ASSET PURCHASE AGREEMENT
BY AND AMONG
OVERTURE SERVICES, INC.,
ALTAVISTA COMPANY,
AURORA I, LLC
(A WHOLLY-OWNED LIMITED LIABILITY COMPANY OF ALTAVISTA)
AND
CMGI, INC.
DATED AS OF
FEBRUARY 18, 2003
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TABLE OF CONTENTS
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ARTICLE I PURCHASE AND SALE OF ACQUIRED ASSETS AND ASSUMPTION OF LIABILITIES.............. 1
Section 1.1 Purchase and Sale of Assets..................................................... 1
Section 1.2 Assumption of Liabilities....................................................... 1
Section 1.3 Purchase Price.................................................................. 2
Section 1.4 Escrow.......................................................................... 2
Section 1.5 Allocation of Purchase Price and Assumed Liabilities............................ 2
ARTICLE II CLOSING......................................................................... 3
Section 2.1 The Closing..................................................................... 3
Section 2.2 Deliveries by the Company....................................................... 3
Section 2.3 Deliveries by Parent............................................................ 3
Section 2.4 Deliveries by Principal Stockholder............................................. 4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................... 4
Section 3.1 Organization.................................................................... 5
Section 3.2 Authorization................................................................... 5
Section 3.3 Execution; Validity of Agreement................................................ 5
Section 3.4 Consents and Approvals; No Violations........................................... 5
Section 3.5 Company Subsidiaries............................................................ 5
Section 3.6 Financial Statements............................................................ 6
Section 3.7 No Undisclosed Liabilities...................................................... 6
Section 3.8 Absence of Certain Changes ..................................................... 6
Section 3.9 Encumbrances ................................................................... 6
Section 3.10 Real Property................................................................... 6
Section 3.11 Leases.......................................................................... 6
Section 3.12 Company Contracts and Commitments............................................... 6
Section 3.13 Litigation...................................................................... 7
Section 3.14 Environmental Matters........................................................... 8
Section 3.15 Compliance with Laws............................................................ 8
Section 3.16 Employee Benefit Plans.......................................................... 8
Section 3.17 Tax Matters..................................................................... 10
Section 3.18 Intellectual Property........................................................... 10
Section 3.19 Labor Matters................................................................... 11
Section 3.20 Affiliate Transactions.......................................................... 14
Section 3.21 Brokers or Finders.............................................................. 15
Section 3.22 Bank Accounts................................................................... 15
Section 3.23 Accounts Receivable and Payable................................................. 15
Section 3.24 Ownership of Assets............................................................. 15
Section 3.25 Investment Intent............................................................... 15
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PRINCIPAL STOCKHOLDER......................... 17
Section 4.1 Organization; Qualification of Principal Stockholder............................ 17
Section 4.2 Authorization................................................................... 17
Section 4.3 Execution; Validity of Agreement................................................ 17
Section 4.4 Consents and Approvals; No Violations........................................... 18
Section 4.5 Litigation...................................................................... 18
Section 4.6 Brokers or Finders.............................................................. 18
Section 4.7 Disclaimer of Other Representations and Warranties.............................. 18
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT........................................ 19
Section 5.1 Organization; Qualification of Principal Stockholder............................ 19
Section 5.2 Authorization................................................................... 19
Section 5.3 Execution; Validity of Agreement................................................ 19
Section 5.4 Consents and Approvals; No Violations........................................... 20
Section 5.5 Capitalization.................................................................. 20
Section 5.6 Parent SEC Reports.............................................................. 20
Section 5.7 No Undisclosed Liabilities...................................................... 21
Section 5.8 Absence of Certain Changes...................................................... 21
Section 5.9 Parent Material Contracts....................................................... 21
Section 5.10 Availability of Funds........................................................... 21
Section 5.11 Litigation...................................................................... 22
Section 5.12 Investigation by Parent......................................................... 22
Section 5.13 Brokers or Finders.............................................................. 22
Section 5.14 Form S-3 Eligibility............................................................ 23
ARTICLE VI COVENANTS....................................................................... 23
Section 6.1 Interim Operations.............................................................. 23
Section 6.2 Access to Information; Confidentiality.......................................... 26
Section 6.3 Regulatory Filings; Commercially Reasonable Efforts............................. 27
Section 6.4 State Takeover Laws............................................................. 28
Section 6.5 Third Party Consents............................................................ 28
Section 6.6 Publicity....................................................................... 29
Section 6.7 Ancillary Agreements............................................................ 29
Section 6.8 Subsequent Actions.............................................................. 29
Section 6.9 Waiver of Bulk Sales Requirement................................................ 30
Section 6.10 Audited Financial Statements.................................................... 29
Section 6.11 Notice of Certain Matters....................................................... 30
Section 6.12 Non-Transferable Assets......................................................... 30
Section 6.13 Rule 145........................................................................ 31
Section 6.14 Company Disclosure Schedule Supplement.......................................... 31
ARTICLE VII ADDITIONAL AGREEMENTS........................................................... 31
Section 7.1 No Solicitation................................................................. 31
Section 7.2 Listing of Additional Shares.................................................... 32
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Section 7.3 Blue Sky Laws................................................................... 32
Section 7.4 Employee Matters................................................................ 33
Section 7.5 Form 10-K....................................................................... 34
ARTICLE VIII CONDITIONS 34
Section 8.1 Conditions to Each Party's Obligation to Effect the Closing..................... 34
Section 8.2 Conditions to Obligation of Parent to Effect the Closing........................ 34
Section 8.3 Conditions to Obligation of the Company and Principal Stockholder to
Effect the Closing.............................................................. 36
ARTICLE IX TERMINATION..................................................................... 37
Section 9.1 Termination..................................................................... 37
Section 9.2 Effect of Termination........................................................... 39
ARTICLE X TAX MATTERS..................................................................... 39
Section 10.1 Liability for Taxes............................................................. 39
Section 10.2 Filing Responsibility........................................................... 40
Section 10.3 Cooperation and Exchange of Information......................................... 40
Section 10.4 Tax Sharing Agreements.......................................................... 41
Section 10.5 Transfer Taxes.................................................................. 41
Section 10.6 Section 338 Election............................................................ 42
Section 10.7 Survival........................................................................ 42
Section 10.8 Scope of Remedy................................................................. 42
Section 10.9 Disputes........................................................................ 42
ARTICLE XI ESCROW AND INDEMNIFICATION...................................................... 43
Section 11.1 Escrow Fund..................................................................... 43
Section 11.2 Indemnification................................................................. 43
Section 11.3 Termination..................................................................... 44
Section 11.4 Claims Upon Escrow Fund......................................................... 45
Section 11.5 Objections to Claims............................................................ 45
Section 11.6 Resolution of Conflicts......................................................... 46
Section 11.7 Third-Party Claims.............................................................. 46
Section 11.8 Tax Indemnification............................................................. 46
ARTICLE XII DEFINITIONS AND INTERPRETATION.................................................. 47
Section 12.1 Definitions..................................................................... 47
Section 12.2 Interpretation.................................................................. 56
ARTICLE XIII MISCELLANEOUS................................................................... 57
Section 13.1 Fees and Expenses............................................................... 57
Section 13.2 Amendment and Modification...................................................... 57
Section 13.3 Notices......................................................................... 57
Section 13.4 Counterparts.................................................................... 59
Section 13.5 Entire Agreement; No Third Party Beneficiaries.................................. 59
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Section 13.6 Severability.................................................................... 59
Section 13.7 Governing Law................................................................... 60
Section 13.8 Venue........................................................................... 60
Section 13.9 Extension; Waiver............................................................... 60
Section 13.10 Assignment; Successors.......................................................... 60
Section 13.11 Survival........................................................................ 60
Section 13.12 Waiver of Right to Jury......................................................... 60
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ATTACHMENTS
Company Disclosure Schedule
Parent Disclosure Schedule
Schedule 6.1 Interim Operations
Schedule 7.4(b) Benefit Plans
Schedule 8.2(d) Necessary Consents
EXHIBIT A: Written Consent of Stockholders
EXHIBIT B: Escrow Agreement
EXHIBIT D: Bill of Sale
EXHIBIT E: Assignment and Assumption Agreement
EXHIBIT F: Registration Rights Agreement
EXHIBIT G: Voting Agreement
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of February 18, 2003
(this "Agreement"), is entered into by and among Overture Services, Inc.
("Parent"), a Delaware corporation, AltaVista Company, a Delaware corporation
(the "Company"), Aurora I, LLC, a Delaware limited liability company of which
the Company is the sole member ("Aurora"), and CMGI, Inc., a Delaware
corporation ("Principal Stockholder"). Certain capitalized terms used in this
Agreement have the meanings assigned to them in Article XII.
