termination, cancellation, modification
or acceleration
of any obligation or loss of any material benefit) under,
require a consent or
waiver under, constitute a change in control under, require the
payment of a
penalty or increased fees under or result in the imposition of
any mortgage,
right of first refusal, claim, license, limitation in voting
rights, security
interest, pledge, lien, charge or encumbrance ("Liens") on the
Company's or any
of its Subsidiaries' assets under, any of the terms, conditions
or provisions of
any lease, license, contract, subcontract, indenture, note,
option or other
agreement, instrument or obligation, written or oral, to which
the Company or
any of its Subsidiaries is a party or by which any of them or
any of their
properties or assets may be bound (each, a "Contract"), or (iii)
subject to
obtaining the
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<PAGE>
Company Stockholder Approval and compliance with the
requirements specified in
clauses (i) through (vi) of Section 3.4(c), conflict with or
violate any permit,
concession, franchise, license, judgment, injunction, order,
writ, decree,
statute, law, ordinance, rule, or regulation applicable to the
Company or any of
its Subsidiaries or any of its or their respective properties or
assets, except
in the case of clauses (ii) and (iii) of this Section 3.4(b) for
any such
conflicts, violations, breaches, defaults, terminations,
cancellations,
modifications, accelerations, losses, penalties, increased fees
or Liens, and
for any consents or waivers not obtained, that, individually or
in the
aggregate, are not reasonably likely to result in a Company
Material Adverse
Effect.
(c) No consent, approval, action, license, permit, order,
certification, concession, franchise or authorization of, or
registration,
declaration, notice or filing with, any federal, state or local,
U.S. or foreign
court, arbitrational tribunal, administrative agency or
commission or other
governmental or regulatory authority, agency or instrumentality
(a "Governmental
Entity") or any stock market or stock exchange on which shares
of Company Common
Stock are listed for trading is required by or with respect to
the Company or
any of its Subsidiaries in connection with the execution,
delivery and
performance of this Agreement by the Company or the consummation
by the Company
of the transactions contemplated by this Agreement, except for
(i) the
pre-merger notification requirements under the Hart-Scott-Rodino
Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and
applicable foreign
antitrust or merger control laws, (ii) the filing of the
Certificate of Merger
with the Delaware Secretary of State and appropriate
corresponding documents
with the appropriate authorities of other states in which the
Company is
qualified as a foreign corporation to transact business in order
to continue
such qualification, (iii) the filing of the Proxy Statement with
the SEC in
accordance with the Exchange Act, (iv) the filing of such
reports, schedules or
materials under Section 13 of or Rule 14a-12 under the Exchange
Act as may be
required in connection with this Agreement and the transactions
contemplated
hereby, and (v) such consents, approvals, orders,
authorizations, registrations,
declarations and filings as may be required under applicable
state securities
laws, and (vi) such other consents, approvals, licenses,
permits, orders,
authorizations, registrations, declarations, notices and filings
which, if not
obtained or made, would not be, individually or in the
aggregate, reasonably
likely to result in a Company Material Adverse Effect.
(d) The affirmative vote for approval and adoption of the
Company
Voting Proposal by the holders of a majority in voting power of
the outstanding
shares of Company Common Stock on the record date for the
meeting of the
Company's stockholders (the "Company Meeting") to consider the
Company Voting
Proposal (the "Required Company Stockholder Vote") is the only
vote of the
holders of any class or series of the Company's capital stock or
other
securities necessary for the approval and adoption of this
Agreement and for the
consummation by the Company of the other transactions
contemplated by this
Agreement. There are no bonds, Contracts, debentures, warrants,
options, series
of capital stock, notes or other Indebtedness of the Company or
its Subsidiaries
having the right to vote (or, except for the Company's Zero
Coupon Notes and the
Company Warrants, convertible into, or exercisable or
exchangeable for,
securities having the right to vote) on any matters on which
stockholders of the
Company or its Subsidiaries may vote.
