AGREEMENT AND PLAN OF MERGER
BY AND AMONG
INTERMIX MEDIA, INC.,
FOX INTERACTIVE MEDIA, INC.
PROJECT IVORY ACQUISITION CORPORATION
AND
NEWS CORPORATION
(SOLELY WITH RESPECT TO SECTIONS 6.9 AND 6.15)
Dated as of July 18, 2005
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement”), dated as of July 18, 2005, by and among Intermix Media, Inc., a Delaware corporation ("Ivory”), Fox Interactive Media, Inc., a Delaware corporation ("Parent”), Project Ivory Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent ("Merger Sub") and, solely with respect to Sections 6.9 and 6.15, News Corporation, a Delaware corporation ("News”).
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Ivory, Parent and Merger Sub have unanimously approved the acquisition of Ivory by Parent on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Board of Directors of Ivory has (i) determined that the Merger (as defined herein) and the other transactions contemplated hereby are fair to and advisable and in the best interests of Ivory and its stockholders, (ii) approved and adopted this Agreement and the transactions contemplated hereby, including the Merger and (iii) recommended that Ivory’s stockholders adopt this Agreement;
WHEREAS, the respective Boards of Directors of Merger Sub and Ivory have approved and adopted the merger of Merger Sub with and into Ivory with Ivory as the survivor, as set forth below (the "Merger”), in accordance with the General Corporation Law of the State of Delaware (the "DGCL”) and upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, as a condition to and an inducement to Parent’s and Merger Sub’s willingness to enter into this Agreement, simultaneously with the execution of this Agreement, certain stockholders of Ivory are entering into a stockholder voting agreement with Parent (the "Support Agreement”); and
WHEREAS, Ivory, Parent and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with the Merger and to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, at the Effective Time (as defined below), Merger Sub shall be merged with and into Ivory, and the separate corporate existence of Merger Sub
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shall thereupon cease. Ivory shall be the surviving corporation in the Merger (sometimes hereinafter referred to as the "Surviving Corporation”), and the separate corporate existence of Ivory with all of its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger, except as set forth in Article II. The Merger shall have the effects specified in the DGCL.
Section 1.2 Effective Time. As promptly as practicable after the satisfaction or, if permissible, waiver of the conditions set forth in Article VII, the parties hereto shall cause the Merger to be consummated by filing a certificate of merger (the "Certificate of Merger”) with the Secretary of State of the State of Delaware, in such form as is required by, and executed in accordance with, the relevant provisions of the DGCL (the date and time that the Merger becomes effective in accordance with applicable Law (which shall occur upon such filing) being the "Effective Time”).
Section 1.3 Certificate of Incorporation. At the Effective Time, the certificate of incorporation of Ivory, as in effect immediately prior to the Effective Time, shall be the certificate of incorporation of the Surviving Corporation until thereafter amended as provided therein or by applicable Law (the "Certificate of Incorporation”).
Section 1.4 By-Laws. At the Effective Time, and without any further action on the part of Ivory or Merger Sub, the by-laws of Ivory, as in effect immediately prior to the Effective Time, shall be the by-laws of the Surviving Corporation (the "By-Laws”), until thereafter amended as provided therein, in the Certificate of Incorporation or in accordance with applicable Law.
Section 1.5 Directors. Subject to requirements of applicable Law, the directors of Merger Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Certificate of Incorporation and the By-Laws.
Section 1.6 Officers. The officers of Merger Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the officers of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Certificate of Incorporation and the By-Laws.
ARTICLE II
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
Section 2.1 Effect on Capital Stock. At the Effective Time, as a result of the Merger and without any further action on the part of Ivory, Parent, Merger Sub or any holder of any shares of capital stock of Ivory, Parent or Merger Sub:
(a) Merger Sub. Each share of common stock, par value of $0.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one (1) fully paid share of common stock, par value $0.001 per share, of the Surviving Corporation and constitute the only outstanding shares of capital stock of the Surviving Corporation and shall not be affected by the Merger.
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(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each Common Share and Preferred Share that is owned by Ivory directly as treasury stock or by Parent, Merger Sub, or any of Ivory’s wholly-owned Subsidiaries (other than in a representative or fiduciary capacity) shall automatically be retired and shall cease to be outstanding, and no cash or other consideration shall be delivered in exchange therefor.
(c) Conversion of Ivory Common Shares.
Subject to Section 2.3:
(i) each issued and outstanding share of Ivory common stock, par value $0.001 per share (the "Common Shares”) (other than any Common Shares to be retired in accordance with Section 2.1(b) and Dissenting Shares (as defined below)) shall be converted into the right to receive $12.00 in cash, without interest (the "Common Merger Consideration”).
(ii) each issued and outstanding share of Series A Preferred Stock (as defined below) (other than any share of Series A Preferred Stock to be retired in accordance with Section 2.1(b) and Dissenting Shares), shall be converted into the right to receive $12.00 in cash, without interest (the "Series A Preferred Merger Consideration”);
(iii) each issued and outstanding share of Series B Preferred Stock (as defined below) (other than any share of Series B Preferred Stock to be retired in accordance with Section 2.1(b) and Dissenting Shares), shall be converted into the right to receive $14.60 in cash, without interest (the "Series B Preferred Merger Consideration”);
(iv) each issued and outstanding share of Series C Preferred Stock (as defined below) (other than any share of Series C Preferred Stock to be retired in accordance with Section 2.1(b) and Dissenting Shares), shall be converted into the right to receive $13.50 in cash, without interest (the "Series C Preferred Merger Consideration”);
(v) each issued and outstanding share of Series C-1 Preferred Stock (as defined below) (other than any share of Series C-1 Preferred Stock to be retired in accordance with Section 2.1(b) and Dissenting Shares), shall be converted into the right to receive $14.00 in cash, without interest (the "Series C-1 Preferred Merger Consideration” and, together with the Series A Preferred Merger Consideration, the Series B Preferred Merger Consideration, and the Series C Preferred Merger Consideration, the "Preferred Merger Consideration”); and
(vi) as of the Effective Time, all such Common Shares and Preferred Shares shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a certificate representing any such Common
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Shares or Preferred Shares (a "Certificate”) shall cease to have any rights with respect thereto, except the right to receive, upon the surrender of such Certificates (for each Common Share or Preferred Share represented thereby), the Common Merger Consideration or the appropriate Preferred Merger Consideration, as applicable. No Preferred Share that validly elects to treat the Merger as a Liquidation or Liquidation Event, as applicable, under the terms of the applicable Certificate of Designation shall, be entitled to receive any Preferred Merger Consideration.
(d) Stock Options; ESPP; Warrants.
(i) As of the Effective Time, each outstanding option to purchase Common Shares under any employee stock option or compensation plan or arrangement of Ivory (an "Ivory Option”) that is fully vested as of the Effective Time shall by virtue of the Merger and without any action on the part of any holder of any Ivory Option be cancelled and the holder thereof will receive as soon as reasonably practicable following the Effective Time a cash payment with respect thereto equal to the product of (a) the excess, if any, of the Common Merger Consideration over the exercise price per share of such Ivory Option and (b) the number of Common Shares issuable upon exercise of such Ivory Option (the "Option Cash Payment”). As of the Effective Time, all Ivory Options, whether or not vested or exercisable, shall no longer be outstanding and shall automatically cease to exist, and each holder of a Ivory Option shall cease to have any rights with respect thereto, except the right to receive the Option Cash Payment. Prior to the Effective Time, Ivory shall take any and all actions necessary to effectuate this Section 2.1(d)(i), including, but not limited to, providing holders of Ivory Options with notice of their rights with respect to any such Ivory Options as provided herein.
(ii) Each Ivory Option that is unvested as of the Effective Time and that is outstanding immediately prior to the Effective Time (an "Ivory Unvested Option”) shall, at the Effective Time, cease to represent a right to acquire Common Shares, shall be cancelled and of no further force or effect and with respect to each Ivory Unvested Option held by (a) an individual set forth in Section 2.1(d)(ii) of the Ivory Disclosure Schedule ("Specified Individual”) who has signed before the Effective Time a waiver and non-compete agreement in the appropriate form indicated for that individual in such forms acceptable to Parent and Ivory, or (b) any other individual who has signed before the Effective Time an agreement in a form acceptable to Parent and Ivory, shall be converted into the right to receive fifty percent (50%) of the Option Cash Payment in respect of each such Ivory Unvested Option ("Phantom Stock Payment”) in installments as and when such Ivory Unvested Option would have vested subject to the individual’s continued employment with the Surviving Corporation and its Affiliates if it had not been cancelled. Further, with respect to each Ivory Unvested Option subject to an agreement set forth in Section 2.1(d)(ii) of the Ivory Disclosure Schedules (each of which is subject to accelerated vesting upon a qualifying termination of employment as set forth in such agreements, the employee who is party to such agreements shall be entitled to receive, upon a qualifying termination of employment within such period of time specified in such agreement, and subject to the waivers referenced in the preceding sentence, the balance of the Phantom Stock Payment to the extent that such Option Cash Payment has not previously been paid. Prior to the Effective Time, Ivory shall take any and all actions
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necessary to effectuate this Section 2.1(d)(ii) including but not limited to providing holders of Ivory Options with notice of their rights with respect to any such Ivory Options as provided herein and obtaining consents from the individuals set forth in Section 2.1(d)(ii) of the Ivory Disclosure Schedule.
(iii) As of the Effective Time, each outstanding option to purchase MySpace Shares of Common Stock ("MySpace Shares”) under MySpace’s 2005 Equity Incentive Plan (a "MySpace Option”) shall by virtue of the Merger and without any action on the part of any holder of any MySpace Option be cancelled and the holder thereof will receive as soon as practicable following the Effective Time a cash payment with respect thereto equal to the product of (a) the excess, if any, of $3.2660 over the exercise price per share of such MySpace Option and (b) the number of MySpace Shares issuable upon exercise of such MySpace Option.
(iv) Prior to the Effective Time, Ivory shall take any and all actions with respect to Ivory’s 2002 Employee Stock Purchase Plan (the "ESPP”) as are necessary to provide that effective no later than the Effective Time, the ESPP shall terminate and any and all amounts that have been withheld but not yet applied to purchase Common Shares shall be refunded to the participants in the ESPP without interest.
(v) As of the Effective Time, each issued and outstanding Warrant shall no longer be outstanding and shall automatically cease to exist, and each holder of a Warrant shall cease to have any rights with respect thereto. Prior to the Effective Time, Ivory shall take any and all actions necessary to effectuate this Section 2.1(d)(iv), including, but not limited to, providing holders of Warrants with notice of their rights with respect to any such Warrants.