WHEREAS, the Company desires to sell, assign, transfer, convey
and deliver to Parent, and Parent desires to purchase and assume from the
Company, on the terms and subject to the conditions set forth in this Agreement,
the Acquired Assets and Assumed Liabilities, by, among other things, acquiring
all of the equity interests in Aurora pursuant to the terms and conditions
hereof;
WHEREAS, holders of shares of the Company's outstanding
capital stock collectively representing in excess of eighty percent (80%) of the
voting power of the Company have approved this Agreement and the transactions
contemplated hereby (the "Transactions"), upon the terms and subject to the
conditions set forth herein, in accordance with the Delaware General Corporation
Law (the "DGCL") and the Company's Certificate of Incorporation and Bylaws, by
executing the written consent of stockholders in the form attached hereto as
Exhibit A (the "Stockholder Consent"); and
WHEREAS, as a condition and inducement to Parent to enter into
this Agreement and incur the obligations set forth herein, at the Closing,
Parent, the Company and the Escrow Agent named therein shall enter into an
escrow agreement substantially in the form attached hereto as Exhibit B (with
such changes as the Escrow Agent may reasonably request, the "Escrow
Agreement"), pursuant to which the Company shall place a portion of the Purchase
Price in an escrow account to secure certain indemnification obligations to
Parent; and
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements set forth herein,
and for other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF ACQUIRED ASSETS
AND ASSUMPTION OF ASSUMED LIABILITIES
Section 1.1 Purchase and Sale of Assets. Upon the terms and
subject to the conditions set forth in this Agreement, at the Closing, the
Company agrees to sell, assign, transfer, and convey to Parent, and Parent
agrees to purchase, all of the Acquired Assets.
Section 1.2 Assumption of Liabilities. Upon the terms and
subject to the conditions set forth in this Agreement, at the Closing, Parent
shall assume and become
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responsible for, and shall pay, perform and discharge when due, and shall
indemnify the Company against and hold harmless from, and the Company shall
assign to Parent, all of the Assumed Liabilities.
Section 1.3 Purchase Price.
(a) Subject to the terms and conditions of the
Agreement, in consideration of the sale, assignment, transfer and conveyance to
Parent of the Acquired Assets, at the Closing, Parent shall:
(i) pay to the Company sixty million dollars
($60,000,000) in cash by wire transfer of immediately available funds
(the "Cash Consideration"); and
(ii) issue to the Company a number of shares
of Parent's common stock, par value $0.0001 per share (the "Parent
Common Stock"), determined by dividing eighty million dollars
($80,000,000) by the average closing price at the end of normal trading
hours (the "Average Closing Price") of a share of Parent Common Stock
on the Nasdaq National Market or such other principal securities
exchange on which the Parent Common Stock shall then be trading for the
twenty (20) consecutive trading days ending at the end of the second
trading day prior to the Closing Date (the "Stock Consideration" and,
together with the Cash Consideration, the "Purchase Price"); provided,
that Parent shall not be required to issue more than 4,274,670 shares
of Parent Common Stock or less than 3,001,364 shares of Parent Common
Stock to the Company pursuant to this Agreement; and
(iii) assume the Assumed Liabilities.
Section 1.4 Escrow. Ten percent (10%) of each of the Cash
Consideration and the Stock Consideration (the "Escrow Amount") shall be
deposited by the Company within one (1) Business Day after the Closing, by wire
transfer of immediately available funds, in the case of the Cash Consideration,
and shares of Parent Common Stock, in the case of the Stock Consideration, into
escrow pursuant to the terms of the Escrow Agreement for the purpose of
satisfying indemnification claims pursuant to Article XI hereof.
Section 1.5 Allocation of Purchase Price and Assumed
Liabilities. The Company shall agree to an allocation of the Purchase Price and
the Assumed Liabilities among the Acquired Assets in accordance with Section
1060 of the Code and the regulations promulgated thereunder (and any similar
provision of state, local or foreign law, as applicable) pursuant to an
independent third party retained by Parent to in good faith prepare and deliver
such allocation to the Company within thirty (30) calendar days of the date of
this Agreement. To the extent that the Company or the Principal Stockholder is
required to pay any Damages, an appropriate adjustments to the allocation of the
Purchase Price, as required by GAAP, shall be made at such time among the
Acquired Assets. Each of Parent and the Company shall: (a) timely file all forms
(including Internal Revenue Service Form 8594) and Tax Returns required to be
filed in connection with the Final Allocation; (b) be bound by such Final
Allocation for
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purposes of determining Taxes; (c) prepare and file, and cause its respective
Affiliates to prepare and file, its Tax Returns on a basis consistent with such
Final Allocation; and (d) take no position, and cause its Affiliates to take no
position, inconsistent with such allocation on any applicable Tax Return, in any
audit or proceeding before any Tax Authority, in any report made for Tax,
financial accounting or any other purposes, or otherwise. In the event that the
Final Allocation is disputed by any Tax Authority, the party receiving notice of
such dispute shall promptly notify the other parties hereto concerning the
existence and resolution of such dispute.
ARTICLE II
CLOSING
Section 2.1 The Closing. The closing of the Transactions (the
"Closing") shall take place at: (a) the offices of Skadden, Arps, Slate, Meagher
& Flom LLP, 525 University Avenue, Suite 1100, Palo Alto, California 94301 at
6:00 a.m., California time, two (2) Business Days following the date on which
all conditions to the Closing set forth in Article VIII shall have been
satisfied or waived in accordance with this Agreement (other than those
conditions that are contemplated to be satisfied prior to the Closing); or (b)
at such other place, time and date as agreed in writing by Parent and the
Company (the "Closing Date").
Section 2.2 Deliveries by the Company. At the Closing, the
Company shall deliver to Parent:
(a) a duly executed bill of sale in the form attached
hereto as Exhibit D (the "Bill of Sale");
(b) executed copies of the Consents, to the extent
obtained, and the Necessary Consents;
(c) the Company Officer's Certificate referred to in
Section 8.2(g) hereof;
(d) the Company Secretary's Certificate referred to
in Section 8.2(h) hereof;
(e) a certification of non-foreign status for the
Company in the form and manner which complies with the requirements of Section
1445 of the Code and the regulations promulgated thereunder;
(f) executed copies of each of the Ancillary
Agreements; and
(g) stock certificates representing all of the
outstanding equity securities of or membership interests in each of the Company
Subsidiaries.
Section 2.3 Deliveries by Parent. At the Closing, Parent
shall deliver to the Company:
(a) the Purchase Price;
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(b) a duly executed assignment and assumption
agreement in the form attached hereto as Exhibit E (the "Assignment and
Assumption Agreement");
(c) the Parent Officer's Certificate referred to in
Section 8.3(d) hereof;
(d) the Parent Secretary's Certificate referred to in
Section 8.3(e) hereof; and
(e) executed copies of each of the Ancillary
Agreements.
Section 2.4 Deliveries by Principal Stockholder. At the
Closing, Principal Stockholder, shall deliver to Parent:
(a) executed copies of the applicable Ancillary
Agreements;
(b) the Principal Stockholder Officer's Certificate
referred to in Section 8.2(i) hereof; and
(c) the Principal Stockholder Assistant Secretary's
Certificate referred to in Section 8.2(j) hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedule,
prepared and signed by the Company and delivered to Parent simultaneously with
the execution hereof, the Company represents and warrants to Parent that all of
the statements contained in this Article III are true and correct. For purposes
of the representations and warranties of the Company contained herein,
disclosure in any section of the Company Disclosure Schedule of any facts or
circumstances shall be deemed to be disclosure of such facts or circumstances
with respect to such other representations or warranties by the Company calling
for disclosure of such information if such disclosure would reasonably lead
Parent to make further inquiry of such facts and circumstances, and such further
inquiry would reasonably reveal that such disclosure applies to such other
representations and warranties. The inclusion of any information in any section
of the Company Disclosure Schedule or other document delivered by the Company
pursuant to this Agreement shall not be deemed to be an admission or evidence of
the materiality of such item, nor shall it establish a standard of materiality
for any purpose whatsoever.
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Section 3.1 Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
has all requisite corporate or other power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority, and
governmental approvals would not have, individually or in the aggregate, a
Company Material Adverse Effect.
Section 3.2 Authorization. Each of the Company and Aurora has
all requisite power and authority to execute and deliver this Agreement and to
consummate the Transactions. The execution, delivery and performance by the
Company of this Agreement and the consummation of the Transactions by the
Company have been duly authorized by the Board of Directors of the Company and
approved by the holders of the requisite number of voting shares of the
Company's capital stock in accordance with the DGCL and the Company's
Certificate of Incorporation and Bylaws. No other corporate or similar action on
the part of the Company or Aurora is necessary to authorize the execution and
delivery of this Agreement by the Company or Aurora or the consummation by the
Company or Aurora of any of the Transactions.
Section 3.3 Execution; Validity of Agreement. This Agreement
has been duly executed and delivered by the Company and Aurora, and, assuming
due and valid authorization, execution and delivery hereof by Principal
Stockholder and Parent is a valid and binding obligation of the Company and
Aurora, enforceable against them in accordance with its terms except (a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar Laws of general application affecting
enforcement of creditors' rights generally and (b) the availability of the
remedy of specific performance or injunctive or other forms of equitable relief
may be subject to equitable defenses and would be subject to the discretion of
the court before which any proceeding therefor may be brought.
Section 3.4 Consents and Approvals; No Violations. Except for
the filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the Exchange
Act, the HSR Act, applicable foreign antitrust Laws, and state securities laws,
none of the execution, delivery or performance of this Agreement by the Company,
the consummation by the Company of the Transactions or compliance by the Company
with any of the provisions hereof shall: (w) conflict with or result in any
breach of any provision of the Company's Certificate of Incorporation or Bylaws
as presently in effect; (x) require any filing with, or permit, authorization,
consent or approval of, any Governmental Entity; (y) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any Company Material
Contract; or (z) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company.