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<PAGE>
3.5 SEC Filings; Financial Statements; Information Provided.
(a) The Company has filed all registration statements,
forms,
reports and other documents required to be filed by the Company
with the SEC
since January 1, 2002. All such registration statements, forms,
reports and
other documents (including those that the Company may file after
the date hereof
until the Closing) are referred to herein as the "Company SEC
Reports." The
Company SEC Reports (i) were or will be filed on a timely basis,
(ii) at the
time filed, complied, or will comply when filed, as to form in
all material
respects with the applicable requirements of the Securities Act
and the Exchange
Act, as the case may be, and the rules and regulations of the
SEC thereunder
applicable to such Company SEC Reports, and (iii) did not or
will not at the
time they were or are filed contain any untrue statement of a
material fact or
omit to state a material fact required to be stated in such
Company SEC Reports
or necessary in order to make the statements in such Company SEC
Reports, in the
light of the circumstances under which they were made, not
misleading. No
Subsidiary of the Company is subject to the reporting
requirements of Section
13(a) or Section 15(d) of the Exchange Act.
(b) Each of the consolidated financial statements (including,
in
each case, any related notes and schedules) contained or to be
contained in the
Company SEC Reports at the time filed (i) complied or will
comply as to form in
all material respects with applicable accounting requirements
and the published
rules and regulations of the SEC with respect thereto, (ii) were
or will be
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 to such
financial statements
or, in the case of unaudited interim financial statements, as
permitted by the
SEC on Form 10-Q under the Exchange Act), and (iii) fairly
presented or will
fairly present in all material respects the consolidated
financial position of
the Company and its Subsidiaries as of the dates indicated and
the consolidated
results of its operations and cash flows for the periods
indicated, except that
the unaudited interim financial statements were or are subject
to normal and
recurring year-end adjustments. All of the Subsidiaries of the
Company are
consolidated for accounting purposes. The consolidated, audited
balance sheet of
the Company as of December 31, 2004 is referred to herein as the
"Company
Balance Sheet."
(c) Except with respect to information to be supplied by or
on
behalf of the Buyer for inclusion in the proxy statement to be
sent to the
stockholders of the Company in connection with the Company
Meeting (the "Proxy
Statement"), the Proxy Statement and any other soliciting
materials of the
Company shall not, on the date the Proxy Statement or such
materials are first
mailed to stockholders of the Company, at the time of the
Company Meeting or at
the Effective Time, contain any statement which, at such time
and in light of
the circumstances under which it shall be made, is false or
misleading with
respect to any material fact, or omits to state any material
fact necessary in
order to make the statements therein not false or misleading; or
omit to state
any material fact necessary to correct any statement in any
earlier
communication with respect to the solicitation of proxies for
the Company
Meeting which has become false or misleading. If at any time
prior to the
Company Meeting any fact or event relating to the Company or any
of its
Affiliates which should be set forth in a supplement to the
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Proxy Statement should be discovered by the Company or should
occur, the Company
shall, promptly after becoming aware thereof, inform the Buyer
of such fact or
event.
(d) The Company maintains disclosure controls and procedures
required by Rule 13a-15 or 15d-15 under the Exchange Act. Such
disclosure
controls and procedures are designed to ensure that all material
information
concerning the Company is made known on a timely basis to the
individuals
responsible for the preparation of the Company's filings with
the SEC and other
public disclosure documents. The Company has disclosed, based on
its most recent
evaluations, to the Company's outside auditors and the audit
committee of the
Board of Directors of the Company (A) all significant
deficiencies and material
weaknesses in the design or operation of internal control over
financial
reporting (as defined in Rule 13a-15(f) of the Exchange Act)
which are known to
the Company and reasonably likely to adversely affect the
Company's ability to
record, process, summarize and report financial data and (B) any
fraud, whether
or not material, known to the Company that involves management
or other
employees who have a significant role in the Company's internal
control over
financial reporting. The Company is in compliance with the
applicable listing
and other rules and regulations of The NASDAQ National
Market.