Section 2.2 Exchange of Common Share Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall designate a paying agent reasonably acceptable to Ivory (the "Paying Agent”) for the payment of the Common Merger Consideration and the appropriate Preferred Merger Consideration or any other payment to which holders of Ivory Options shall become entitled pursuant to Section 2.1. Immediately prior to the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, Parent shall deposit, or cause Merger Sub to deposit, with the Paying Agent, for the benefit of the holders of Certificates and Ivory Options, cash equal to (i) the product of (A) the number of Common Shares issued and outstanding (and not to be retired pursuant to Section 2.1(b)) immediately prior to the Effective Time multiplied by (B) the Common Merger Consideration, plus (ii) the Aggregate Preferred Merger Consideration plus (iii) the amount equal to the sum of the Option Cash Payments. The deposit made by Parent or Merger Sub, as the case may be, pursuant to this Section 2.2(a) is hereinafter referred to as the "Exchange Fund”. In the event such funds shall be insufficient to make the payments contemplated by Section 2.1(c) and 2.1(d), Parent shall promptly deposit, or cause to be deposited, additional funds with the Paying Agent in an amount which is equal to the deficiency in the amount required to make such payment. The Paying Agent shall cause the Exchange Fund to be (i) held for the benefit of the holders of Common Shares, Preferred Shares and Ivory Options and (ii) applied promptly to
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making the payments provided for in Section 2.1. The Exchange Fund shall not be used for any purpose that is not expressly provided for in this Agreement. For the purposes of this Agreement, "Aggregate Preferred Merger Consideration” shall mean the sum of (i) the product of (A) the number of shares of Series A Preferred Stock issued and outstanding (and not to be retired pursuant to Section 2.1(b)) immediately prior to the Effective Time multiplied by (B) the Series A Preferred Merger Consideration, plus (ii) the product of (A) the number of shares of Series B Preferred Stock issued and outstanding (and not to be retired pursuant to Section 2.1(b)) immediately prior to the Effective Time multiplied by (B) the Series B Preferred Merger Consideration, plus (iii) the product of (A) the number of shares of Series C Preferred Stock issued and outstanding (and not to be retired pursuant to Section 2.1(b)) immediately prior to the Effective Time multiplied by (B) the Series C Preferred Merger Consideration, plus (iv) the product of (A) the number of shares of Series C-1 Preferred Stock issued and outstanding (and not to be retired pursuant to Section 2.1(b)) immediately prior to the Effective Time multiplied by (B) the Series C-1 Preferred Merger Consideration. Notwithstanding anything to the contrary, no amounts need to be deposited with the Paying Agent in respect of Dissenting Shares unless and until the holder thereof fails to perfect or withdraws or otherwise loses his right to appraisal.
(b) Exchange Procedures. As soon as reasonably practicable after the Effective Time (but in no event more than two (2) Business Days thereafter), Parent shall cause the Paying Agent to mail to each holder of record of a Certificate (i) a letter of transmittal specifying that delivery of the Certificates shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates (or affidavits of loss in lieu thereof) to the Paying Agent, such letter of transmittal to be in customary form and have such other provisions as Parent or Paying Agent may reasonably specify and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Common Merger Consideration and Preferred Merger Consideration (such instructions shall include instructions for the payment of the Common Merger Consideration or Preferred Merger Consideration to a Person other than the Person in whose name the surrendered Certificate is registered on the transfer books of Ivory, subject to the receipt of appropriate documentation for such transfer). Upon surrender to the Paying Agent of a Certificate (or evidence of loss in lieu thereof) for cancellation together with such letter of transmittal, duly completed and validly executed, and such other documents as may reasonably be requested by the Paying Agent, the holder of such Certificate shall be entitled to receive in exchange therefor the Common Merger Consideration or Preferred Merger Consideration that such holder is entitled to receive pursuant to this Article II, and the Certificate so surrendered shall forthwith be cancelled; provided that in no event will a holder of a Certificate be entitled to receive Common Merger Consideration or Preferred Merger Consideration if Common Merger Consideration or Preferred Merger Consideration was already paid with respect to the Common Shares or Preferred Shares, as the case may be, underlying such Certificate in connection with an affidavit of loss. No interest will be paid or accrued on any amount payable upon due surrender of the Certificates. In the event of a transfer of ownership of Common Shares or Preferred Shares that is not registered in the transfer records of Ivory, payment may be issued to such a transferee if the Certificate formerly representing such Common Shares or Preferred Shares is presented to the Paying Agent, accompanied by all documents required to evidence and effect such transfer, and the Person requesting such issuance pays any transfer or other Taxes required by reason of such payment to a Person other than the registered holder of such Certificate or establishes to the satisfaction of Parent and Ivory that such Tax has been paid or is not applicable. All cash paid upon the surrender of a Certificate in
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accordance with the terms of this Section 2.2 shall be deemed to have been paid in full satisfaction of all rights pertaining to the Common Shares or Preferred Shares formerly represented by such Certificate.
For the purposes of this Agreement, the term "Person” shall mean any individual, corporation (including not-for-profit corporations), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Entity or other entity of any kind or nature.
(c) Transfers; No Further Ownership Rights. After the Effective Time, there shall be no registration of transfers on the stock transfer books of Ivory of Common Shares or Preferred Shares that were outstanding immediately prior to the Effective Time. If Certificates are presented to the Surviving Company for transfer following the Effective Time, they shall be cancelled against delivery of the Common Merger Consideration or Preferred Merger Consideration, as applicable, for each Common Share or Preferred Share formerly represented by such Certificates.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund relating to the Common Merger Consideration and the Preferred Merger Consideration that remains unclaimed by the stockholders of Ivory or holders of Ivory Options one (1) year after the Effective Time shall be returned to Parent or the Surviving Corporation. Any stockholders of Ivory or holders of Ivory Options who have not theretofore complied with this Article II shall thereafter look only to Parent or the Surviving Corporation for payment of the Common Merger Consideration or the Preferred Merger Consideration upon due surrender of their Certificates (or affidavits of loss in lieu thereof), without interest. Notwithstanding the foregoing, none of Parent, the Surviving Corporation, the Paying Agent or any other Person shall be liable to any former holder of Common Shares, holder of Preferred Shares or holder of Ivory Options for any amount properly delivered to a public official pursuant to applicable abandoned property, escheat or similar Laws.
(e) Lost, Stolen or Destroyed Certificates. In the event that 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 and, if required by Parent, the posting by such Person of a bond reasonably satisfactory to Parent as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent will issue in exchange for such lost, stolen or destroyed Certificate the Common Merger Consideration or Preferred Merger Consideration, as applicable, upon due surrender of the Common Shares or Preferred Shares represented by such Certificate pursuant to this Agreement.
(f) Withholding Rights. Each of Parent, the Paying Agent and the Surviving Corporation shall be entitled to deduct and withhold from the consideration otherwise payable to any Person pursuant to this Article II such amounts as it is required to deduct and withhold with respect to the making of such payment under provision of any federal, state, local or foreign Tax Law. If Parent, the Paying Agent or the Surviving Corporation, as the case may be, so withholds amounts, such amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Common Shares or Preferred Shares, as applicable, in respect of which Parent, Paying Agent or the Surviving Corporation, as the case may be, made such deduction and withholding.
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Section 2.3 Dissenters’ Rights.
(a) Notwithstanding anything in any other Section of this Agreement to the contrary, Common Shares and Preferred Shares outstanding immediately prior to the Effective Time and held by a holder who has not voted for adoption of this Agreement, or consented thereto in writing and who has demanded appraisal for such shares in accordance with Section 262 of the DGCL (the "Dissenting Shares”) shall not be converted into, or represent the right to receive, the Common Merger Consideration or Preferred Merger Consideration, as applicable, unless such holder fails to perfect or withdraws or otherwise loses his right to appraisal. At the Effective Time, all Dissenting Shares shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of Dissenting Shares shall cease to have any rights with respect thereto, except the right to receive, subject to and net of any applicable withholding of Taxes, payment of the appraised value of such Dissenting Shares held by them in accordance with the provisions of Section 262 of the DGCL. 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 of the DGCL or a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by Section 262 of the DGCL, then the right of such holder to receive, subject to and net of any applicable withholding of Taxes, payment of the appraised value of such Dissenting Shares held by them in accordance with the provisions of Section 262 of the DGCL shall cease and such Dissenting Shares shall thereupon be deemed to have been converted into, and to have become exchangeable for, as of the Effective Time, the right to receive the Common Merger Consideration or the appropriate Preferred Merger Consideration, as applicable, without interest, upon surrender, in the manner provided in Section 2.2, of the Certificate or Certificates that formerly evidenced such Dissenting Shares.
(b) Ivory shall give Parent prompt notice of any demands for appraisal received by Ivory, withdrawals of such demands and any other instruments served on or otherwise received by Ivory pursuant to the DGCL, and Parent shall have the right to participate in and control all negotiations and proceedings with respect to demands for appraisal under the DGCL. Ivory shall not, except with the prior written consent of Parent, make any payment with respect to any demands for appraisal or offer to settle or settle any such demands.
Section 2.4 Adjustments to Prevent Dilution. Without limiting the other provision of the Agreement, including Section 5.1, in the event that Ivory changes the number of Common Shares or Preferred Shares issued and outstanding prior to the Effective Time as a result of a reclassification, stock split (including a reverse stock split), stock dividend or distribution, recapitalization, merger, subdivision, issuer tender or exchange offer, or other similar transaction, the Common Merger Consideration and each Preferred Merger Consideration shall be equitably adjusted to reflect such change.
Section 2.5 Stockholders’ Meeting; Proxy Statement.
(a) In accordance with any applicable Law, the certificate of incorporation and by-laws of Ivory, Ivory shall use its commercially reasonable efforts to call and hold a
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meeting of its stockholders as promptly as reasonably practicable after the date hereof for the purpose of voting upon the adoption of this Agreement and the transactions contemplated hereby, including the Merger (the "Ivory Stockholders Meeting”), and Ivory shall use its commercially reasonable efforts to hold such stockholder meeting as promptly as reasonably practicable after the date on which the Proxy Statement (as defined below) is cleared by the SEC (as defined below). The Board of Directors of Ivory shall duly call, give notice of, convene, hold and submit the adoption of this Agreement to the stockholders of Ivory whether or not the Board of Directors of Ivory effects a Change of Recommendation (as defined below).
(b) Ivory shall use its commercially reasonable efforts to solicit from the stockholders of Ivory proxies in favor of the Merger and shall take all other reasonable action necessary or advisable to secure the vote or consent of the stockholders of Ivory required by the DGCL and the Certificate of Incorporation and By-Laws of Ivory to adopt this Agreement.
(c) As promptly as reasonably practicable after the date of this Agreement, Ivory shall prepare and file with the SEC, and shall use its commercially reasonable efforts to have cleared by the SEC, the proxy statement relating to the Ivory Stockholders Meeting (together with any amendments thereof or supplements thereto) to be distributed in connection with the Ivory Stockholders Meeting to vote upon this Agreement (the "Proxy Statement”). Ivory, Parent and Merger Sub each shall promptly and timely provide all information relating to its respective businesses or operations necessary for inclusion in the Proxy Statement to satisfy all requirements of applicable state and United States federal securities Laws. Ivory and Parent (with respect to Parent and Merger Sub) each shall be solely responsible for any statement, information or omission in the Proxy Statement relating to it (and Merger Sub with respect to Parent) or its Affiliates based upon written information provided by it (or Merger Sub with respect to Parent) for inclusion in the Proxy Statement.