Section 3.5 Company Subsidiaries. Section 3.5 of the Company
Disclosure Schedule sets forth the name, jurisdiction of incorporation and
authorized capital of each Company Subsidiary. All the outstanding capital stock
of each Company Subsidiary is owned directly or indirectly by the Company, free
and clear of all Encumbrances, and is validly issued, fully paid and
nonassessable. Each Company Subsidiary: (a) is a corporation or limited
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction
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of incorporation; (b) has all corporate or other similar power and authority and
all necessary government approvals to own, lease and operate its properties and
to carry on its business as it is now being conducted and to own the properties
and assets it now owns; and (c) is duly qualified or licensed to conduct its
business as a foreign entity in good standing in every jurisdiction in which
such qualification or license is required, except, in the case of the foregoing
clauses (a), (b) and (c), where the failure to be so organized, existing and in
good standing, to have such power, authority and governmental approvals, and to
be so qualified or licensed, would not have, individually or in the aggregate, a
Company Material Adverse Effect. There are no shares of capital stock of any
Company Subsidiary issued or outstanding that are not owned directly or
indirectly by the Company and there are no existing options, warrants, calls,
pre-emptive rights, subscriptions or other rights, agreements, arrangements or
commitments of any character, obligating any Company Subsidiary to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock of any Company Subsidiary.
Section 3.6 Financial Statements. True and complete copies of
the Financial Statements are included in Section 3.6 of the Company Disclosure
Schedule. The Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved and with each other
within the same period and fairly present the consolidated financial position
and the consolidated results of operations and cash flows of the Company and the
Company Subsidiaries as of the times and for the periods referred to therein;
provided, however, that the Financial Statements are subject to normal recurring
year-end audit adjustments, and do not contain all footnotes required under
GAAP.
Section 3.7 No Undisclosed Liabilities. Except for threatened
or pending litigation set forth on Section 3.13 of, or as otherwise included in,
the Company Disclosure Schedule or this Agreement, liabilities and obligations
reflected in the Balance Sheet or incurred in the ordinary course of business
since the Balance Sheet Date, neither the Company nor any Company Subsidiary has
any liabilities or obligations that are material to the Company and the Company
Subsidiaries, taken as a whole, individually or in the aggregate, and that would
be required to be disclosed in a consolidated balance sheet of the Company
(including the related notes thereto, where appropriate) prepared in accordance
with GAAP.
Section 3.8 Absence of Certain Changes. Except as (a)
disclosed in the Financial Statements, this Agreement or the Company Disclosure
Schedule or (b) expressly required by this Agreement, since the Balance Sheet
Date through the date of this Agreement, no event that would be reasonably
likely to result in a Company Material Adverse Effect has occurred.
Section 3.9 Encumbrances. The Company and each Company
Subsidiary has good title to the Acquired Assets, free and clear of all
Encumbrances.
Section 3.10 Real Property. The Company does not own, and has
never owned, any real property.
Section 3.11 Leases. Section 3.11 of the Company Disclosure
Schedule sets forth a complete and correct list of all Leases, each of which has
been made available to Parent. Each Lease is valid, binding and enforceable in
accordance with its terms and is in full force and
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effect. There is no existing material default by the Company or any Company
Subsidiary under any of the Leases.
Section 3.12 Company Contracts and Commitments.
(a) Section 3.12 of the Company Disclosure Schedule
sets forth a true, complete and correct list of every Contract (other than the
Leases, which are addressed in Section 3.11 and such Licenses as are addressed
in Section 3.18(c)) that is currently in effect as of the date of this Agreement
and: (i) provides for future payments by the Company or any Company Subsidiary,
or to the Company or any Company Subsidiary, of more than $100,000 per annum and
may not be canceled upon sixty (60) days' notice without any liability, penalty
or premium (excluding purchase orders, invoices, leasing transactions and
advertising agreements, in any such case, which were entered into or incurred in
the ordinary course of business); (ii) was entered into by the Company or a
Company Subsidiary with a current stockholder, current executive officer or
current director of the Company or any Company Subsidiary; (iii) is a collective
bargaining or similar agreement; (iv) involves an agreement with respect to any
Indebtedness of the Company or any Company Subsidiary; (v) materially restricts
any conduct of any business in any location by the Company or any Company
Subsidiary; (vi) is an employment agreement with a current executive officer or
current director, or consulting agreement with an individual involving payments
by the Company in excess of $100,000 per annum; (vii) is a material joint
venture agreement or partnership agreement to which the Company or any Company
Subsidiary is a party or is otherwise bound; (viii) is an agreement to which the
Company or any Company Subsidiary is a party or is otherwise bound that contains
explicit terms providing for material benefits (which shall not be interpreted
to include cancellation or termination) to the other party that may be
triggered, increased or accelerated by this Agreement, any of the Ancillary
Agreements or the consummation of the Transactions; or (ix) is an agreement to
which the Company or any Company Subsidiary is a party or is otherwise bound,
entered into other than in the ordinary course of business, that includes terms
or provisions obligating the Company or any Company Subsidiary to provide
indemnification (other than in agreements where such indemnification is provided
in the ordinary course of business) or any other guarantee to any Person.
(b) As of the date hereof, (i) there is not and, to
the Knowledge of the Company, there has not been claimed or alleged by any
Person with respect to any Contract required to be listed in Section 3.12 of the
Company Disclosure Schedule (together with the Leases and such Licenses required
to be listed on Section 3.18(c) of the Company Disclosure Schedule, such
Contracts, the "Company Material Contracts"), any existing default or event
that, with notice or lapse of time or both, would constitute a default or, event
of default on the part of the Company or any Company Subsidiary or, to the
Knowledge of the Company, on the part of any other party thereto, except such
defaults, events of default and other events which are not material, and (ii) no
consent, approval, authorization or waiver from, or notice to, any Governmental
Entity or other Person is required in order to maintain in full force and effect
any of the Company Material Contracts as a result of the Transactions other than
such consents and waivers that have been obtained and are unconditional and in
full force and effect and such notices that have been duly given.
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Section 3.13 Litigation. As of the date of this Agreement,
there is no action, suit, inquiry, proceeding or investigation by or before any
court or other Governmental Entity pending or, to the Knowledge of the Company,
threatened against the Company or any Company Subsidiary.
Section 3.14 Environmental Matters. To the Knowledge of the
Company, (a) the Company and each Company Subsidiary are in material compliance
with all applicable Environmental Laws; (b) neither the Company nor any Company
Subsidiary has received any written notice with respect to any property owned or
leased by the Company or any Company Subsidiary from any Governmental Entity or
third party alleging that the Company or any Company Subsidiary is not in
material compliance with any Environmental Law; and (c) there has been no
"release" of a "hazardous substance," as those terms are defined in the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 et seq., in excess of a reportable quantity which release remains
unresolved on any real property owned by the Company or any Company Subsidiary.
Section 3.15 Compliance with Laws. The Company and the
Company Subsidiaries have complied in a timely manner and in all material
respects with all Laws that apply to the properties or assets owned by the
Company or any Company Subsidiary, except for violations that would not
constitute a Company Material Adverse Effect.
Section 3.16 Employee Benefit Plans.
(a) Section 3.16 of the Company Disclosure Schedule
contains a true and complete list of all Benefit Plans. The Company has provided
or made available to Parent: (i) correct and complete copies of all documents
embodying each Benefit Plan including, without limitation, all amendments
thereto and all related trust documents; (ii) the most recent annual reports
(Form Series 5500 and all schedules and financial statements attached thereto),
if any, required under ERISA or the Code in connection with each Benefit Plan;
(iii) if the Benefit Plan is funded, the most recent annual and periodic
accounting of Benefit Plan assets; (iv) the most recent summary plan description
together with the summary(ies) of material modifications thereto, if any,
required under ERISA with respect to each Benefit Plan; (v) all material written
agreements and contracts relating to each Benefit Plan, including, without
limitation, administrative service agreements and group insurance contracts;
(vi) all communications material to any employee or employees relating to any
Benefit Plan, relating to any amendments, terminations, establishments,
increases or decreases in benefits, acceleration of payments or vesting
schedules or other events which would result in any liability to the Company;
(vii) all material correspondence to or from any Governmental Entity relating to
any Benefit Plan; (viii) all discrimination tests for each Benefit Plan for the
most recent plan years; and (ix) the most recent IRS determination or opinion
letter issued with respect to each Benefit Plan, if applicable.