(e) The Company has made available to the Buyer a complete
and
correct copy of any exhibits, annexes, attachments, supplements,
amendments or
modifications that have not been filed with the SEC to all
exhibits to the
Annual Report on Form 10-K filed by the Company with the SEC on
March 16, 2005
that have requested by the Buyer.
3.6 No Undisclosed Liabilities. Except as disclosed in the
Company SEC
Reports filed prior to the date of this Agreement or in the
Company Balance
Sheet, the Company and its Subsidiaries do not have any
liabilities (whether
accrued, absolute, contingent or otherwise), except for
liabilities (i) incurred
in connection with the transactions contemplated hereby, (ii)
incurred in the
ordinary course of business consistent with past practice or
(iii) that,
individually or in the aggregate, are not reasonably likely to
result in a
Company Material Adverse Effect.
3.7 Absence of Certain Changes or Events. Between the date of
the Company
Balance Sheet and the date of this Agreement, except as
disclosed in the Company
SEC Reports, (i) the Company and its Subsidiaries have conducted
their
respective businesses only in the ordinary course of business
consistent with
past practice and (ii) neither the Company nor any of its
Subsidiaries has taken
any action which, if taken after the date hereof, would require
the consent of
the Buyer under Section 5.1 of this Agreement. Since the date of
the Company
Balance Sheet, there has not been any change, event,
circumstance or development
that, individually or in the aggregate, has had or is reasonably
likely to
result in a Company Material Adverse Effect.
3.8 Taxes.
(a) The Company and each of its Subsidiaries have timely filed
all
Tax Returns that they were required to file, and all such Tax
Returns were
correct and complete, except for any failure to file or errors
or omissions
that, individually or in the aggregate, are not reasonably
likely to result in a
Company Material Adverse Effect. The Company and each of its
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<PAGE>
Subsidiaries have paid on a timely basis all Taxes due and
payable (whether or
not shown on any such Tax Returns). The unpaid Taxes of the
Company and its
Subsidiaries for Tax periods through the date of the Company
Balance Sheet do
not exceed the accruals and reserves for Taxes set forth on the
Company Balance
Sheet exclusive of any accruals and reserves for "deferred
taxes" or similar
items that reflect timing differences between Tax and financial
accounting
principles. All liabilities for Taxes that arose since the date
of the Company
Balance Sheet arose in the ordinary course of business. All
Taxes that the
Company or any of its Subsidiaries is or was required by law to
withhold or
collect have been duly withheld or collected and, to the extent
required, have
been paid to the proper Governmental Entity, except for any such
Taxes with
respect to which the failure to withhold, collect or pay is not,
individually or
in the aggregate, reasonably likely to result in a Company
Material Adverse
Effect. There are no liens or encumbrances with respect to Taxes
upon any of the
assets or property of the Company or its Subsidiaries, other
than liens for
Taxes not yet due and payable. For purposes of this Agreement,
(i) "Taxes" means
all taxes, charges, fees, levies or other similar assessments or
liabilities,
including income, gross receipts, ad valorem, premium,
value-added, excise, real
property, personal property, sales, use, services, license
alternative or add-on
minimum, transfer, withholding, employment, payroll and
franchise taxes imposed
by the United States of America or any state, local or foreign
government, or
any agency thereof, or other political subdivision of the United
States or any
such government, and any interest, fines, penalties, assessments
or additions to
tax resulting from, attributable to or incurred in connection
with any tax or
any contest or dispute thereof and (ii) "Tax Returns" means all
reports,
returns, declarations, statements or other information required
to be supplied
to a taxing authority in connection with Taxes, including,
without limitation,
any information return, claim for refund, amended return or
declaration of
estimated Tax.