(d) Ivory shall notify Parent of the receipt of any comments of the SEC with respect to the Proxy Statement and of any requests by the SEC for any amendment or supplement thereto or for additional information and shall provide a copy of such comments or requests to Parent promptly after receipt, and shall promptly provide to Parent copies of all correspondence between Ivory or any representative of Ivory and the SEC. Ivory shall give Parent and its counsel the reasonable opportunity to review and comment on any proposed responses to comments, which review shall be concluded as promptly as possible, but in no event more than three (3) Business Days after the receipt by Parent of Ivory’s proposed responses to SEC comments or other correspondence to the SEC. If at any time after the date the Proxy Statement is mailed to stockholders and prior to the Ivory Stockholders Meeting any information relating to Ivory, Parent or Merger Sub, or any of their respective Affiliates, officers or directors, is discovered by Ivory, Parent or Merger Sub which is required to be set forth in an amendment or supplement to the Proxy Statement so that the Proxy Statement will not include any untrue statement 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 parties hereto and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC, and, to the extent required by applicable Law, disseminated to the stockholders of Ivory. As promptly as reasonably practicable after the Proxy Statement has been cleared by the SEC, Ivory shall mail the Proxy Statement to the holders of Common Shares and Preferred
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Shares as of the record date established for the Ivory Stockholder Meeting. Unless the Board of Directors of Ivory shall have effected a Change in Recommendation, the Proxy Statement shall include the recommendation of the Board of Directors of Ivory that the holders of Common Shares and Preferred Shares vote in favor of the adoption of this Agreement (the "Ivory Recommendation”).
(e) Nothing in this Section 2.5 shall be deemed to prevent Ivory or its Board of Directors from taking any action they are permitted or required to take under, and in compliance with, Section 6.2 or are required to take under applicable Law.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing of the Merger (the "Closing”) shall take place (i) at the offices of Pillsbury Winthrop Shaw Pittman LLP, MGM Tower, 10250 Constellation Boulevard, Los Angeles, CA 90067 at 10:00 a.m. Pacific time on the second Business Day after the last to be satisfied or waived of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions) shall be satisfied or waived (by the party entitled to the benefit of such condition) in accordance with this Agreement or (ii) at such other place and time and/or on such other date as Ivory and Parent may agree in writing (the "Closing Date”), unless this Agreement has been terminated pursuant to its terms.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of Ivory. Except as set forth in the section of the disclosure letter delivered to Parent by Ivory on or prior to the date of this Agreement (the "Ivory Disclosure Letter”) that corresponds with the applicable subsection of this Section 4.1, Ivory hereby represents and warrants to Parent and Merger Sub that:
(a) Organization, Good Standing and Qualification. Each of Ivory and its Subsidiaries is a corporation or other legal entity duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization. Each of Ivory and its Subsidiaries has all requisite corporate or similar power and authority to own and operate its properties and to carry on its business as currently conducted and is qualified to do business and is in good standing as a foreign corporation or other legal entity in each jurisdiction where the ownership or operation of its properties or conduct of its business requires such qualification, except where the failure to be so qualified or be in good standing, in the aggregate, has not had and would not reasonably be expected to have an Ivory Material Adverse Effect. Ivory has heretofore made available to Parent complete and correct copies of Ivory’s and each of its Subsidiaries’ certificate of incorporation and by-laws (or comparable governing instruments), as in effect on the date hereof. Section 4.1(a) of the Ivory Disclosure Letter sets forth a list, as of the date hereof, of all of the Subsidiaries of Ivory and the jurisdictions under which such Subsidiaries are incorporated or organized.
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As used in this Agreement, the term "Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, trust or other legal entity of which such Person (either directly or through or together with another Subsidiary of such Person) (i) is either the sole general partner, the sole managing member or sole holder of other similar interest, or (ii) owns (x) 50% or more of the voting power of the voting capital stock or other equity interests, or (y) 50% or more of the outstanding voting capital stock or other voting equity interests, or (z) 50% or more of the economic interest of such corporation, partnership, limited liability company or other legal entity. For the avoidance of doubt, MySpace, Inc. ("MySpace”) shall be deemed to be a Subsidiary of Ivory for all purposes of this Agreement.
As used in this Agreement, the term "Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person; provided, that, for the purposes of this definition, "control” (including, with correlative meanings, the terms "controlled by” and "under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
As used in this Agreement, the term "Ivory Material Adverse Effect” means any change in or effect on the condition (financial or otherwise), business, assets, liabilities or results of operations of Ivory or any of its Subsidiaries that has had or would reasonably be expected to be materially adverse to Ivory and its Subsidiaries taken as a whole; provided, however, that any event or occurrence (including litigation) arising from any of the following shall not be considered when determining if an Ivory Material Adverse Effect has occurred or is likely or expected to occur: (i) the negotiation (including activities relating to due diligence) or public announcement of this Agreement or (ii) except for purposes of Section 4.1(d), the execution, delivery or pendency of this Agreement or the transactions contemplated herein, including the impact thereof on the relationships of Ivory or any of its Subsidiaries with customers, suppliers, distributors, consultants, stockholders, employees or independent contractors or other third parties with whom Ivory or any of its Subsidiaries has any relationship, (b) any failure by Ivory to meet any projections or forecasts for any period ending (or for which revenues or earnings are released) on or after the date hereof, (c) changes generally affecting the industries in which Ivory or its Subsidiaries operates so long as such change does not disproportionately affect Ivory and its Subsidiaries, (d) changes in economic conditions in the United States, in any region thereof, or in any non-U.S. or global economy, (e) changes in generally accepted accounting principles (or any interpretation thereof), (f) any attack on, or by, outbreak or escalation of hostilities or acts of terrorism involving, the United States, or any declaration of war by the United States Congress, (g) the petition by the People of the State of New York v. Intermix Media, Inc., filed on April 28, 2005 in the Supreme Court for the State of New York, County of New York and Greenspan v. Salzman, et. al, LASC No. BC328558, filed on February 10, 2005 in the Los Angeles Superior Court (the "Pending Matters”), or any similar action or suit, including all court filings, appeals, judgments or settlements in connection therewith and announcements or disclosure thereof (other than as a result of New Facts adduced or any New Allegations or Developments asserted or arising with respect to the subject matter of either of the Pending
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Matters), (h) the trading price of Common Shares taken by itself (but excluding therefrom any underlying cause or suggested cause of such effect) or (i) Ivory’s option to purchase equity interests in MySpace pursuant to Article 7 of the Stockholders Agreement, including the exercise of such option by Ivory and announcement or disclosure thereof; provided that clause (i) shall not apply to Section 7.2(a) insofar as the accuracy of the last sentence of Section 4.1(w) is concerned.
"New Fact” means, with respect to a Pending Matter, any material factual matter in respect of an action by Ivory or any of its Subsidiaries, or any of their respective officers, directors, employees or agents, that is relevant to the resolution of such Pending Matters (or any related proceeding), and of which the Parent had not become aware prior to the date of this Agreement.
"New Allegation or Development” means, with respect to a Pending Matter, any material new allegation asserted, or material new line of investigation initiated, by any Governmental Entity in such Pending Matters (or in any related proceeding).
As used in this Agreement, the term "Knowledge” or any similar formulation of Knowledge shall mean the actual knowledge of, with respect to Ivory and its Subsidiaries, those Persons set forth in Section 4.1(a) of the Ivory Disclosure Letter and, with respect to Parent and its Subsidiaries, those Persons set forth in Section 4.2 of the Parent Disclosure Letter, in each case without any separate duty to investigate.
(b) Capital Structure. The authorized capital stock of Ivory consists of (i) 250,000,000 Common Shares, of which 34,905,254 shares were outstanding as of June 30, 2005 (and none of which Common Shares were held by Ivory in its treasury), and (ii) 40,000,000 shares of preferred stock, par value $0.10 per share (the "Ivory Preferred Stock”), of which (A) 10,000,000 shares are designated Series A 6% Convertible Preferred Stock (the "Series A Preferred Stock”), of which 194,000 shares were outstanding as of the date hereof, (B) 4,098,335 shares are designated Series B Convertible Preferred Stock (the "Series B Preferred Stock”), of which 1,750,000 shares were outstanding as of the date hereof, (C) 20,000,000 shares are designated Series C Convertible Preferred Stock (the "Series C Preferred Stock”), of which 3,786,595 shares were outstanding as of the date hereof and (D) 2,000,000 shares are designated Series C-1 Convertible Preferred Stock (the "Series C-1 Preferred Stock”), of which 1,325,000 shares were outstanding as of the date hereof (such Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series C-1 Preferred Stock referred to collectively as the "Ivory Preferred Stock,” each share of Ivory Preferred Stock a "Preferred Share”). Ivory has not made any issuance of Common Shares or Preferred Shares except as a result of (x) exercises of Ivory Options which were outstanding on June 30, 2005 for Common Shares, (y) conversions of Preferred Shares which were outstanding on June 30, 2005, into Common Shares or (z) dividends payable on Common Shares or Preferred Shares which were outstanding as of June 30, 2005. All of the issued and outstanding Common Shares and Preferred Shares have been and all Common Shares which may be issued pursuant to the Ivory Stock Plans (as defined below) will be, when issued in accordance with the terms thereof, duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of preemptive rights. Each of the outstanding shares of capital stock or other ownership interests in each of Ivory’s Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and, except for MySpace (which is
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at least 50% owned by Ivory) is owned by Ivory or a direct or indirect wholly owned Subsidiary of Ivory, free and clear of all Liens (as defined below) (including any restriction on the right to vote, sell or otherwise dispose of such capital stock of other ownership interests, except restrictions on transfer imposed by federal and state securities laws). Other than with respect to the Subsidiaries listed on Section 4.1(a) of the Ivory Disclosure Letter, Ivory does not directly or indirectly own any securities or other beneficial ownership interests in any other Person (including through joint ventures or partnership arrangements), or have any investment in any other Person. As of the date of this agreement, other than (i) 8,776,949 options to purchase Common Shares at an average price of $2.79 per Common Share as to which options to purchase 4,904,512 shares have not vested as of June 30, 2005, pursuant to (A) Ivory’s 2004 Stock Awards Plan, (B) Ivory’s 1999 Stock Awards Plan, and (C) Ivory’s 2002 Employee Stock Purchase Plan, each as amended ((A), (B) and (C) collectively, the "Ivory Plans”), (ii) options to purchase 832,920 shares of MySpace common stock pursuant to MySpace’s 2005 Equity Incentive Plan, as amended, at an average price of $1.17 per share, (iii) warrants to purchase such number of Common Shares at such prices as are set forth on Part 1 of Section 4.1(b) of the Ivory Disclosure Letter (the "Warrants”), and (iv) the rights to convert the Preferred Shares into Common Shares (such conversion rights, the "Conversion Rights”), there are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements or commitments of any kind to which Ivory or any of its Subsidiaries is a party, or by which Ivory or any of its Subsidiaries are bound, obligating Ivory or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, any shares of capital stock or other securities of Ivory or any of its Subsidiaries or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any securities of Ivory or any of its Subsidiaries, and no securities or obligations evidencing such rights are authorized, issued or outstanding. Except for the Support Agreement, neither Ivory nor any of its Subsidiaries is a party to any voting agreement with respect to the voting of any of its securities or the securities of any of its Subsidiaries. There are not any outstanding contractual obligations of Ivory or any of its Subsidiaries to repurchase, redeem or otherwise acquire or to file any registration statement with respect to any shares of capital stock of Ivory or any of its Subsidiaries. Following the consummation of the Merger, there will not be outstanding any rights, warrants, options or other securities entitling the holder thereof to purchase, acquire or otherwise receive any shares of the capital stock of Ivory or any of its Subsidiaries (or any other securities exercisable for or convertible into such shares). Except as described above, neither Ivory nor any of its Subsidiaries has outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the stockholders of Ivory or any Subsidiary of Ivory on any matter ("Voting Debt”). Part 2 of Section 4.1(b) of the Ivory Disclosure Letter sets forth the holders of all outstanding Preferred Shares, Ivory Options and Warrants, the exercise price and expiration dates, and, with respect to the Ivory Options and Warrants, the number of Common Shares into which they each convert.