(b) With respect to those Benefit Plans that are
being assumed by the Parent as set forth on Schedule 7.4(b), the Company and
each Company Subsidiary has performed all obligations required to be performed
by them under, are not in material default or violation of, and to the Knowledge
of the Company and Principal Stockholder, there is no default or violation by
any other party to any such Benefit Plan, and each such Benefit Plan has been
established and maintained in accordance with its terms and in compliance in all
material
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respects with all applicable Laws, including but not limited to ERISA and the
Code. Each such Benefit Plan intended to qualify under Section 401(a) of the
Code and each trust intended to qualify under Section 501(a) of the Code is so
qualified, and has received a favorable determination letter from the IRS with
respect to each such Benefit Plan as to its qualified status under the Code and
no event has occurred which would reasonably be expected to adversely affect the
status of such determination letter or the qualified status of such Benefit
Plan. To the Knowledge of Company no "prohibited transaction," within the
meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not
otherwise exempt under Section 408 of ERISA, has occurred with respect to any
such Benefit Plan. There are no actions, suits or claims pending or, to the
Knowledge of the Company or the knowledge of the Principal Stockholder,
threatened (other than routine claims for benefits) against any such Benefit
Plan or against the assets of any such Benefit Plan. There are no audits,
inquiries or proceedings pending or to the Knowledge of the Company threatened
by the IRS, the Department of Labor, or any other Governmental Entity with
respect to any such Benefit Plan. The Company is not subject to any material
penalty or tax with respect to any such Benefit Plan under Section 502(i) of
ERISA or Sections 4975 through 4980 of the Code.
(c) With respect to those Benefit Plans that are
being assumed by the Parent as set forth on Schedule 7.4(b), neither the Company
nor any Company Subsidiary has ever, with respect to an employee, maintained,
established, sponsored, participated in, or contributed to, any: (i) Benefit
Plans subject to Title IV of ERISA or Section 412 of the Code; (ii) "multiple
employer plan" within the meaning of Section (3)(37) of ERISA; (iii) a "multiple
employer plan" as defined in ERISA or the Code; or (iv) a "funded welfare plan"
within the meaning of Section 419 of the Code.
(d) With respect to those Benefit Plans that are
being assumed by the Parent as set forth on Schedule 7.4(b), no Benefit Plan
provides, or has any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to any person for any reason,
except as may be required by COBRA or other applicable statute, and neither the
Company nor any Company Subsidiary has ever represented, promised or contracted
(whether in oral or written form) to any employee (either individually or to
employees as a group) or any other person that such employee(s) or other person
would be provided with retiree life insurance, retiree health or other retiree
employee welfare benefit, except to the extent required by statute.
(e) To the Knowledge of the Company, with respect to
those Benefit Plans being assumed by Parent as set forth on Schedule 7.4(b),
each such Benefit Plan can be terminated or otherwise discontinued after the
Closing Date in accordance with its terms and with applicable foreign, state,
federal or local law, without material liability, to Parent, the Company or any
Company Subsidiary.
(f) To the Knowledge of the Company, neither the
Company nor any Company Subsidiary has, prior to the Closing, engaged in a
material violation of any of the health care continuation requirements of COBRA,
the requirements of FMLA, the requirements of the Women's Health and Cancer
Rights Act of 1998, the requirements of the Newborns' and Mothers' Health
Protection Act of 1996, or any amendment to each such act, or any similar
provisions of state law applicable to its current and former employees. As soon
as practicable after the date hereof (but in no event longer than ten (10)
calendar days from the date hereof), the
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Company shall deliver to Parent a disclosure schedule setting sets forth all
current and former employees of the Company and the Company Subsidiaries that
are currently receiving or eligible for health care continuation coverage under
COBRA or any similar provisions of state law.
(g) With respect to those International Employee
Plans being assumed by Parent as set forth on Schedule 7.4(b), to the Knowledge
of the Company, each such International Employee Plan has been adopted,
maintained and administered in material compliance with its terms and conditions
and with the requirements prescribed by any and all statutory or regulatory laws
that are applicable to such International Employee Plan. Furthermore, no such
International Employee Plan has unfunded liabilities, that as of the Effective
Time, will not be offset by insurance or fully accrued. Except as required by
law, to the Knowledge of the Company no condition exists that would prevent the
Company or a Company Subsidiary from terminating or amending any such
International Employee Plan in accordance with its terms and applicable foreign,
state, federal or local law at any time for any reason without material
liability to the Company or any Company Subsidiary.
(h) With respect to those Benefit Plans being assumed
by Parent as set forth on Schedule 7.4(b), the execution of this Agreement and
the consummation of the Transactions will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
Company Benefit Plan, employee agreement, trust or loan that will or may result
in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any current (or former) employee,
director or consultant.
Section 3.17 Tax Matters. (a) All material Tax Returns
required to be filed by or with respect to the Company or any Company Subsidiary
have been filed on a timely basis (taking into account all applicable
extensions); (b) other than amounts for any unpaid Taxes of the Company or any
Company Subsidiary that have been adequately accrued or reserved (in accordance
with GAAP) on the Balance Sheet, all material Taxes required to be paid or
withheld by the Company or a Company Subsidiary (whether or not shown in any Tax
Return) have been timely paid in full and/or timely withheld and either have
been duly and timely paid over to the appropriate Tax Authority or been properly
set aside for such purpose and will be duly and timely paid to the appropriate
Tax Authority; (c) all such filed Tax Returns were true, correct and complete in
all material respects; (d) there are no liens for Taxes upon any property or
assets of the Company or any Company Subsidiary, except for Permitted
Encumbrances; (e) no federal, state, local or foreign Audits are presently
pending with regard to any Taxes or Tax Returns of the Company or any Company
Subsidiary; (f) neither the Company nor any Company Subsidiary has executed any
waiver of the statute of limitations on or extending the period for the
assessment of collection of any Tax; and (g) neither the Company nor any Company
Subsidiary has any liability for unpaid Taxes that has not been adequately
accrued or reserved (in accordance with GAAP) on the most recent Financial
Statements, and since the date of the most recent Financial Statements, neither
the Company nor any Company Subsidiary has incurred any liability for Taxes
other than in the ordinary course of business.
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Section 3.18 Intellectual Property.
(a) Section 3.18(a) of the Company Disclosure
Schedule lists all Company Registered Intellectual Property. The Company or one
of the Company Subsidiaries is listed in the records of the appropriate United
States federal or state agency as the sole owner for each item of the Company
Registered Intellectual Property that is the subject of a registration in the
United States. To the Knowledge of the Company, either the Company or one of the
Company Subsidiaries is listed in the records of the appropriate foreign agency
as the sole owner for each item of Company Registered Intellectual Property that
is the subject of a registration outside the United States. To the Knowledge of
the Company, the Intellectual Property included in the Acquired Assets,
including the Company Registered Intellectual Property, includes all
Intellectual Property rights in and to all material inventions, works of
authorship, and know-how created, invented or authored, as the case may be, by
any employee of, or consultant to, the Company or any Company Subsidiary in the
course of such employment or consulting relationship. The preceding sentence is
qualified by the Knowledge of the Company for facts and circumstances prior to
January 2000. The Company and each Company Subsidiary implements and enforces a
policy requiring all employees, contractors and other parties who create
Intellectual Property for, or on behalf of, the Company or a Company Subsidiary
to execute an assignment agreement in substantially the form provided to Parent,
transferring ownership of such Intellectual Property to the Company or the
Company Subsidiary, as the case may be.
(b) Section 3.18(b) of the Company Disclosure
Schedule (i) lists all Computer Software owned or licensed by, or otherwise used
in the business of, the Company or any Company Subsidiary, other than (x) third
party software applications that are generally available and have an individual
acquisition cost of $50,000 or less, or (y) software applications that are used
in general infrastructure and administrative functions that are generally
available and have an individual acquisition cost of $50,000 or less, and (ii)
identifies whether each of the foregoing items of Computer Software are owned,
licensed, or otherwise used, as the case may be.
(c) Section 3.18(c) of the Company Disclosure
Schedule lists all material Licenses, specifying the name of the parties thereto
and whether the License is an inbound license, an outbound license or a
cross-license. To the Knowledge of the Company, each such License is in full
force and effect and is enforceable in accordance with its terms. The Company
and the Company Subsidiaries are in material compliance with, and have not
materially breached any term of any of such Licenses and, to the Knowledge of
the Company, all other parties to such Licenses are in compliance with, and have
not breached any term of, such Licenses.
(d) Section 3.18(d) of the Company Disclosure
Schedule contains a complete and accurate list (by name and version number) of
all material service offerings, Computer Software and other products or services
of the Company or any Company Subsidiary currently sold, licensed, distributed
or otherwise provided by the Company or any Company Subsidiary (all of the
foregoing, collectively, "Company Products").
(e) To the Knowledge of the Company, neither the
Company nor any Company Subsidiary has done, or failed to do, any act or thing
which may, after the Closing
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Date, prejudice the validity or enforceability of any material Company
Registered Intellectual Property in any material respect.
(f) Either the Company or a Company Subsidiary is the
sole and exclusive owner of all material Company Intellectual Property except as
to Intellectual Property that is co-owned by the Company and any Company
Subsidiary; provided, however, that as to any Intellectual Property that is
co-owned by the Company and one or more Company Subsidiaries, the Acquired
Assets will include the ownership rights of the Company and all co-owner Company
Subsidiaries.