(b) There are no deficiencies for any amount of Taxes
claimed,
proposed or assessed by any taxing or other Governmental Entity
in writing that
have not been fully paid, settled or accrued for. The Company
has made available
to the Buyer correct and complete copies of all federal income
Tax Returns,
examination reports and statements of deficiencies assessed
against or agreed to
by the Company since January 1, 2002. The federal income Tax
Returns of the
Company and each of its Subsidiaries have been audited by the
Internal Revenue
Service (the "IRS") or are closed by the applicable statute of
limitations for
all taxable years through the taxable year specified in Section
3.8(b) of the
Company Disclosure Schedule. The Company has made available to
the Buyer correct
and complete copies of all other Tax Returns of the Company and
its Subsidiaries
together with all related examination reports and statements of
deficiency for
all periods from and after January 1, 2002. No examination or
audit of any Tax
Return of the Company or any of its Subsidiaries by any
Governmental Entity is
currently in progress or, to the knowledge of the Company,
threatened or
contemplated. Neither the Company nor any of its Subsidiaries
has been informed
by any Governmental Entity that the Governmental Entity believes
that the
Company or any of its Subsidiaries was required to file any Tax
Return that was
not filed. Neither the Company nor any of its Subsidiaries has
waived any
statute of limitations with respect to Taxes or agreed to an
extension of time
with respect to a Tax assessment or deficiency.
-15-
<PAGE>
(c) Neither the Company nor any of its Subsidiaries: (i) has
made
any payments, is obligated to make any payments, or is a party
to any agreement
that could obligate it to make any payments that will be treated
as an "excess
parachute payment" under Section 280G of the Code; or (ii) has
any actual or
potential liability for any Taxes of any person (other than the
Company and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
similar
provision of law in any jurisdiction), or as a transferee or
successor, by
contract or otherwise.
(d) Neither the Company nor any of its Subsidiaries (i) is or
has
ever been a member of a group of corporations with which it has
filed (or been
required to file) consolidated, combined or unitary Tax Returns,
other than a
group of which only the Company and its Subsidiaries are or were
members or (ii)
is a party to or bound by any Tax indemnity, Tax sharing or Tax
allocation
agreement.
(e) Neither the Company nor any of its Subsidiaries (i) is
required
to make any payments in connection with transactions or events
contemplated by
this Agreement or (ii) is a party to an agreement that would
require it to make
any payments, in each case that would not be fully deductible by
reason of
Section 162(m) of the Code.
(f) Neither the Company nor any of its Subsidiaries has been
either
a "distributing corporation" or a "controlled corporation" in a
distribution
occurring during the last five years in which the parties to
such distribution
treated the distribution as one to which Section 355 of the Code
is applicable.
(g) Neither the Company nor any of its Subsidiaries has agreed
or is
required to make any adjustments for any taxable period, or
portion thereof,
ending after the Closing Date pursuant to Section 481(a) of the
Code or any
similar provision of state, local or foreign law by reason of a
change in
accounting method initiated by it or any other relevant party
and neither the
Company nor any of its Subsidiaries has any knowledge that the
IRS has proposed
any such adjustment or change in accounting method, nor has any
application
pending with any Governmental Entity requesting permission for
any changes in
accounting methods that relate to the business or assets of the
Company or any
of its Subsidiaries.
(h) The Company will not be required to include any item of
income
in, or exclude any item of deduction from, taxable income for
any taxable
period, or portion thereof, ending after the Closing Date as a
result of any (i)
"closing agreement" as described in Section 7121 of the Code (or
any
corresponding or similar provision of state, local or foreign
income Tax law)
executed on or prior to the Closing Date, (ii) intercompany
transaction or
excess loss account described in the Treasury Regulations under
Section 1502 of
the Code (or any corresponding or similar provision of state,
local or foreign
income Tax law), (iii) installment sale or open transaction
disposition made on
or prior to the Closing Date, (iv) prepaid amount received on or
prior to the
Closing Date or (v) other action taken prior to the Closing
Date.
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<PAGE>
3.9 Owned and Leased Real Properties.
(a) Section 3.9(a) of the Company Disclosure Schedule sets forth
a
complete and accurate list as of the date of this Agreement of
(i) the addresses
of all real property owned by the Company or any Subsidiary (the
"Owned Real
Property"), (ii) the record owner of such Owned Real Property,
and (iii) all
loans secured by mortgages encumbering the Owned Real Property.