(c) Corporate Authority.
(i) Ivory has all requisite corporate power and authority necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate, on the terms and subject to the conditions of this Agreement, the transactions contemplated hereby. This Agreement has been duly authorized, executed
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and delivered by Ivory, and no other corporate proceedings on the part of Ivory are necessary to authorize or approve this Agreement, the performance by Ivory of its obligations hereunder or to consummate the transactions contemplated hereby (other than, with respect to the Merger, the adoption of this Agreement by the affirmative vote of the holders of a majority of the then outstanding Common Shares and Preferred Shares entitled to vote thereon voting together as a single class on an as converted basis with respect to each Preferred Share (collectively, the "Ivory Requisite Vote”). Assuming due authorization, execution and delivery by each of Parent and Merger Sub, this Agreement is a valid and legally binding agreement of Ivory enforceable against Ivory 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”).
(ii) The Board of Directors of Ivory has unanimously approved and adopted this Agreement and the transactions contemplated hereby, including the Merger, has determined that the Merger and the other transactions contemplated hereby are fair to, and advisable and in the best interest of Ivory and its stockholders and, subject to Section 6.2, has recommended that the stockholders of Ivory adopt this Agreement.
(d) Governmental Filings; No Violations.
(i) Other than any reports, filings, registrations, approvals and/or notices (A) required to be made pursuant to Section 1.2, (B) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act”), and the Securities Exchange Act of 1934, as amended (the "Exchange Act”), (C) under the antitrust Laws of foreign Governmental Entities (collectively, the "Foreign Antitrust Filings”) and (D) to comply with the rules and regulations of the American Stock Exchange LLC ("AMEX”) (items (B) through (D) (inclusive), the "Ivory Required Statutory Approvals”), no notices, reports, registrations or other filings are required to be made by Ivory with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by Ivory from, any United States or foreign federal, state or local governmental or regulatory authority, agency, court, commission, body or other governmental entity of competent jurisdiction (each a "Governmental Entity”) in connection with the execution and delivery of this Agreement and the consummation by Ivory of the transactions contemplated hereby or by the Support Agreement, except for those that the failure to make or obtain, in the aggregate, have not had and would not reasonably be expected to have an Ivory Material Adverse Effect or prevent, impair or materially delay the ability of Ivory to consummate the transactions contemplated by this Agreement or the Support Agreement.
(ii) Neither the execution, delivery and performance of this Agreement and the consummation by Ivory of the transactions contemplated hereby nor compliance by Ivory with any of the provisions hereof or thereof will constitute or result in (A) a breach, conflict or violation of, or a default under, either the certificate of incorporation or by-laws (or comparable governing instruments) of Ivory or any of its Subsidiaries, (B) a breach, conflict or violation of, a default under, the acceleration of any obligations, a termination or the creation of a right of termination, the loss of any right or benefit, or the creation of a Lien on any assets of Ivory or any Subsidiary of Ivory (with or without
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notice, lapse of time or both) pursuant to, any agreement, lease, contract, note, mortgage, indenture, arrangement or other obligation binding upon Ivory or any Subsidiary of Ivory (each, a "Contract”) or, assuming that all consents, approvals and authorizations described in Section 4.1(d)(i) will be obtained prior to the Effective Time and all filings, notifications and registrations described in Section 4.1(d)(i) will have been made and any waiting periods thereunder will have terminated or expired prior to the Effective Time, violate any Law or governmental or non-governmental permit or license to which Ivory or any of its Subsidiaries is subject or (C) any change in the rights or obligations of any party under any of the Contracts, except, in the case of clause (B) or (C) above, for any breaches, conflicts, violations, defaults, accelerations, terminations, rights of termination, creations and changes that, in the aggregate, have not had and would not reasonably be expected to have an Ivory Material Adverse Effect or prevent, impair or materially delay the ability of Ivory to consummate the transactions contemplated by this Agreement or the Support Agreement.
(e) Ivory Reports; Financial Statements.
(i) The filings required to be made by Ivory since April 1, 2003 under the Securities Act of 1933, as amended (the "Securities Act”), and the Exchange Act have been filed with the SEC, including all forms, statements, reports, agreements (oral or written) and all documents, exhibits, amendments and supplements appertaining thereto, and each such filing complied, as of their respective dates (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such subsequent filing), in all material respects with all applicable requirements of the appropriate statutes and the rules and regulations thereunder (collectively, the "Ivory Reports”). None of the Ivory Reports (in the case of Ivory Reports filed pursuant to the Securities Act), as of their effective dates (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such subsequent filing), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein not misleading. None of the Ivory Reports (in the case of Ivory Reports filed pursuant to the Exchange Act) as of the respective dates filed with the SEC or first mailed to stockholders (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such subsequent filing), as applicable, contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(ii) The consolidated financial statements of Ivory and its Subsidiaries included in the Ivory Reports comply as to form in all material respects with the applicable rules and regulations of the SEC with respect thereto. Each of the consolidated balance sheets included in or incorporated by reference into the Ivory Reports (including the related notes and schedules) presents fairly, in all material respects, the consolidated financial position of Ivory and its Subsidiaries as of its date, and each of the consolidated statements of income and consolidated statements of cash flows included in or incorporated by reference into the Ivory Reports (including any related notes and schedules) presents fairly, in all material respects, the results of operations, retained earnings and changes in financial position, as the case may be, of
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Ivory and its Subsidiaries for the periods set forth therein (subject, in the case of unaudited statements, to the absence of notes and normal year-end audit adjustments which, in the aggregate, have not had and would not reasonably be expected to have an Ivory Material Adverse Effect), in each case in accordance with United States generally accepted accounting principles as in effect on the date or for the period with respect to which such principles are applied ("U.S. GAAP”) consistently applied during the periods indicated, except as may be noted therein.
(iii) Ivory has designed and maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information required to be disclosed by Ivory in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to Ivory’s management as appropriate to allow timely decisions regarding required disclosure. Ivory has complied in all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder or under the Exchange Act.
(f) Information. None of the information included or incorporated by reference in the Proxy Statement will, at the date it is first mailed to Ivory’s stockholders and at the time of the Ivory Stockholders Meeting, 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 made therein, in light of the circumstances under which they were made, not misleading. The Proxy Statement will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder. No representation is made by Ivory in this subsection (f) with respect to statements made based on information supplied by Parent or Merger Sub in writing specifically for inclusion or incorporation by reference in the Proxy Statement.
(g) No Undisclosed Material Liabilities. There are no liabilities or obligations, whether accrued, contingent, absolute, determined, determinable or otherwise, other than: (i) liabilities or obligations disclosed and provided for in the Ivory balance sheet as of March 31, 2005 included in the Ivory Reports, including the notes thereto (the "Ivory Balance Sheet”) or in the Ivory Reports filed prior to the date hereof; and (ii) liabilities or obligations incurred in the ordinary course of business consistent with past practices since March 31, 2005 except in each case for such exceptions as, in the aggregate, have not had and would not reasonably be expected to have an Ivory Material Adverse Effect.
(h) Absence of Certain Changes. Since March 31, 2005 (the "Audit Date”), except as disclosed in the Ivory Reports filed on or after the Audit Date and prior to the date of this Agreement or as set forth on Section 4.1(h) of the Ivory Disclosure Letter, Ivory and its Subsidiaries have conducted their business only in the ordinary and usual course of such business, and there has not been (i) any events, circumstances or states of fact which, in the aggregate, have had or would reasonably be expected to have an Ivory Material Adverse Effect; (ii) any declaration, setting aside or payment of any dividend or other distribution in respect of the capital stock of Ivory or any repurchase, redemption or other acquisition by Ivory or any Subsidiary of any securities of Ivory; or (iii) any change by Ivory in accounting principles,
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practices or methods which is not required by U.S. GAAP. Except as set forth in Section 4.1(h) of the Ivory Disclosure Letter, since the Audit Date and through the date of this Agreement, there has not been any material increase in the compensation payable or that could become payable by Ivory or any of its Subsidiaries to directors, officers or key employees or any material amendment of any of the Ivory Compensation and Benefit Plans other than increases to employees that are not officers made in the ordinary course of business consistent with past practice.
(i) Litigation. Except as disclosed in the Ivory Reports, there are no civil, criminal or administrative actions, suits, claims, hearings, investigations or proceedings pending or, to the Knowledge of Ivory, threatened against Ivory or any of its Subsidiaries, except for those that, in the aggregate, have not had and would not be reasonably expected to have an Ivory Material Adverse Effect or prevent or materially delay the ability of Ivory to consummate the transactions contemplated by this Agreement. Except as disclosed in the Ivory Reports filed prior to the date of this Agreement, neither Ivory nor any of its Subsidiaries is subject to any outstanding order, writ, injunction or decree of a Governmental Entity which, in the aggregate, have had or would reasonably be expected to have an Ivory Material Adverse Effect or could prevent or materially delay the consummation of the transactions contemplated hereby.
(j) Employee Benefits.
(i) The term "Ivory Compensation and Benefit Plan” shall mean each "employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA”) and each other bonus, deferred compensation, profit-sharing, thrift, savings, deferred compensation, employee stock ownership, stock bonus, stock purchase, change in control, retention, restricted stock, stock option, employment, termination, severance, compensation or other material compensation or benefit plan, policy, practice, agreement or other arrangement, that is maintained by Ivory or any of its Subsidiaries or that covers employees or former employees ("Employees”), or directors or former directors or consultants or former consultants of Ivory or any of its Subsidiaries; and any trust agreement or insurance contract forming a part of such Ivory Compensation and Benefit Plan. Section 4.1(j) of the Ivory Disclosure Letter lists all Ivory Compensation and Benefit Plans, and any Ivory Compensation and Benefit Plans containing "change of control” or similar provisions therein are specifically identified in Section 4.1(j)(i) of the Ivory Disclosure Letter. Ivory has made available to Parent prior to the date hereof a copy of all Ivory Compensation and Benefit Plans and a copy of each agreement, policy, practice or arrangement that covers key employees or former key employees of Ivory and its Subsidiaries. In addition, with respect to each Ivory Compensation and Benefit Plan, Ivory has made available to Parent a true, correct and complete copy of: (A) the most recent Annual Report (Form 5500 Series) and accompanying schedule, if any; (B) the current summary plan description and any material modifications thereto, if any (in each case, whether or not required to be furnished under ERISA); (C) the most recent annual financial report, if any; (D) the most recent actuarial report, if any; and (E) the most recent determination letter from the IRS, if any.