(g) To the Knowledge of the Company, either the
Company or a Company Subsidiary owns or otherwise has the right to use all
Intellectual Property necessary to: (i) provide the services currently provided
by the Company to third parties; (ii) use, manufacture, copy, modify, market and
distribute the products currently manufactured, marketed, sold, licensed or
otherwise distributed by the Company; and (iii) operate the internal systems of
the Company that are material to its business or operations, taken as a whole,
including, without limitation, computer hardware systems and software
applications. To the Knowledge of the Company, there are no facts or
circumstances that would reasonably lead it to believe that the Company and the
Company Subsidiaries do not own or otherwise have the right to use all
Intellectual Property necessary to: (i) provide the services currently provided
by the Company to third parties; (ii) use, manufacture, copy, modify, market and
distribute the products currently manufactured, marketed, sold, licensed or
otherwise distributed by the Company; and (iii) operate the internal systems of
the Company that are material to its business or operations, taken as a whole,
including, without limitation, computer hardware systems and software
applications. Each material item of such Intellectual Property shall be owned,
available for use or enforceable, as the case may be, by Parent immediately
following the Closing on substantially identical terms and conditions as it was
available to or enforceable by, as the case may be, the Company immediately
prior to the Closing.
(h) To the Knowledge of the Company, the activities
and the conduct of the business and operations of the Company and any Company
Subsidiary did not prior to Closing, and will not when conducted in the same
manner following the Closing, infringe upon, violate or constitute the
unauthorized use of the Intellectual Property rights of any third party. To the
Knowledge of the Company, there are no facts or circumstances that would
reasonably lead it to believe that the activities or the conduct of the business
or operations of the Company or any Company Subsidiary did prior to Closing, or
will when conducted in the same manner following the Closing, infringe upon,
violate or constitute the unauthorized use of the Intellectual Property rights
of any third party. There is no pending or, to the Knowledge of the Company,
threatened (in writing) claim before any court, agency, arbitral tribunal, or
registration authority in any jurisdiction: (i) involving any item of
Intellectual Property owned or used by the Company; (ii) alleging that the
activities or the conduct of the business of the Company and the Company
Subsidiaries does or will infringe upon, violate or constitute the unauthorized
use of the Intellectual Property rights of any third party; or (iii) challenging
the ownership, use, validity, enforceability or registrability of any
Intellectual Property by the Company. There are no settlements, forbearances to
sue, consents, judgments, or orders or similar obligations (other than license
agreements in the ordinary course of business) which (A) restrict the rights of
the
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Company to use any material Intellectual Property; (B) restrict the Company's
business in order to accommodate a third party's intellectual property rights;
or (C) permit third parties to use any material Intellectual Property owned by
the Company.
(i) [reserved]
(j) No third party possesses any copy of any source
code to any material Computer Software of the Company, except as permitted under
a License set forth in Section 3.18(c) of the Company Disclosure Schedule.
(k) No Computer Software that is open source, public
source or freeware, or any modification or derivative thereof, including any
version of any Computer Software licensed pursuant to any GNU general public
license or limited general public license was or is used in, incorporated into,
integrated or bundled with any material Company Product.
(l) To the Knowledge of the Company, the Company and
the Company Subsidiaries have taken commercially reasonable actions to protect
each item of material Intellectual Property owned by them, except where the
failure to take such actions was the result of a reasonable business decision by
the Company made in the ordinary course of business. To the Knowledge of the
Company, without limiting the foregoing, the Company and the Company
Subsidiaries have taken commercially reasonable actions to protect their
respective material Trade Secrets and any material Trade Secrets of third
parties provided to the Company or any Company Subsidiary. The Company and each
Company Subsidiary implements and enforces a policy requiring all employees,
contractors and other parties having access to such Trade Secrets to execute a
proprietary information/confidentiality agreement, in substantially the form
provided to Parent, with the Company or one of the Company Subsidiaries, as the
case may be. To the Knowledge of the Company, there has been no disclosure by
the Company or by the Company Subsidiaries of any such Trade Secrets except
pursuant to such proprietary information/confidentiality agreements, and, to the
Knowledge of the Company, no party to any such agreement is in breach thereof.
(m) Neither the Company nor any Company Subsidiary is
in violation of any agreement relating to any Company Intellectual Property or
any third party Intellectual Property, except for such violations as have not
resulted, and could not reasonably be expected to result, individually or in the
aggregate, in a Company Material Adverse Effect. To the Knowledge of the
Company, the consummation of the Transactions will not result in Parent being
bound by any non-compete or other restriction on the operation of any business
of Parent prior to the Closing or the granting by Parent of any rights or
licenses to any Intellectual Property rights of Parent prior to the Closing to a
third party (including but not limited to a covenant not to sue)
(n) To the Knowledge of the Company, neither the
Company nor any Company Subsidiary has disclosed the source code for any of the
Computer Software owned by them or other confidential information constituting,
embodied in or pertaining to such Computer Software to any Person, except
pursuant to effective nondisclosure agreements, and the Company has taken
commercially reasonable measures to prevent disclosure of such source code.
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(o) To the Knowledge of the Company: (i) the Company
and the Company Subsidiaries have at all times complied with all applicable Laws
relating to privacy, data protection and the collection and use of personal
information and user information gathered or accessed in the course of the
operations of the Company or any Company Subsidiary; (ii) the Company and the
Company Subsidiaries have at all times complied in all respects with all rules,
policies and procedures established by the Company or any Company Subsidiary
from time to time with respect to privacy, publicity, data protection or
collection and use of personal information and user information gathered or
accessed in the course of the operations of the Company or any Company
Subsidiary; and (iii) no claims have been asserted or threatened against the
Company or any Company Subsidiary (and to the Knowledge of the Company, no such
claims are likely to be asserted or threatened against the Company or any
Company Subsidiary) by any Person alleging a violation of such Person's privacy,
personal or confidentiality rights under any such rules, policies or procedures.
With respect to all personal and user information described in this Section
3.18(o), the Company and the Company Subsidiaries have at all times taken all
steps reasonably necessary (including, without limitation, implementing and
monitoring compliance with adequate measures with respect to technical and
physical security) to ensure that the information is protected against loss and
against unauthorized access, use, modification, disclosure or other misuse. To
the Knowledge of the Company, there has been no unauthorized access to or other
misuse of that information. To the Knowledge of the Company, the consummation of
the Transactions will not result in any breach or violation of any of the
Company's or any of its subsidiaries procedures, policies or rules governing
privacy or use of any information or data of, or with respect to, any Person or
violate any Law with respect to such data or information.
Section 3.19 Labor Matters.
(a) No work stoppage or labor strike against the
Company or any Company Subsidiary is pending, or to the Knowledge of the
Company, threatened nor has there been any such action since August 31, 1999. To
the Knowledge of the Company, there are no activities or proceedings of any
labor union, works council or other employee collective bargaining group or
association to organize any employees, and, to the Knowledge of the Company, no
union or works council claims to represent any employees. There are no actions,
suits, claims, labor disputes or grievances pending, or to the Knowledge of the
Company, threatened, relating to any labor, safety or discrimination matters
involving any employee, including without limitation, charges of unfair labor
practices or discrimination complaints. To the Knowledge of the Company, neither
the Company nor any Company Subsidiary has engaged in any unfair labor practices
within the meaning of the National Labor Relations Act. Neither the Company nor
any Company Subsidiary presently has been in the past, a party to, or bound by,
any collective bargaining agreement or union contract with respect to employees
and no collective bargaining agreement is being negotiated on behalf of the
employees.
(b) The Company and each Company Subsidiary: (i) is
in compliance in all material respects with all applicable federal, state and
local laws, rules and regulations respecting employment, employment practices,
terms and conditions of employment, health and safety and wages and hours
(including but not limited to the classification and/or treatment of employees
as exempt or non-exempt), in each case, with respect to employees; (ii) has
withheld
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all amounts required by law or by agreement to be withheld from the wages,
salaries and other payments to employees; and (iii) is not liable in any
material respect for any arrears of wages or any Taxes or any penalty for
failure to comply with any of the foregoing. There are no pending, or, to the
Knowledge of the Company, threatened or reasonably anticipated claims, charges
or actions pending against the Company before the Equal Employment Opportunity
Commission or similar state, federal or local agency or under any worker's
compensation policy or long-term disability policy.
(c) Since January 1, 2001, (i) neither the Company
nor any Company Subsidiary has effected a "plant closing" (as defined in the
WARN Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility; (ii) there has not
occurred a "mass layoff" (as defined in the WARN Act) affecting any site of
employment or facility of the Company or any Company Subsidiary; (iii) neither
the Company nor any Company Subsidiary has engaged in layoffs or employment
terminations sufficient in number to trigger application of any state, local or
foreign law or regulation similar to the WARN Act; and (iv) none of the Company
nor any of the Company Subsidiaries' employees has suffered an "employment loss"
(as defined in the WARN Act) during the ninety (90) day period prior to the date
of this Agreement.
Section 3.20 Affiliate Transactions. No Contracts are in
effect as of the date hereof between the Company or any Company Subsidiary on
the one hand, and Affiliates of the Company, on the other hand.
Section 3.21 Brokers or Finders. The Company has not entered
into any Contract entitling any agent, broker, investment banker, financial
advisor or other firm or Person to any broker's or finder's fee or any other
commission or similar fee in connection with any of the Transactions, other than
US Bancorp Piper Jaffray, a true and correct copy of which has been provided to
Parent.
Section 3.22 Bank Accounts. Section 3.22 of the Company
Disclosure Schedule sets forth the names and locations of all banks, trust
companies, savings and loan associations and other financial institutions at
which the Company or any Company Subsidiary maintains safe deposit boxes,
checking accounts or other accounts of any nature the available balance of which
customarily exceeds $5,000.