Legal
descriptions of such Owned Real Property and the most recent
title reports or
policies (if any) with respect to each of the Owned Real
Properties have
previously been made available to Buyer. The Company or its
Subsidiaries are the
sole owners of good, valid, fee simple and marketable title to
the Owned Real
Properties, including without limitation, all buildings,
structures, fixtures
and improvements located thereon in each case free and clear of
any Liens other
than those that are not, individually or in the aggregate,
reasonably likely to
result in a Company Material Adverse Effect.
(b) Section 3.9(b) of the Company Disclosure Schedule sets forth
a
complete and accurate list as of the date of this Agreement of
all real property
leased, subleased or licensed by the Company or any of its
Subsidiaries
(collectively, the "Leases") other than (i) property subject to
a Lease that is
terminable by the Company or any of its Subsidiaries on no more
than thirty (30)
days notice without liability or financial obligation to the
Company or (ii)
property subject to a Lease for which the payment by the Company
is less than
$10,000 per month (collectively "Company Leases") and the
location of the
premises. Neither the Company nor any of its Subsidiaries nor,
to the Company's
knowledge, any other party to any Company Lease is in default
under any of the
Company Leases, except where the existence of such defaults,
individually or in
the aggregate, is not reasonably likely to result in a Company
Material Adverse
Effect, and each Company Lease is valid and binding and is
enforceable by the
Company and its Subsidiaries in accordance with its respective
terms, except for
such failures to be valid, binding or enforceable, individually
or in the
aggregate, is not reasonably likely to result in a Company
Material Adverse
Effect. Neither the Company nor any of its Subsidiaries leases,
subleases or
licenses any real property to any person other than the Company
and its
Subsidiaries. The Company has made available to the Buyer
complete and accurate
copies of all Company Leases.
3.10 Title to Tangible Personal Property. The Company and its
Material
Subsidiaries have legal and valid title to, or a valid and
enforceable right to
use, all of the tangible personal properties and assets used or
held for use by
the Company and its Subsidiaries in connection with the conduct
of the business
of the Company and its Subsidiaries, except for such defects or
failures that,
individually or in the aggregate, are not reasonably likely to
result in a
Company Material Adverse Effect. All such tangible personal
properties and
assets, other than properties and assets in which the Company or
any of its
Subsidiaries has a leasehold interest, are free and clear of all
Liens, except
for such Liens that, individually or in the aggregate, are not
reasonably likely
to result in a Company Material Adverse Effect.
3.11 Intellectual Property.
(a) To the knowledge of the Company, the Company and its
Material
Subsidiaries own, license, sublicense or otherwise possess
legally enforceable
rights to use all Intellectual Property necessary to conduct the
business of the
Company and its Subsidiaries as
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<PAGE>
currently conducted (in each case excluding generally
commercially available,
off-the-shelf software programs), the absence of which,
individually or in the
aggregate, is not reasonably likely to result in a Company
Material Adverse
Effect. For purposes of this Agreement, the term "Intellectual
Property" means
all intellectual property, including without limitation, all (i)
patents,
inventions, trademarks, service marks, trade names, domain
names, copyrights,
designs and trade secrets, (ii) applications for and
registrations of such
patents, trademarks, service marks, trade names, domain names,
copyrights and
designs, (iii) lists (including customer lists), databases,
processes, formulae,
methods, schematics, technology, know-how, computer software
programs and
related documentation, and (iv) other tangible or intangible
proprietary or
confidential information and materials.
(b) The execution and delivery of this Agreement by the Company
and
the consummation by the Company of the Merger will not result in
the breach of,
or create on behalf of any third party the right to terminate or
modify, or
result in the payment of any additional fees under, (i) any
license, sublicense,
consent or other agreement relating to any Intellectual Property
owned by the
Company that is material to the business of the Company and its
Subsidiaries
taken as a whole, or (ii) any Intellectual Property Licenses (as
defined below).