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(ii) All Ivory Compensation and Benefit Plans are in compliance in all material respects with applicable Law including provisions of ERISA, the Internal Revenue Code of 1986, as amended (the "Code”) and any other applicable Law. Each Ivory Compensation and Benefits Plan has been administered in all material respects in accordance with its terms. Each Ivory Compensation and Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the U.S. Department of the Treasury, Internal Revenue Service (the "IRS”), that has not been revoked and nothing has occurred, whether by action or failure to act, that would cause the loss of such qualification or that would result in costs to Ivory or any of its Subsidiaries under the Internal Revenue Service’s Employee Plans Compliance Resolution System. As of the date hereof, there is no material pending or, to the Knowledge of Ivory, threatened litigation relating to the Ivory Compensation and Benefit Plans, any fiduciaries thereof with respect to their duties to the Ivory Compensation and Benefits Plans or the assets of any of the trusts under any of the Ivory Compensation and Benefits Plans which could reasonably be expected to result in any material liability of Ivory or any of its Subsidiaries. Neither Ivory nor any of its Subsidiaries nor, to the Knowledge of Ivory, any other Person has engaged in a transaction that, assuming the Taxable period of such transaction expired as of the date hereof, would subject Ivory or any of its Subsidiaries or any Person that Ivory or its Subsidiaries has an obligation to indemnify to a material tax or penalty imposed by either Section 4975 of the Code or Section 502 of ERISA.
(iii) Neither Ivory, any of its Subsidiaries nor any ERISA Affiliate maintains or has ever maintained a Plan that is subject to Title IV of ERISA. Neither Ivory, any of its Subsidiaries nor any ERISA Affiliate has contributed to or ever been obligated to contribute to a "multiemployer plan”, within the meaning of Section 3(37) of ERISA, at any time. "ERISA Affiliate” means Ivory and any of its Subsidiaries and any trade or business (whether or not incorporated) that would be treated as a single employer with Ivory or any of its Subsidiaries under Section 4001 of ERISA or Section 414(b), (c), (m) or (o) of the Code. There does not now exist, nor do any circumstances exist that could result in, any Controlled Group Liability that could be a material liability of Ivory or its Subsidiaries following the Closing. "Controlled Group Liability” means any and all liabilities as a result of a failure to comply with (A) the continuation coverage requirements of Section 601 et seq. of ERISA and Section 4980B of the Code, (B) the Health Insurance Portability and Accountability Act or (C) corresponding or similar provisions of foreign Laws or regulations.
(iv) All contributions required to be made by Ivory or any of its Subsidiaries under the terms of any Ivory Compensation and Benefit Plan as of the date hereof have been timely made or have been reflected on the most recent consolidated balance sheet filed or incorporated by reference in Ivory Reports.
(v) Neither Ivory nor its Subsidiaries have any material obligations for, or liabilities with respect to, retiree health and life benefits under any Ivory Compensation and Benefit Plan, except for benefits required to be provided under Section 4980B of the Code or any other applicable Law requiring continuation of health coverage.
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(vi) Except as described on Section 4.1(j)(vi) of the Ivory Disclosure Letter, the consummation of the transactions contemplated by this Agreement alone or in combination with another event will not (a) entitle any of the employees of Ivory or any of its Subsidiaries to severance pay, (b) accelerate the time of payment or vesting of payment or trigger any payment of compensation or benefits under, increase the amount payable, or trigger any other material obligation pursuant to, any of the Ivory Compensation and Benefit Plans or (c) result in any breach or violation of, or a default under, or trigger any forfeiture under any Ivory Compensation and Benefit Plans. No payment under any Ivory Compensation and Benefit Plans individually or collectively and as a result of the transactions contemplated by this agreement (whether alone or upon the occurrence of any additional or subsequent events) or otherwise, would be expected to give rise to the payment of any amount that would not be deductible pursuant to Section 280G or 162(m) of the Code.
(vii) All Ivory Compensation and Benefit Plans subject to the Laws of any jurisdiction outside of the United States (i) have been maintained in material compliance with all applicable Laws and regulations, (ii) if they are intended to qualify for special tax treatment meet all requirements for such treatment, and (iii) if they are intended to be funded and/or book-reserved, are fully funded and/or book reserved, as appropriate, based upon reasonable actuarial assumptions.
(viii) Ivory has no material liability with respect to any improper classification of any individual who renders services to Ivory or any of its Subsidiaries who is classified by Ivory or such Subsidiary, as applicable, as having the status of an independent contractor or other non-employee status for any purpose (including for purposes of Taxation and Tax reporting and under Ivory Compensation and Benefit Plans).
(k) Compliance with Laws; Regulatory Matters.
(i) Except for matters that, in the aggregate, have not had and would not reasonably be expected to have an Ivory Material Adverse Effect, the business of Ivory and its Subsidiaries is and has been conducted in compliance with all applicable United States or foreign, federal, state or local laws, statutes, ordinances, rules, regulations, judgments, orders, injunctions, decrees, arbitration awards, agency requirements, licenses and permits, in each case, of any Governmental Entity (collectively, "Laws”). The provisions of this Section 4.1(k) shall not apply to Environmental Laws which are covered exclusively in Section 4.1(m).
(ii) Except for such failures that, in the aggregate, have not had and would not reasonably be expected to have an Ivory Material Adverse Effect, Ivory and each of its Subsidiaries has all permits, licenses, franchises, variances, exemptions, orders and other governmental authorizations, consents and approvals from Governmental Entities ("Permits”) necessary to conduct its business as currently conducted, and all such Permits are valid and in full force and effect. Each of Ivory and its Subsidiaries is, and at all times from January 1, 2003 through the date of this Agreement has been, in material compliance with the terms and requirements of such Permits, except for such failures as,
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in the aggregate, have not had and would not reasonably be expected to have an Ivory Material Adverse Effect. Since January 1, 2003, none of Ivory and its Subsidiaries has received any written notice from any Governmental Entity regarding (a) any actual or possible violation of or failure to comply with any term or requirement of any material Permits, or (b) any actual or possible revocation, withdrawal, suspension, cancellation, termination or modification of any material Permits, except as, in the aggregate, have not had and would not reasonably be expected to have an Ivory Material Adverse Effect. To the Knowledge of Ivory, no Governmental Entity has at any time since January 1, 2003 challenged in writing the right of any of Ivory and its Subsidiaries to develop, manufacture, market, license, distribute, promote, offer, provide or sell any products or services.
(l) Anti-takeover Statutes; Rights Plan. Ivory has taken all action necessary to exempt the Support Agreement, the Merger, this Agreement (and, in each case, the performance thereof) and the transactions contemplated hereby or thereby from the provisions of Section 203 of the DGCL, and such action is effective at the date of this Agreement. No other anti-takeover statute or regulation is applicable to this Agreement, the Support Agreement, the Merger or the transactions contemplated hereby or thereby.
(m) Environmental Matters.
(i) Ivory and its Subsidiaries are, and have been since January 1, 2002, in compliance with all Environmental Laws, including possessing all material Permits required for its operations under applicable Environmental Laws, except for instances of non-compliance that, in the aggregate, have not had and would not reasonably be expected to have an Ivory Material Adverse Effect.
(ii) Neither Ivory nor any of its Subsidiaries has received written notice of, and, to the knowledge of Ivory, is not the subject of, any actions, claims, investigations, demands, requests for information, citation, complaint or notices by any person alleging liability arising under, or non-compliance with any Environmental Law, except as, in the aggregate, have not had and would not reasonably be expected to have an Ivory Material Adverse Effect.
(iii) With respect to any Owned Real Property or Leased Real Property currently or formerly owned or leased, as the case may be, by Ivory or its Subsidiaries there have been no Releases of Hazardous Materials that are reasonably likely to result in a claim against Ivory or any of its Subsidiaries that, in the aggregate, have had or would reasonably be expected to have an Ivory Material Adverse Effect. Neither Ivory nor any of its Subsidiaries has entered into any agreement that may require them to pay to, reimburse, guarantee, pledge, defend, indemnify or hold harmless any Person from or against any liabilities arising out of or related to the generation, manufacture, use, transportation or disposal of Hazardous Materials, or otherwise arising in connection with or under Environmental Laws, except as, in the aggregate, have not had and would not reasonably be expected to have an Ivory Material Adverse Effect.
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As used herein, the term "Environmental Law” means any federal, state, local and foreign Law, judicial decisions, injunctions and permits and governmental agreements relating to protection of human health or the environment (including ambient air, surface water, ground water, land surface or subsurface strata), including those relating to the Release of Hazardous Materials.
As used herein, the term "Hazardous Material” means all substances or materials regulated as hazardous, toxic, explosive, dangerous, flammable or radioactive under any Environmental Law, including (a) petroleum, asbestos or polychlorinated biphenyls and (b) in the United States, all substances defined as Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. Section 300.5.
As used herein, the term "Release” means any release, spill, emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration into the indoor or outdoor environment (including ambient air, surface water, groundwater and surface or subsurface strata) or into or out of any property, including the movement of Hazardous Substances through or in the air, soil, surface water, groundwater or property.
Notwithstanding any other provision of this Agreement to the contrary (including, but not limited to, Section 4.1(k)), the representations and warranties of Ivory in this Section 4.1(m) constitute the sole representations and warranties of Ivory with respect to any Environmental Law or Hazardous Substance.
(n) Tax Matters. Ivory and each of its Subsidiaries (i) (A) has duly and timely filed (taking into account any extension of time within which to file) all material Tax Returns required to be filed by it, and all such Tax Returns are complete and accurate in all material respects and (B) has not requested any extension of time within which to file any material Tax Return; (ii) (A) has timely paid all material amounts of Taxes shown as due and payable on such Tax Returns, except with respect to matters contested in good faith through appropriate proceedings and for which adequate reserves have been established, in accordance with U.S. GAAP, on the Ivory Balance Sheet (as adjusted for operations in the ordinary course of business since the date thereof) and (B) has no liability for penalties or charges with respect to the late filing of any material Tax Return required to be filed by or with respect to any of them on or before the Effective Time; (iii) with respect to all material Tax Returns filed by or with respect to it, has not waived any statute of limitations with respect to Taxes in excess of $20,000 individually or $100,000 in the aggregate or agreed to any extension of time with respect to a Tax assessment or deficiency in excess of $20,000 individually or $100,000 in the aggregate; (iv) as of the date hereof, does not have any deficiency, or any audits, examinations, investigations or other proceedings in respect of material Taxes pending or proposed or threatened in writing; and (v) has timely withheld and paid all material Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder or other Third Party (as defined below). The consolidated U.S. federal income Tax Returns of Ivory have been examined and settled, or the applicable statutes of limitation for the assessment of Taxes for such period have closed, with respect to all Taxable years prior to 2005. Neither Ivory nor any of its Subsidiaries (i) has any liability for Taxes of any Person (other than Ivory or any of its Subsidiaries) under Treasury
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Regulation Section 1.1502-6 (or any comparable provision of U.S. state or local or foreign Law), as a transferee or successor, by contract or otherwise; (ii) is a party to any agreement (with any Person other than Ivory or any of its Subsidiaries) relating to the allocation or sharing of Taxes other than an agreement set forth in Section 4.1(n) of the Ivory Disclosure Letter which shall terminate on or prior to the Effective Time and under which neither Ivory nor any of its Subsidiaries shall have any liability for any prior periods; (iii) has constituted either a "distributing corporation” or a "controlled corporation” in a transaction that was intended to qualify under Section 355(a) of the Code; or (iv) has participated in a "reportable transaction” within the meaning of Treasury Regulations Section 1.6011-4(b) or any predecessor provision thereto.