Section 3.23 Accounts Receivable and Payable. All accounts
receivable and accounts payable of the Company or any Company Subsidiary have
arisen, and as of the Closing Date shall have arisen, from bona fide
transactions in the ordinary course of business consistent with past practice.
Section 3.24 Ownership of Assets. As between (i) Principal
Stockholder and its Subsidiaries (other than the Company and the Company
Subsidiaries), on the one hand, and (ii) the Company and the Company
Subsidiaries, on the other hand, none of the Principal Stockholder nor its
Subsidiaries (other than the Company and the Company Subsidiaries) own, or have
the right (under Contracts to which the Company or any Company Subsidiary is a
party) to use or otherwise have a license to any of the assets and other rights
(whether tangible or
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intangible) used to conduct the business, operations and activities of the
Company as presently conducted.
Section 3.25 Investment Intent.
(a) Investment Representations. The Company
understands that the shares of Parent Common Stock it will receive pursuant to
the terms of this Agreement have not been registered under the Securities Act.
The Company also understands that these shares are being offered and sold
pursuant to an exemption from registration under the Securities Act based in
part upon the Company's representations contained in the Agreement. The Company
hereby represents and warrants as follows:
(i) Acquisition for Own Account. The Company
is acquiring the shares of Parent Common Stock for the Company's own
account for investment only, and not with a view towards their
distribution other than pursuant to an effective registration statement
or a valid exemption from registration under the Securities Act.
(ii) The Company Can Protect Its Interest.
The Company represents that by reason of its, or of its management's,
business or financial experience, the Company has the capacity to
protect its own interests in connection with the Transactions.
(iii) Parent Information. The Company has
had an opportunity to discuss Parent's business, management and
financial affairs with directors, officers and management of Parent and
has had the opportunity to review Parent's operations and facilities.
The Company has also had the opportunity to ask questions of and
receive answers from, Parent and its management regarding the terms and
conditions of this investment.
(iv) Legends. To the extent applicable, each
certificate or other document evidencing any of the shares of Parent
Common Stock delivered pursuant to the terms of this Agreement shall be
endorsed with the legends substantially in the form set forth below:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY
AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."
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(b) Rule 145 Compliance. The Company further
represents, warrants and covenants that, for purposes of, and within the meaning
of, Rule 145 under the Securities Act:
(i) the Company has not submitted this
Agreement or the Transactions for the vote or consent of any of its
stockholders other than the Principal Stockholder;
(ii) the Company has not adopted a plan or
agreement that provides for dissolution of the Company;
(iii) the Company has not adopted a plan or
agreement that provides for a pro rata or similar distribution of
the shares of Parent Common Stock to be delivered pursuant to the
Transactions to the security holders of the Company;
(iv) the Company's Board of Directors has
not adopted resolutions relative to (ii) or (iii) above within one
(1) year after the date hereof; and
(v) the transfer of the Acquired Assets
hereby is not part of a pre-existing plan for the distribution of
the shares of Parent Common Stock to be delivered pursuant to the
Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PRINCIPAL STOCKHOLDER
Principal Stockholder represents and warrants to Parent that all of
the statements contained in this Article IV are true and correct. The inclusion
of any information in any document delivered by Principal Stockholder pursuant
to this Agreement shall not be deemed to be an admission or evidence of the
materiality of such item, nor shall it establish a standard of materiality for
any purpose whatsoever.
Section 4.1 Organization; Qualification of Principal
Stockholder. Principal Stockholder is a corporation duly organized, validly
existing and in good standing under the laws of Delaware.
Section 4.2 Authorization. Principal Stockholder has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the Transactions. The execution, delivery and performance by
Principal Stockholder of this Agreement and the consummation of the Transactions
by Principal Stockholder have been duly authorized by the Board of Directors of
Principal Stockholder, and no other corporate action on the part of Principal
Stockholder (including its stockholders) is necessary to authorize the execution
and delivery of this Agreement by Principal Stockholder or the consummation by
Principal Stockholder of any of the Transactions.
Section 4.3 Execution; Validity of Agreement. This Agreement
has been duly
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executed and delivered by Principal Stockholder, and, assuming due and valid
authorization, execution and delivery hereof by the Company and Parent is a
valid and binding obligation of Principal Stockholder, enforceable against
Principal Stockholder in accordance with its terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar Laws of general application affecting enforcement
of creditors' rights generally and (b) the availability of the remedy of
specific performance or injunctive or other forms of equitable relief may be
subject to equitable defenses and would be subject to the discretion of the
court before which any proceeding therefor may be brought.
Section 4.4 Consents and Approvals; No Violations. Except for
(a) the filings, permits, authorizations, consents and approvals as may be
required under, and other applicable requirements of, the Securities Act, the
Exchange Act, the HSR Act, applicable foreign antitrust Laws, and state
securities laws and (b) in the case (y) below, except as would not have a
material adverse effect on the ability of Principal Stockholder to consummate
the Transactions, none of the execution, delivery or performance of this
Agreement by Principal Stockholder, the consummation by Principal Stockholder of
the Transactions or compliance by Principal Stockholder with any of the
provisions hereof shall: (w) conflict with or result in any breach of any
provision of Principal Stockholder's Certificate of Incorporation or Bylaws as
presently in effect; (x) require any filing with, or permit, authorization,
consent or approval of, any Governmental Entity; (y) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any Company Material
Contract; or (z) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Principal Stockholder.
Section 4.5 Litigation. As of the date of this Agreement,
there is no action, suit, inquiry, proceeding or investigation by or before any
court or Governmental Entity pending or, to the knowledge of Principal
Stockholder, threatened against or involving Principal Stockholder that: (i) is
expected to have a material adverse effect on the ability of Principal
Stockholder to consummate the Transactions; (ii) questions or challenges the
validity of this Agreement or any action taken or to be taken by Principal
Stockholder pursuant to this Agreement or in connection with the Transactions;
or (iii) is reasonably likely to result in liability to Parent following the
Closing, other than as disclosed in the Company Disclosure Schedule.
Section 4.6 Brokers or Finders. Neither Principal Stockholder
nor any of its Subsidiaries or Affiliates has entered into any Contract
entitling any agent, broker, investment banker, financial advisor or other firm
or Person to any brokers' or finders' fee or any other commission or similar fee
in connection with the Transactions, other than US Bancorp Piper Jaffray, whose
fees and expenses shall be paid by the Company in accordance with the Company's
agreement with such firm, a true and correct copy of which has been provided to
Parent.
Section 4.7 Disclaimer of Other Representations and
Warranties. Except as expressly set forth in this Article IV, Principal
Stockholder makes no representation or warranty, express or implied, at law or
in equity, and any such other representations and warranties are hereby
disclaimed. Without limiting the generality of the foregoing, Principal
Stockholder
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makes no representation or warranty regarding the Acquired Assets or the Assumed
Liabilities, and none shall be implied at law or in equity.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth in the Parent Disclosure Schedule,
prepared and signed by Parent and delivered to the Company and Principal
Stockholder simultaneously with the execution hereof, Parent represents and
warrants to the Company, Aurora and Principal Stockholder that all of the
statements contained in this Article V are true and correct. For purposes of the
representations and warranties of Parent contained herein, disclosure in any
section of the Parent Disclosure Schedule of any facts or circumstances shall be
deemed to be disclosure of such facts or circumstances with respect to such
other representations or warranties by Parent calling for disclosure of such
information, if such disclosure would reasonably lead the Company and Principal
Stockholder to make further inquiry of such facts and circumstances, and such
further inquiry would reasonably reveal that such disclosure applies to such
other representations and warranties. The inclusion of any information in any
section of the Parent Disclosure Schedule or other document delivered by Parent
pursuant to this Agreement shall not be deemed to be an admission or evidence of
the materiality of such item, nor shall it establish a standard of materiality
for any purpose whatsoever.
Section 5.1 Organization; Qualification of Parent. Parent is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority and all necessary governmental approvals to own, lease and operate
their properties and to carry on their business as it is now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority and government approvals would not have, individually
or in the aggregate, a Parent Material Adverse Effect.
Section 5.2 Authorization. Parent has all requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
Transactions. The execution, delivery and performance by Parent of this
Agreement and the consummation of the Transactions by Parent have been duly
authorized by Parent's Board of Directors and no other corporate action on the
part of the Parent (including Parent's stockholders) is necessary to authorize
the execution and delivery of this Agreement by Parent or the consummation by
Parent of any of the Transactions.
Section 5.3 Execution; Validity of Agreement. This Agreement
has been duly executed and delivered by Parent and, assuming due and valid
authorization, execution and delivery hereof by the Company, is a valid and
binding obligation of Parent, enforceable against each of them in accordance
with its terms except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar Laws of
general application affecting enforcement of creditors' rights generally and (b)
the availability of the remedy of specific performance or injunctive or other
forms of equitable relief may be subject to equitable defenses and would be
subject to the discretion of the court before which any proceeding therefor may
be brought.