Section 3.11(b)(i) of the Company Disclosure Schedule sets forth
a complete and
accurate list of all registrations and applications for
registration of
Intellectual Property owned by the Company or its Subsidiaries,
and Section
3.11(b)(ii) of the Company Disclosure Schedule sets forth a
complete and
accurate list of all licenses, sublicenses and other agreements
as to which the
Company or any of its Subsidiaries is a party and pursuant to
which the Company
or any of its Subsidiaries is authorized to use any third party
Intellectual
Property that is material to the business of the Company and its
Subsidiaries,
taken as a whole, excluding non-exclusive, generally
commercially available,
off-the-shelf software programs (collectively, "Intellectual
Property
Licenses").
(c) To the knowledge of the Company, all patents and
registrations
for trademarks, service marks and copyrights which are held by
the Company or
any of its Subsidiaries and which are material to the business
of the Company
and its Subsidiaries, taken as a whole, are subsisting and have
not expired or
been cancelled or abandoned. To the knowledge of the Company, no
third party is
infringing, violating or misappropriating any of the Company
Intellectual
Property, except for infringements, violations or
misappropriations that,
individually or in the aggregate, are not reasonably likely to
result in a
Company Material Adverse Effect.
(d) To the knowledge of the Company, the conduct of the business
of
the Company and its Subsidiaries as currently conducted does not
infringe,
violate or constitute a misappropriation of any Intellectual
Property of any
third party, except for such infringements, violations and
misappropriations
that, individually or in the aggregate, are not reasonably
likely to result in a
Company Material Adverse Effect.
(e) The Company takes commercially reasonable steps to protect
and
preserve its rights in any proprietary Intellectual Property
(including
executing confidentiality, and intellectual property assignment
agreements with
current executive officers and current employees and contractors
that have a
material role in the development of the Company's products and
Intellectual
Property).
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<PAGE>
3.12 Contracts.
(a) For purposes of this Agreement, "Company Material
Contract"
shall mean:
(i) any "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) with respect to the
Company and its
Subsidiaries;
(ii) any employment, consulting or other Contract with (x)
any
member of the Company's Board of Directors, (y) any executive
officer of the
Company or (z) any other employee of the Company earning an
annual salary equal
to or in excess of $200,000, other than those that are
terminable by the Company
or any of its Subsidiaries on no more than thirty (30) days
notice without
liability or financial obligation to the Company;
(iii) any Contract containing any covenant (A) limiting in
any
respect the right of the Company or any of its Subsidiaries to
engage in any
line of business or compete with any person in any line of
business or to
compete with any party, (B) granting any exclusive rights to
make, sell or
distribute the Company's products, or (C) otherwise prohibiting
or limiting the
right of the Company and its Subsidiaries to sell or distribute
any products or
services;
(iv) any Contract (i) relating to the disposition or
acquisition by the Company or any of its Subsidiaries with
obligations remaining
to be performed or liabilities continuing after the date of this
Agreement of
any business or any material amount of assets not in the
ordinary course of
business or (ii) pursuant to which the Company or any of its
Subsidiaries has
any material ownership interest in any other person or other
business enterprise
other than the Material Subsidiaries;
(v) any Contract to provide source code into any escrow or
to
any third party (under any circumstances) for any product or
technology that is
material to the Company and its Subsidiaries taken as a
whole;
(vi) any Contract to license any third party to reproduce
any
of the Company's Intellectual Property products, services or
technology or any
Contract to sell or distribute any of the Company's Intellectual
Property
products, services or technology, except (A) agreements with
sales
representatives or other resellers in the ordinary course of
business, or (B)
agreements allowing internal backup copies made or to be made by
end-user
customers in the ordinary course of business;
(vii) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements, promissory notes or other
Contracts relating to
the borrowing of money, extension of credit or other
Indebtedness, other than
accounts receivables and payables in the ordinary course of
business;
(viii) any settlement agreement entered into within three
(3)
years prior to the date of this Agreement, other than (I)
releases immaterial in
nature or amount entered into with former employees or
independent contractors
of the Company in the ordinary course of
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<PAGE>
business in connection with the routine cessation of such
employee's or
independent contractor's employment with the Company or (II)
settlement
agreements for cash only (which has been paid) and does not
exceed $250,000 as
to such
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