As used in this Agreement, (i) the term "Tax” (including, with correlative meaning, the terms "Taxes,” and "Taxable”) includes all taxes of any kind, including federal, state, local and foreign income, profits, franchise, gross receipts, environmental, customs duty, capital stock, severances, stamp, payroll, sales, employment, unemployment, disability, use, property, withholding, excise, production, value added, occupancy and other taxes, duties or assessments of any nature whatsoever, together with all interest, penalties and additions imposed with respect to such amounts and any interest in respect of such penalties and additions, in all cases whether disputed or not, and (ii) the term "Tax Return” includes all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns) required to be supplied to a Tax authority relating to Taxes.
(o) Labor Matters. As of the date hereof, (i) neither Ivory nor any of its Subsidiaries is the subject of any material proceeding asserting that Ivory or any of its Subsidiaries has committed an unfair labor practice or any other violation of Law relating to employee matters, (ii) nor since January 1, 2004 has there been any labor strike, dispute, walk-out, work stoppage, slow-down or lockout involving Ivory or any of its Subsidiaries, (iii) no labor organization or group of employees of Ivory or any of its Subsidiaries has made a pending demand for recognition or certification, (iv) to the Knowledge of Ivory, there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or threatened to be brought or filed, with the National Labor Relations Board or any other labor relations tribunal or authority and (v) to the Knowledge of Ivory, there are no organizing activities, strikes, work stoppages, slowdowns, lockouts, material arbitrations or material grievances, or other material labor disputes pending or threatened against or involving Ivory or any of its Subsidiaries.
(p) Intellectual Property.
(i) For purposes of this Section 4.1(p):
(A) "Intellectual Property Agreements” shall mean all agreements, whether oral or written, and whether between Ivory or any of its Subsidiaries and third Persons or inter-corporate (other than licenses of readily available commercial software programs having an acquisition price of less than $50,000), to which Ivory or any of its Subsidiaries is a party or otherwise bound (1) under which Ivory or its Subsidiaries receives rights under any Intellectual Property Rights, (2) under which Ivory or its Subsidiaries grants rights under any Intellectual Property Rights or (3) restricting Ivory’s or any of its Subsidiaries’ rights to use any Intellectual Property Rights;
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(B) "Intellectual Property Rights” means all patents, trademarks, trade names, service marks, Internet domain names, designs, logos, slogans, and general intangibles of like nature together with the goodwill of the business symbolized by the foregoing, copyrights, Software (as defined below), technology, Trade Secrets (as defined below), and other intellectual property and intangible rights, and applications and registrations therefore;
(C) "Software” means all (1) computer programs, whether in source code or object code form, (2) data, databases and compilations and (3) all documentation relating to any of the foregoing;
(D) "Trade Secrets” means all confidential information, technology, trade secrets, know-how, processes, user lists, data collections, formulae, algorithms, models and methodologies; and
(ii) Ivory and its Subsidiaries own, are validly licensed or otherwise have the right to use, free and clear of any Liens other than Permitted Liens (as defined below), all Intellectual Property Rights which are owned, used or held for use in the business of Ivory and its Subsidiaries, provided that this representation shall not expand the representation set forth in Section 4.1(p)(iv)(B).
(iii) The Intellectual Property Agreements are valid and binding obligations of Ivory and its Subsidiaries, and to Ivory’s Knowledge the other Persons thereto, are enforceable in accordance with their terms, and there exists no event or condition which has or will result in a violation or breach of, or constitute (with or without due notice of lapse of time or both) a default under any such Intellectual Property Agreement by (A) Ivory or any of its Subsidiaries, or (B) to Ivory’s Knowledge, any third Person, except, in each case which, in the aggregate, has not had and would not reasonably be expected to have an Ivory Material Adverse Effect. No royalties, honoraria or other fees are payable by Ivory or any of its Subsidiaries to any third Persons for the use of or right to use any Intellectual Property Rights except pursuant to the Intellectual Property Agreements.
(iv) Except as set forth in Section 4.1(p)(iv) of the Ivory Disclosure Letter, and except, in each case which, in the aggregate, has not had and would not reasonably be expected to have an Ivory Material Adverse Effect:
(A) The Intellectual Property Rights owned or used by Ivory or any of its Subsidiaries, are subsisting and are valid and enforceable.
(B) To Ivory’s Knowledge, the conduct of Ivory’s and its Subsidiaries’ business as currently and heretofore conducted does not infringe or otherwise violate any Intellectual Property Right owned by any third Person. No written claim of infringement or other violation of any Intellectual Property Rights of any third Person has been made or asserted against Ivory or any of its
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Subsidiaries. To Ivory’s Knowledge, no Person is infringing or otherwise violating the rights of Ivory or any of its Subsidiaries with respect to any Intellectual Property Rights.
(C) Ivory and each of its Subsidiaries takes reasonable measures to protect the secrecy of its Trade Secrets. No Trade Secret of Ivory or any of its Subsidiaries has been disclosed or authorized to be disclosed to any third Person other than pursuant to a written non-disclosure agreement. With respect to any non-disclosure agreement relating to Trade Secrets of Ivory or any of its Subsidiaries on the one hand, or a third Person on the other hand, Ivory and its Subsidiaries are not, and to Ivory’s Knowledge the other Person thereto is not, in breach or default thereof.
(D) With respect to the Software which Ivory or its Subsidiaries purport to own, such Software was either developed (1) by U.S. employees of Ivory or any of its Subsidiaries within the scope of their employment, (2) as a "work made for hire” (as defined under 17 U.S.C. § 101) pursuant to a valid written agreement, or (3) by independent contractors who have assigned all their rights to Ivory or any of its Subsidiaries pursuant to valid written agreements.
(E) Except as provided for in the Intellectual Property Agreements, there are no settlements, forbearances to sue, consents, judgments, or orders or similar obligations which (1) materially restrict Ivory’s or any of its Subsidiaries’ rights to use any Intellectual Property Right or (2) permit third Persons to use any material Intellectual Property Right owned or controlled by Ivory or any of its Subsidiaries. The execution of this Agreement and the transactions contemplated hereby will not (a) result in the loss or impairment of Ivory’s or any of its Subsidiaries’ rights to or under any of the Intellectual Property Rights owned by Ivory or any of its Subsidiaries (b) give rise to a right to terminate any Intellectual Property Agreements, or (c) result in payment obligations under Intellectual Property Agreements which are in excess of the amounts payable prior to the Closing Date, except to the extent resulting from increased usage of the applicable Intellectual Property Rights licensed under such Intellectual Property Agreements.
(F) Ivory and its Subsidiaries are in compliance with all applicable Laws, as well as their own rules, policies, and procedures relating to privacy, data protection, and the collection and use of personal information collected, used, or held for use by Ivory or any of its Subsidiaries in the conduct of their business. No written claim has been asserted or threatened against Ivory or any of its Subsidiaries alleging a violation thereof.
(q) Title to Properties.
(i) Ivory and its Subsidiaries have good title to their owned assets, or in the case of assets and properties that they lease, license or have other rights in, valid rights by lease, license or other agreement to use, all assets and properties (in each case,
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tangible and intangible) necessary to permit Ivory and its Subsidiaries to conduct their business as currently conducted, except where the failure to have such title, or rights by lease, license, or other agreement to use, in the aggregate, have not had and would not reasonably be expected to have an Ivory Material Adverse Effect. The assets and properties (in each case, tangible and intangible) owned or used by Ivory and its Subsidiaries are in satisfactory condition and repair for their continued use as they have been used and are adequate in all material respects for their current use, reasonable wear and tear excepted, except where the failure to be in satisfactory condition and repair, in the aggregate, has not had and would not reasonably be expected to have an Ivory Material Adverse Effect.
(ii) Except as set forth in Section 4.1(q)(ii) of the Ivory Disclosure Letter and subject to any Permitted Liens, (i) Ivory or one of its Subsidiaries has good and merchantable title to each parcel of real property owned by Ivory or its Subsidiaries that is material to the operation of the business of Ivory and its Subsidiaries taken as a whole (the "Owned Real Property”), (ii) Ivory and its Subsidiaries have not leased, licensed or, to the Knowledge of Ivory, otherwise granted any Person the right to use or occupy such Owned Real Property or any portion thereof that materially interferes with the operation of the business of Ivory and its Subsidiaries taken as a whole and (iii) Ivory and its Subsidiaries have not collaterally assigned or granted any other security interest in such Owned Real Property, except for Permitted Liens. The Owned Real Property constitutes all of the real property owned by Ivory and its Subsidiaries.
(iii) Except as set forth in Section 4.1(q)(iii) of the Ivory Disclosure Letter or as, individually or, in the aggregate, would not reasonably be likely to have an Ivory Material Adverse Effect, (i) Ivory and its Subsidiaries do not sublease or license to any Person the right to use or occupy each parcel of all leasehold or subleasehold estates and other rights to use or occupy any land, buildings or structures currently used by Ivory or its Subsidiaries in the course of their respective businesses (the "Leased Real Property”) or any portion thereof, (ii) to the Knowledge of Ivory, there are no disputes with respect to any lease, (iii) Ivory and its Subsidiaries have not collaterally assigned or granted any other security interest in any lease or any interest therein and (iv) there are no Liens, except for Permitted Liens, on the estate or interest created by any lease.
(iv) Except as, in the aggregate, have not had and would not reasonably be expected to have an Ivory Material Adverse Effect, since January 1, 2002, (i) no written notice from any Governmental Entity has been received by Ivory or any of its Subsidiaries requiring or calling attention to the need for any material work, repair, construction, alteration or installation on, or in connection with, the Owned Real Property or the Leased Real Property, and (ii) no material assessment for public improvement that is due and remains unpaid has been made against any Owned Real Property or Leased Real Property and, to the Knowledge of Ivory, there are no currently proposed or pending assessments for public improvements against any Owned Real Property or Leased Real Property.