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Section 5.4 Consents and Approvals; No Violations. Except for
(a) the filings, permits, authorizations, consents and approvals as may be
required under, and other applicable requirements of, the Securities Act, the
Exchange Act, the HSR Act, and applicable foreign antitrust Laws and state
securities laws and (b) in the case of (y) below, except as would not have a
Parent Material Adverse Effect, none of the execution, delivery or performance
of this Agreement by Parent, the consummation by Parent of the Transactions or
compliance by Parent with any of the provisions hereof shall: (w) conflict with
or result in any breach of any provision of the Certificate of Incorporation or
Bylaws of Parent, each as presently, in effect; (x) require any filing with, or
permit, authorization, consent or approval of, any Governmental Entity; (y)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any material Contract of Parent; or (z) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent.
Section 5.5 Capitalization. As of January 28, 2003, the
authorized capital stock of Parent consists of (a) 200,000,000 shares of Parent
Common Stock, of which 59,275,635 shares are issued and outstanding; and (b)
10,000,000 shares of preferred stock, all of which have been designated Series A
Preferred Stock, none of which are issued and outstanding. No shares are held in
treasury. As of the date hereof, approximately 8,900,000 shares of Parent Common
Stock are reserved for issuance upon the exercise of options outstanding under
Parent's various stock incentive plans. As of the date hereof, no shares of
Parent Common Stock are reserved for issuance upon the exercise of warrants. All
the outstanding shares of Parent Common Stock and Parent preferred stock are
duly authorized, validly issued, fully paid and non-assessable. Except as set
forth above, as of the date hereof, (x) there are no shares of capital stock of
Parent authorized, issued or outstanding, other than shares of Parent Common
Stock issued subsequent to January 28, 2003 pursuant to previously outstanding
options issued pursuant to the Parent's stock option plans and (y) there are no
existing options, warrants, calls, pre-emptive rights, subscriptions or other
rights, agreements, arrangements or commitments of any character, relating to
the issued or unissued capital stock of Parent or any of its Subsidiaries
obligating Parent to issue, transfer or sell or cause to be issued, transferred
or sold any shares of capital stock of Parent, other than options to purchase
Parent Common Stock granted in the ordinary course of business subsequent to
January 28, 2003 pursuant to Parent's stock option plans in existence as of that
date.
Section 5.6 Parent SEC Reports. Parent has filed all required
forms, reports, schedules, statements and other documents (including exhibits
and other information incorporated therein) with the SEC since December 31, 2000
through the date hereof (collectively, the "Parent SEC Reports"). As of their
respective dates, or, if amended, as of the date of the last such amendment,
each Parent SEC Report, (a) complied in all material respects with the
applicable requirements of the Securities Act, the Exchange Act, and the rules
and regulations thereunder applicable to such Parent SEC Reports and (b) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
Each of the consolidated balance sheets included in or incorporated by reference
into the Parent SEC Reports (including the related notes and schedules) fairly
presents in all material respects the consolidated financial position of Parent
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and its Subsidiaries as of its date, and each of the consolidated statements of
operations, stockholders' equity and cash flows included in or incorporated by
reference into the Parent SEC Reports (including any related notes and
schedules) fairly presents in all material respects the financial position,
results of operations and cash flows, as the case may be, of Parent and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments and the absence of
footnotes), in each case in accordance with GAAP consistently applied during the
periods involved, except as may be noted therein. There is no investigation by
the SEC threatened or pending, or, to the knowledge of the Parent, contemplated
with respect to any Parent SEC Report, including, without limitation, revenue
recognition thereunder or any of Parent's officers, directors or principal
stockholders.
Section 5.7 No Undisclosed Liabilities. Except for (a)
liabilities and obligations disclosed in Parent's quarterly report on Form 10-Q
for the quarter ended September 30, 2002 filed with the SEC, incurred in the
ordinary course of business since September 30, 2002, (b) liabilities arising
out of facts or events fully disclosed in a press release issued by Parent
subsequent to that date and prior to the date hereof, and (c) liabilities that
would not reasonably be expected to result in a Parent Material Adverse Effect,
neither Parent nor any of its Subsidiaries, taken as a whole, has any
liabilities or obligations, that would be required to be disclosed in a
consolidated balance sheet of Parent (including the related notes thereto, where
appropriate) prepared in accordance with GAAP.
Section 5.8 Absence of Certain Changes. Except as (a)
disclosed in the Parent SEC Reports, (b) disclosed in Parent's quarterly report
on Form 10-Q for the quarter ended September 30, 2002 filed with the SEC, (c)
fully disclosed in a press release issued by Parent subsequent to that date and
prior to the date hereof, or (d) expressly required by this Agreement, since
September 30, 2002 to the Parent's knowledge, no event that would be reasonably
likely to result in a Parent Material Adverse Effect has occurred.
Section 5.9 Parent Material Contracts. To Parent's knowledge,
Parent has not breached, or received in writing any claim or notice that it has
breached, any of the terms or conditions of (i) any agreement, contract or
commitment required to be filed as an exhibit to the Parent SEC Reports
(including any agreements, contracts or commitments entered into since September
30, 2002 that are required to be filed by Parent with the SEC in any report in
the future), or (ii) any agreement with any of the parties listed on Section 5.9
of the Parent Disclosure Schedule (the "Parent Material Contracts"). Each Parent
Material Contract that has not expired by its terms is in full force and effect
and is the legal, valid and binding obligation of Parent, enforceable against
them in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity), except where the failure of such Parent Material Contract to be in full
force and effect or to be legal, valid, binding or enforceable against Parent
has not had and would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect.
Section 5.10 Availability of Funds. Parent currently has
access to sufficient immediately available funds in cash or cash equivalents,
and shall at the Closing have sufficient
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immediately available funds, in cash, to pay all amounts payable pursuant to
this Agreement and to consummate the Transactions including, but not limited to,
the Cash Consideration.
Section 5.11 Litigation. As of the date of this Agreement,
there is no action, suit, inquiry, proceeding or investigation by or before any
court or Governmental Entity pending or, to the knowledge of Parent, overtly
threatened against or involving Parent or any of its Subsidiaries that is
expected to have a Parent Material Adverse Effect or that questions or
challenges the validity of this Agreement or any action taken or to be taken by
Parent or any of its Subsidiaries pursuant to this Agreement or in connection
with the Transactions.
Section 5.12 Investigation by Parent. Parent has conducted
its own independent investigation, review and analysis of the business,
operations, assets, liabilities, results of operations, financial condition,
software, technology and prospects of the Company and the Company Subsidiaries,
which investigation, review and analysis was done by Parent and, to the extent
Parent deemed appropriate, by Parent's representatives. Parent acknowledges that
it and its representatives have been provided adequate access to the personnel,
properties, premises and records of the Company and the Company Subsidiaries for
such purpose. In entering into this Agreement, Parent acknowledges that it has
relied solely upon the aforementioned investigation, review and analysis and,
except and only to the extent expressly set forth in Articles III and IV, not on
any factual representations or opinions of the Company or the Company's
representatives, and, in each case, Parent:
(a) acknowledges that, except and only to the extent
expressly set forth in Articles III and IV, none of the Company, the Company
Subsidiaries, Principal Stockholder or any of their respective directors,
officers, stockholders, employees, Affiliates, controlling persons, agents,
advisors or representatives makes or has made any oral or written representation
or warranty, either express or implied, as to the accuracy or completeness of
any of the information (including in materials furnished in the Company's data
room, in presentations by the Company's management or otherwise) provided or
made available to the Parent or its directors, officers, employees, Affiliates,
controlling persons, agents or representatives;
(b) agrees, to the fullest extent permitted by Law,
that none of the Company, the Company Subsidiaries, Principal Stockholder or any
of their respective directors, officers, employees, shareholders, Affiliates,
controlling persons, agents, advisors or representatives shall have any
liability or responsibility whatsoever to Parent or its directors, officers,
employees, Affiliates, controlling persons, agents or representatives on any
basis (including in contract or tort, under federal or state securities laws or
otherwise) based upon any information provided or made available, or statements
made (including in materials furnished in the Company's data room, in
presentations by the Company's management or otherwise), to Parent or its
directors, officers, employees, Affiliates, controlling persons, advisors,
agents or representatives (or any omissions therefrom); and
(c) Parent hereby acknowledges that, except to the
extent specifically set forth in this Article V, Parent is purchasing the
Acquired Assets on an "as-is, where-is" basis.
Section 5.13 Brokers or Finders. Neither Parent, nor any of
its Subsidiaries or its Affiliates has entered into any Contract entitling any
agent, broker, investment banker,
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financial advisor or other firm or Person to any broker's or finder's fee or any
other commission or similar fee in connection with any of the Transactions.
Section 5.14 Form S-3 Eligibility. Parent meets the
eligibility requirements for use of Form S-3 to provide for the registration and
continuous resale of the Parent Common Stock issued to the Company under this
Agreement pursuant to Rule 415 under the Securities Act.