(v) For the purposes of this Agreement, "Liens” shall mean all mortgages, liens, pledges, charges, security interests, encumbrances or other adverse
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claims of any kind in respect of any property or asset. For the purposes of this Agreement, "Permitted Liens” shall mean (A) Liens for Taxes not yet due and payable or which are being contested in good faith by appropriate proceedings, (B) Liens securing indebtedness or liabilities that are reflected in the Ivory Balance Sheet, (C) such non-monetary Liens or other imperfections of title, if any, that, individually or in the aggregate, are not reasonably likely to (x) materially interfere with the present use or operation of any property of Ivory or any of its Subsidiaries or (y) materially detract from the value of any such property, (D) Liens imposed or promulgated by Laws with respect to real property and improvements, including zoning regulations, (E) Liens disclosed on existing title reports or existing surveys (in either case copies of which title reports and surveys have been delivered or made available to Parent), and (F) mechanics’, carriers’, workmen’s, repairmen’s and similar Liens, incurred in the ordinary course of business.
(r) Material Contracts.
(i) As of the date hereof, all of the contracts, undertakings, commitments or agreements described in any of Item 601(b)(1), (2), (4), (9) or (10) of Regulation S-K of the rules and regulations issued under the Securities Act to which Ivory or its Subsidiaries is a party ("Material Contracts”) have been filed as exhibits to, or incorporated by reference in, the Ivory Reports.
(ii) There are no Contracts, undertakings, commitments or agreements to which any of Ivory or its Subsidiaries is a party containing any covenant not to compete with another Person, except for such covenants, which in the aggregate, are not reasonably expected to be material to the business of Ivory and it Subsidiaries taken as a whole.
(iii) Neither Ivory nor any of its Subsidiaries has breached, or received in writing any claim or notice that it has breached any Contract to which it is a party or by which it is bound, except for such breaches as would not have an Ivory Material Adverse Effect. To Ivory’s Knowledge, each Contract to which Ivory or any of its Subsidiaries is a party or by which it is bound that has not expired or terminated by its terms is in full force and effect, except (A) to the extent it has previously expired in accordance with its terms and (B) for such exceptions as, in the aggregate, have not had and would not reasonably be expected to have an Ivory Material Adverse Effect. To Ivory’s Knowledge (x) each of the other parties thereto has performed all of the obligations required to be performed by it under, and is not in default under, each such Contract and, (y) no event has occurred that, with notice or lapse of time, or both, would constitute such a default, except for such failures of performance, defaults and events which, in the aggregate, have not had and would not reasonably be expected to have an Ivory Material Adverse Effect. Each Material Contract is a valid and binding obligation of Ivory or a Subsidiary of Ivory and, to the Knowledge of Ivory, the valid and binding obligation of each other party thereto.
(s) Insurance. Ivory maintains for itself and its Subsidiaries insurance policies covering the assets, business, equipment, properties, operations, employees, directors and officers, and product warranty and liability claims, and such other forms of insurance in such
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amounts, with such deductibles and against such risks and losses as, in its good faith judgment, are reasonable for the business and assets of Ivory and its Subsidiaries (taking into account the cost and availability of such insurance). All such insurance policies are in full force and effect, all premiums due and payable thereon have been paid, and Ivory and its Subsidiaries are otherwise in compliance with the terms and conditions of such policies and bonds, except for such exceptions as, in the aggregate, have not had and would not reasonably be expected to have an Ivory Material Adverse Effect.
(t) Vote Required. The Ivory Requisite Vote is the only vote of any class or series of the capital stock of Ivory required to adopt this Agreement.
(u) Brokers and Finders. Except for Montgomery & Co. and Thomas Weisel Partners LLC, neither Ivory nor any of its Subsidiaries has retained any broker or finder or incurred any liability for any brokerage fees, commissions or finders’ fees in connection with the Merger, the Support Agreement or the other transactions contemplated hereby or thereby. Prior to the date hereof, Ivory has provided Parent with a true, correct and complete copy of the engagement letter between Ivory and Montgomery & Co. and Thomas Weisel Partners LLC, respectively.
(v) Opinion of Financial Advisor. Ivory has received an opinion of each of Thomas Weisel Partners LLC and Montgomery & Co., dated as of the date hereof, to the effect that, as of such date, the Common Merger Consideration and the Preferred Merger Consideration is fair from a financial point of view to holders of Common Shares and holders of Preferred Shares.
(w) Transactions with Affiliates. Except as set forth in the Ivory Reports or on Part 1 of Section 4.1(w) of the Ivory Disclosure Letter, since January 1, 2002, neither Ivory nor any of its Subsidiaries is party to any Contract with any person or entity (x) that is an Affiliate of Ivory or (y) with respect to which any Affiliate of Ivory, or any member of the immediate family of any such Affiliate, owns more than 10% of the voting equity of such person or entity that would be required to be disclosed under Rule 404(a) of Regulation S-K. Except as set forth on Section 4.1(w) of the Ivory Disclosure Letter, all such transactions have been conducted on terms at least as favorable to Ivory or its applicable Subsidiary as could have been obtained from third parties. Ivory has disclosed all material information known (after due inquiry) by any of the officers of Ivory that relates to its option to acquire shares of capital stock of MySpace set forth in Article 7 of the Stockholders Agreement, dated February 11, 2005, by and among Ivory, Intermix Media, Inc., MySpace Ventures, LLC, Redpoint Ventures I, L.P., Redpoint Associates I, LLC, Redpoint Ventures II, L.P., Redpoint Associates II, LLC, Redpoint Technology Partners Q-1, L.P., Redpoint Technology Partners A-1, L.P., Orix Venture Finance LLC, Pinnacle Ventures I Affiliates L.P. and Pinnacle Ventures I (Q) Equity Holdings L.L.C., as amended (the "Stockholders Agreement”) and its ability to exercise such option.
(x) No Limitation on Other Representation. Except as otherwise expressly provided in this Agreement, nothing in any representation or warranty in this Agreement shall in any way limit or restrict the scope, applicability or meaning of any other representation or warranty made by Ivory herein.
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(y) No Other Representations or Warranties. Except for the representations and warranties contained in this Section 4.1, neither Ivory nor any other Person makes any other express or implied representation or warranty on behalf of Ivory or any of its Subsidiaries.
Section 4.2 Representations and Warranties of Parent and Merger Sub. Except as set forth in the section of the disclosure letter delivered to Ivory by Parent on or prior to the date of this Agreement (the "Parent Disclosure Letter”) that corresponds with the applicable subsection of this Section 4.2, Parent and Merger Sub each represents and warrants to Ivory that:
(a) Organization, Good Standing and Qualification. Each of Parent and Merger Sub is a corporation duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization. Each of Parent and Merger Sub has all requisite corporate power to own and operate its material properties and to carry on its business as currently conducted and is qualified to do business and is in good standing as a foreign corporation or other legal entity in each jurisdiction where the ownership or operation of its properties or conduct of its business requires such qualification, except where the failure to be so qualified as a foreign corporation or be in good standing, in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect.
As used in this Agreement, the term "Parent Material Adverse Effect” means a material adverse effect on the ability of Parent to consummate the transactions contemplated by this Agreement.
(b) Corporate Authority.
(i) Each of News, Parent and Merger Sub has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate on the terms and subject to the conditions of this Agreement, the transactions contemplated hereby, subject only to the receipt of the Parent Required Statutory Approvals. This Agreement has been duly authorized, executed and delivered by News, Parent and Merger Sub, and no other corporate proceedings on the part of News, Parent or Merger Sub are necessary to authorize or approve this Agreement or to consummate the transactions contemplated hereby. Assuming due authorization, execution and delivery by Ivory, this Agreement is a valid and legally binding agreement of Parent, News, and Merger Sub, enforceable against each of News, Parent and Merger Sub in accordance with its terms, subject to the Bankruptcy and Equity Exception.
(ii) The Boards of Directors of Parent and Merger Sub have approved and adopted this Agreement and approved the transactions contemplated hereby, including the Merger.
(c) Governmental Filings; No Violations.
(i) Other than any reports, filings, registrations, approvals and/or notices (A) required to be made pursuant to Section 1.2, (B) required to be made under the HSR Act, the Securities Act and the Exchange Act, and (C) required pursuant to the Foreign Antitrust Filings (items (B) and (C) (inclusive)), the "Parent Required Statutory
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Approvals”), no notices, reports, registrations or other filings are required to be made by Parent or Merger Sub with, nor are any consents, registrations, approvals, Permits or authorizations required to be obtained by Parent or Merger Sub from, any Governmental Entity, in connection with the execution and delivery by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the Merger and the other transactions contemplated hereby, except for those that the failure to make or obtain, in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect.
(ii) Neither the execution, delivery and performance of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the transactions contemplated hereby nor compliance by Parent and Merger Sub with any of the provisions hereof will constitute or result in (A) a breach or violation of, or a default under, either the certificate of incorporation or by-laws of Parent or Merger Sub, (B) a breach or violation of, or a default under, the acceleration of any obligations, a termination or the creation of a right of termination, the loss of any right or benefit or the creation of a lien, pledge, security interest or other encumbrance on the assets of Parent or Merger Sub (with or without notice, lapse of time or both) pursuant to any material Contracts binding upon Parent, Merger Sub or any of Parent’s Subsidiaries or, assuming that all consents, approvals and authorizations described in Section 4.2(c)(i) will be obtained prior to the Effective Time and all filings, notifications and registrations described in Section 4.2(c)(i) will have been made and any waiting periods thereunder will have terminated or expired prior to the Effective Time, violate any Law or governmental or non-governmental permit or license to which Parent, Merger Sub or any of Parent’s Subsidiaries is subject or (C) any change in the rights or obligations of any party under any of the material Contracts, except, in the case of clause (B) or (C) above, for any breaches, violations, defaults, terminations, rights of termination, accelerations, creation or change that, in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect.
(d) Disclosure Documents. None of the information provided by Parent specifically for inclusion or incorporation by reference in (i) the Proxy Statement or (ii) any other document to be filed with the SEC or any Other Filings will, at the respective times filed with the SEC or other Governmental Entity and, in addition, in the case of the Proxy Statement at the date it or any amendment or supplement is mailed to stockholders, at the time of the Ivory Stockholders Meeting and at the Effective Time, 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 made therein, in light of the circumstances under which they were made, not misleading.
(e) No Business Activities. All of the outstanding capital stock of Merger Sub is owned directly or indirectly by Parent. Merger Sub is not a party to any material Contract and has not conducted any activities other than in connection with the organization of Merger Sub, the negotiation and execution of this Agreement and the Support Agreement and the consummation of the transactions contemplated hereby and thereby. Merger Sub has no Subsidiaries.
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(f) No Vote Required. No vote of the stockholders of Parent is required to adopt this Agreement and the transactions contemplated hereby, including the Merger.
(g) Ownership of Ivory Common Shares. Neither Parent nor Merger Sub is, nor at any time during the last three years has it been, an "interested stockholder” of Ivory as defined in Section 203 of the DGCL. Neither Parent, Merger Sub nor any of their respective Subsidiaries or, to the Knowledge of Parent, any of their respective Affiliates or associates (as such term is defined under the Exchange Act) (i) beneficially owns, directly or indirectly, or (ii) is a party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, in case of either clause (i) or (ii), any Common Shares, in each case, except in accordance with this Agreement and the Support Agreement, including the Merger.
(h) Financial Capability. Parent has, and will have at the Effective Time, the financial capacity to perform and to cause Merger Sub to perform its obligations under this Agreement, and Parent has currently available (or access to) all funds necessary to pay the consideration set forth in Article II and any other amounts contemplated by this Agreement. Without limiting the foregoing, Parent’s ability to consummate, and to cause Merger Sub to consummate, the transactions contemplated hereby is not contingent on Parent’s ability to complete any public offering or private placement of equity or debt securities or to obtain any other type of financing prior to or on the Effective Time.
(i) Brokers and Finders. Except for J.P. Morgan Securities Inc., neither Parent nor Merger Sub has retained any broker or finder or incurred any liability for any brokerage fees, commissions or finders’ fees in connection with the Merger, the Support Agreement or the other transactions contemplated hereby or thereby.
(j) Litigation. There are no civil, criminal or administrative actions, suits, claims, hearings, investigations or proceedings pending or, to the Knowledge of Parent, threatened against Parent or any of its Subsidiaries, except for those that, in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect. Neither Parent nor any of its Subsidiaries is subject to any outstanding order, writ, injunction or decree of a Governmental Entity which, in the aggregate, have had and would reasonably be expected to have a Parent Material Adverse Effect.
(k) No Other Representations or Warranties. Except for the representations and warranties contained in this Section 4.2, neither Parent nor any other Person makes any other express or implied representation or warranty on behalf of Parent or any of its Subsidiaries.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Covenants of Ivory. Except as set forth on Schedule 5.1, Ivory covenants and agrees as to itself and its Subsidiaries (as applicable) that, from the date hereof and continuing until the Effective Time, except as expressly contemplated or permitted by this Agreement, or to the extent Parent shall otherwise consent in writing:
(a) Ivory shall conduct its business only in the ordinary and usual course, and it and its Subsidiaries shall use their respective commercially reasonable efforts to (i) preserve their current business organizations intact and maintain their existing relations and goodwill with customers, suppliers, distributors, creditors, lessors, licensors, licensees, agents, employees, business associates to the end that Ivory’s and its Subsidiaries’ goodwill and ongoing material businesses shall be unimpaired at the Effective Time; (ii) maintain and keep their properties and assets in good repair and condition; and (iii) maintain in effect all governmental permits pursuant to which Ivory or any of its material Subsidiaries currently operates;
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(b) neither Ivory nor any of its Subsidiaries shall (i) amend its certificate of incorporation or by-laws or the comparable governing instruments of any of its Subsidiaries; (ii) split, combine or reclassify its outstanding shares of capital stock; (iii) declare, set aside or pay any dividend payable in cash, stock or property in respect of any capital stock (other than dividends from its direct or indirect wholly-owned Subsidiaries to it or a wholly owned Subsidiary in the ordinary course of business); or (iv) repurchase, redeem or otherwise acquire any shares of its capital stock or any securities convertible into or exchangeable or exercisable for any shares of its capital stock or permit any of its Subsidiaries to purchase or otherwise acquire any shares of its capital stock or any securities convertible into or exchangeable or exercisable for any shares of its capital stock;
(c) neither Ivory nor any of its Subsidiaries shall issue, sell, pledge, dispose of or encumber any shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of its capital stock of any class or any Voting Debt other than (i) Common Shares issuable pursuant to options (whether or not vested) outstanding on the date hereof under the Ivory Stock Plans, (ii) 605,720 Common Shares issuable under the MySpace’s 2005 Equity Incentive Plan, (iii) Common Shares issuable upon exercise of the Warrants and (iv) Common Shares of Ivory issuable upon exercise of the Conversion Rights; provided that in the event that the Warrants expire unexercised, the amount of shares specified in (ii) shall be decreased by the amount that remains unexercised;
(d) neither Ivory nor any of its Subsidiaries shall issue, sell, pledge, dispose of or encumber any shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of the capital stock of any class of MySpace;
(e) neither Ivory nor any of its Subsidiaries shall, other than in the ordinary and usual course of business in transactions not in excess of $20,000 individually or $100,000 in the aggregate in any calendar quarter, transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any other property or assets;
(f) neither Ivory nor any of its Subsidiaries shall, by any means, make any acquisition of, or investment in, assets or stock (whether by way of merger, consolidation, tender offer, share exchange or other activity) in any transaction or any series of transactions (whether or not related) for an aggregate purchase price or prices, including the assumption of any debt, in excess of $20,000 individually or $100,000 in the aggregate in any calendar quarter, except for acquisitions listed on Section 5.1(f) of the Ivory Disclosure Letter or the acquisition of business supplies and equipment in the ordinary course of business;
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(g) neither Ivory nor any of its Subsidiaries shall, other than in the ordinary and usual course of business consistent with past practice, (i) modify, amend or terminate any Material Contract (and in any case only if the amount involved is less than $100,000), (ii) waive, release, relinquish or assign any Material Contract (or any of the rights of Ivory or any of its Subsidiaries thereunder), right or claim, (iii) cancel or forgive any indebtedness owed to Ivory or any of its Subsidiaries, (iv) enter into any Contract that (A) would in any way be binding upon Parent or any of its Affiliates (other than Ivory, the Surviving Corporation or any of their Subsidiaries) or (B) would limit the ability of Ivory or any of its Affiliates to compete in any manner or jurisdiction, except for such limitations, when taken together with similar limitations in other Contracts, which would not reasonably be expected to be material to the business or Ivory and its Affiliates;
(h) neither Ivory nor any of its Subsidiaries shall (i) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, recapitalization or other similar reorganization of itself or any of its Subsidiary, or (ii) other than in the usual and ordinary course of business, accelerate or delay (or permit any of its Subsidiaries to accelerate or delay) collection of notes or accounts receivable in advance of or beyond their regular due dates;
(i) neither Ivory nor any of its Subsidiaries shall (i) terminate, establish, adopt, enter into, make any new grants or awards under (other than grants or awards in the ordinary course of business consistent with past practice, amend or otherwise modify any Ivory Compensation and Benefit Plans, except as that are required by applicable Law (ii) increase the salary, wage, bonus or other compensation or benefits of any current or former directors, officers, employees, consultants or service providers, except (A) in the ordinary course of business consistent with past practice and (B) in the case of any increase of compensation to an officer, such increase as described in Section 5.1(i)(ii) of Ivory Disclosure Letter, or (iii) accelerate the vesting or payment of compensation payable or benefits provided or to become payable or provided to any of current or former directors, officers, employees, consultants or service providers or otherwise pay any amounts, grant any awards or provide any benefits not otherwise due, except actions necessary to satisfy contractual obligations under Ivory Compensation and Benefit Plans existing as of the date hereof, or (iv) establish, adopt or enter into any collective bargaining agreement, except in each of (i) through (iv) for, in each case, (A) increases in base salary and wages to employees or new hires with a base salary of less than $120,000 occurring in the ordinary and usual course of business, consistent with past practice (which shall include normal periodic performance reviews and related compensation and benefit increases) and previously disclosed to Parent, or (B) actions necessary to satisfy contractual obligations under the Ivory Compensation and Benefit Plans existing as of the date hereof;
(j) Ivory shall, and shall cause its Subsidiaries to, maintain with financially responsible insurance companies (or through self insurance) insurance in such amounts and against such risks and losses as are consistent with the insurance maintained by Ivory and its Subsidiaries as of the date of this Agreement in the ordinary course of business consistent with past practice;
(k) except as required by applicable Law or to the extent required by U.S. GAAP as advised by Ivory’s regular independent accountants, neither Ivory nor any of its Subsidiaries shall change any accounting principle, practice or method in a manner that is inconsistent with past practice;
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(l) Ivory and its Subsidiaries shall (i) prepare all material Tax Returns required to be filed with any taxing authority consistent with past practice, (ii) timely file such Tax Returns and timely pay all Taxes due and payable as shown on the Tax Returns filed, and (iii) promptly notify Parent of any action, suit, proceeding, investigation, audit or claim pending against or with respect to Ivory or any of its Subsidiaries in respect of any material Tax where there is a reasonable likelihood of a materially adverse determination or decision. Except as required by applicable Law, neither Ivory nor any of its Subsidiaries shall make, change or revoke any material Tax election, settle or compromise any material Tax liability, or amend any material Tax Return;
(m) neither Ivory nor any of its Subsidiaries shall settle or compromise any suit or claim or threatened suit or claim where the amount involved is greater than $50,000 individually or $200,000 in the aggregate or is otherwise covered in full by insurance and the settlement of which only involves such payment;
(n) neither Ivory nor any of its Subsidiaries shall (i) incur, assume or pre-pay any long-term debt or incur or assume any short-term debt, except that Ivory and its Subsidiaries may pre-pay debt in the ordinary course of business in an amount not to exceed $60,000 in the aggregate; (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person (other than a wholly-owned subsidiary of Ivory); (iii) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, contingent or otherwise), except in the ordinary course of business consistent with past practice and in accordance with their terms; (iv) make any loans, advances or capital contributions to, or investments in, any other Person, except for loans, advances, capital contributions or investments between any wholly-owned Subsidiary of Ivory and Ivory or another wholly-owned Subsidiary of Ivory in accordance with past practice; (v) authorize or make capital expenditures which are in excess of $50,000 individually or $200,000 in the aggregate or, with respect to MySpace, capital expenditures reasonably necessary for ongoing operations that do not require additional financing; or (vi) vary Ivory’s inventory practices in any material respect from Ivory’s past practices; and
(o) neither Ivory nor any of its Subsidiaries will authorize or enter into an agreement to do anything prohibited by the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Access. Ivory agrees that upon reasonable prior notice it shall (and shall cause its Subsidiaries to) afford Parent’s officers, directors, employees, counsel, accountants and other authorized representatives and agents ("Representatives”) reasonable access, during normal business hours throughout the period prior to the Effective Time, to its executive officers, properties, books, contracts and records, and, during such period, Ivory shall (and shall cause its Subsidiaries to) furnish promptly to Parent all information concerning its business, properties
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and personnel as may reasonably be requested but only to the extent such access does not unreasonably interfere with the business or operations of Ivory or its Subsidiaries; provided that no investigation pursuant to this Section shall affect or be deemed to modify any representation or warranty made by Ivory, Parent or Merger Sub in this Agreement or the conditions to the obligations of the parties to consummate the Merger; provided, further that Ivory shall not be obligated to take any action pursuant to the foregoing (i) that would contravene any agreement to which Ivory or a Subsidiary is a party or violate any Law or (ii) in the event of any litigation or threatened litigation between the parties over the terms of this Agreement to the extent such information sought is relevant to such litigation. All such information shall be governed by the terms of the Confidentiality Agreement (as defined below). Ivory shall furnish promptly to Parent a true, correct and complete copy of each report, schedule, registration statement and other document filed by it or its Subsidiaries during such period pursuant to the requirements of federal or state securities Laws.
Section 6.2 No Solicitation.
(a) Ivory shall, and shall cause each of its Subsidiaries, and their respective officers, directors, employees, representatives and agents (collectively, "Ivory Representatives”) to immediately cease any existing discussions or negotiations, if any, with any Third Party that may be ongoing with respect to an Acquisition Proposal. Ivory shall not, and shall not authorize or permit any of its Subsidiaries or any of their respective Representatives (including any investment banker, attorney or accountant retained by it or any of its Subsid