ARTICLE VI
COVENANTS
Section 6.1 Interim Operations. Except as set forth in
Schedule 6.1, during the period from the date hereof and continuing until the
earlier of the termination of this Agreement pursuant to Article IX or the
Closing, except as expressly provided in this Agreement or as may be consented
to in writing by Parent (such consent not to be unreasonably withheld or
delayed):
(a) the Company and each of the Company Subsidiaries
shall: (i) conduct its business in the same manner as heretofore conducted, only
in the ordinary course and in material compliance with all applicable Laws; (ii)
pay its debts, taxes and other liabilities when due and perform other material
obligations when due; and (iii) use commercially reasonable efforts to (A)
preserve intact its present business organization, (B) except as provided in (f)
below keep available the services of its present officers and employees and (C)
preserve its relationships with customers, suppliers, distributors, licensors,
licensees and other Persons with which it has significant business dealings;
(b) no Company Subsidiary shall:
(i) amend its Certificate of Incorporation
or Bylaws or similar organizational documents;
(ii) issue, sell, transfer, pledge, dispose
of or encumber any shares of any class or series of its capital stock,
or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any
shares of any class or series of its capital stock (except for the
issuance of capital stock issuable upon the exercise of options
outstanding as of the date hereof);
(iii) set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to any
shares of any class or series of its capital stock;
(iv) split, combine or reclassify any shares
of any class or series of its stock; or
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(v) redeem, purchase or otherwise acquire
directly or indirectly any shares of any class or series of its capital
stock, or any instrument or security which consists of or includes a
right to acquire such shares;
(c) neither the Company nor any Company Subsidiary
shall: (i) incur or assume any Indebtedness, modify the terms of any
Indebtedness or other liability; (ii) assume or guarantee the obligations of any
other Person; (iii) enter into any "keep well" or other agreement to maintain
any financial statement condition of any other Person (other than any Company
Subsidiary); or (iv) enter into any arrangement having the economic effect of
any of the foregoing; provided, however, notwithstanding the foregoing, the
Company shall not be restricted from incurring additional Indebtedness pursuant
to the terms of the Convertible Notes;
(d) neither the Company nor any Company Subsidiary
shall make changes in the compensation (including equity compensation, whether
payable in cash or otherwise) or benefits payable or to become payable to any of
their employees, except in the ordinary course of business consistent with past
practice, but in no event which shall in the aggregate exceed $250,000;
(e) neither the Company nor any Company Subsidiary
shall hire any employees other than in the ordinary course of business
consistent with past practice; provided, however, that no Company or Company
Subsidiary shall hire any employee whose annual compensation would exceed
$100,000 without the prior approval of Parent, which such approval shall not be
unreasonably withheld or delayed;
(f) neither the Company nor any Company Subsidiary
shall terminate any of their employees other than in the ordinary course of
business consistent with past practice without the prior approval of Parent,
which such approval shall not be unreasonably withheld; provided, however, that
if the Company or any Company Subsidiary shall terminate any of their employees
prior to the Closing other than as directed by Parent, the Company shall pay all
severance and other costs resulting from or arising out of such termination;
(g) neither the Company nor any Company Subsidiary
shall voluntarily permit any insurance policy naming it as a beneficiary or a
loss payable payee to be cancelled or terminated;
(h) neither the Company nor any Company Subsidiary
shall adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization, or
otherwise acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a portion of the assets of, or by any other
manner, any business or any Person or division thereof, or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to its business;
(i) neither the Company nor any Company Subsidiary
shall change in any material respect any of the accounting methods used by it
unless required or permitted by GAAP;
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(j) no Company Subsidiary shall make or change any
Tax election, change an annual accounting period, adopt or change any material
Tax accounting method, file any amended Tax Return, enter into any closing
agreement, settle or consent to any Tax claim, surrender any right to claim a
refund of Taxes, or consent to the extension or waiver of the statutory period
of limitations applicable to any material Tax claim;
(k) neither the Company nor any Company Subsidiary
shall voluntarily take, or agree to or commit to take, any action that would
result in any of the conditions to the Closing set forth in Article VIII not
being satisfied, or would make any representation or warranty of the Company
contained herein inaccurate in any material respect at, or as of any time prior
to, the Closing Date, or that would materially impair the ability of the parties
hereto to consummate the Transactions in accordance with the terms hereof or
materially delay such consummation;
(l) neither the Company nor any Company Subsidiary
shall enter into any material partnership arrangements, material joint software
development agreements, material joint ventures or other material strategic
alliances or material strategic collaborations, except, in any case, as such are
terminable upon not more than thirty (30) days notice without material payment
or penalty of any kind;
(m) neither the Company nor any Company Subsidiary
shall sell, lease, license, mortgage or otherwise encumber or dispose of any
properties or assets which are material, individually or in the aggregate, to
its business, except sales, licenses or other dispositions in the ordinary
course of business consistent with past practice;
(n) neither the Company nor any Company Subsidiary
shall make any loans, advances or capital contributions to, or investments in,
any other Person, other than loans or investments by the Company, or any Company
Subsidiary, to or in the Company or any Company Subsidiary;
(o) neither the Company nor any Company Subsidiary
shall settle any claim, action or proceeding involving money damages, except to
the extent subject to reserves reflected in the Financial Statements;
(p) neither the Company nor any Company Subsidiary
shall subject itself, or the Parent, to any non-compete on any of their
respective businesses;
(q) neither the Company nor any Company Subsidiary
shall enter into any Contract the effect of which would be to grant to a third
party following the Closing Date any actual or potential right of license to any
of its Intellectual Property, except for non-exclusive licenses of Trademarks or
Copyrights in the ordinary course of business consistent with past practice
granted in connection with, or incidental to, the provision of services in the
ordinary course of business consistent with past practice;
(r) neither the Company nor any Company Subsidiary
shall grant any exclusive rights with respect to any of its Intellectual
Property;
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(s) neither the Company nor any Company Subsidiary
shall enter into, modify or amend in a manner adverse in any material respect to
such party any material Contract, terminate any material Contract, or waive,
release or assign any material rights or claims under any material Contract;
provided, however, that neither this covenant nor any other provision in this
Agreement shall restrict the ability of the Company or any Company Subsidiary
from entering into advertising or paid inclusion agreements, Internet search
services agreements or agreements involving payments by the Company of less than
$75,000, in each such case, which are entered into in the ordinary course of
business and consistent with past practice; and
(t) neither the Company nor any Company Subsidiary
shall enter into any Contract to do any of the foregoing.
Section 6.2 Access to Information; Confidentiality.
(a) Access to Information. Prior to the Closing, the
Company and each Company Subsidiary shall: (i) give Parent and its authorized
representatives reasonable access to all of its books, records, senior
personnel, offices and other facilities and properties; (ii) permit Parent to
make such copies and inspections thereof as Parent may reasonably request; and
(iii) cause its officers and other employees to furnish Parent with such
financial and operating data and other information with respect to its business
and properties, as from time to time Parent may reasonably request; provided,
however, that any such access shall be conducted at Parent's expense, at a
reasonable time, under the supervision of personnel of the Company or such
Company Subsidiary, as the case may be, and in such a manner as to maintain the
confidentiality of this Agreement and the Transactions in accordance with the
terms hereof and not to interfere with the normal operation of the business of
the Company or such Company Subsidiary, as the case may be. If and to the extent
that Principal Stockholder shall be in possession or control, at any time prior
to the Closing, of any of the books, records, financial and operating data or
other information of or relating to the business and properties of the Company
or any Company Subsidiary, Principal Stockholder shall give Parent and its
authorized representatives reasonable access to such books, records, financial
and operating data and other information to the same extent as provided above.
Notwithstanding the foregoing, no information or knowledge obtained by Parent
during the course of any investigation conducted by Parent pursuant to this
Section 6.2(a) shall: (a) affect or be deemed to modify in any respect any of
the representations or warranties of the Company or Principal Stockholder set
forth in this Agreement (or in any certificate, instrument or other document
delivered by the Company or Principal Stockholder to Parent in connection with
the Transactions), or the conditions to the obligations of the parties to
consummate the Transactions in accordance with the terms and conditions hereof;
(b) be deemed to amend or supplement the Company Disclosure Schedule, prevent or
cure any misrepresentations, breach of warranty or breach of covenant by the
Company or Principal Stockholder; or (c) otherwise limit or affect any remedies
available to Parent as a result of or arising out of such disclosure. Nothing
herein shall require the Company to disclose any information to Parent if such
disclosure would, in its sole and absolute discretion (A) jeopardize any
attorney-client or other legal privilege or (B) contravene any applicable Law,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement (including any confidentiality agreement to which it or its Affiliates
is a party).
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(b) Confidentiality. Parent, Principal Stockholder
and the Company acknowledge that they have previously executed a confidentiality
agreement, dated April 16, 2001, as amended (the "Confidentiality Agreement"),
which shall remain in full force and effect in accordance with its terms. All
information contained (i) herein, (ii) in the Company Disclosure Schedule, or
(iii) delivered to Parent, Principal Stockholder, the Company, or any of their
authorized representatives pursuant hereto shall be deemed to be "Proprietary
Information" (as defined and subject to the exceptions contained in the
Confidentiality Agreement) until the Closing Date.
Section 6.3 Regulatory Filings; Commercially Reasonable
Efforts.
(a) Regulatory Filings. Subject to the terms and
conditions herein, the Company, Principal Stockholder and Parent shall
coordinate and cooperate with one another and shall use their respective
commercially reasonable efforts to comply with, and shall refrain from taking
any action that would impede compliance with, all Laws, and as promptly as
practicable after the date hereof, shall make all filings, notices, petitions,
statements, registrations, submissions for information, application or
submission of other documents required by any Governmental Entity in connection
with the Transactions, including, without limitation: (i) Notification and
Report Forms with the Federal Trade Commission and the Antitrust Division of the
Department of Justice as required by the HSR Act; (ii) filings under applicable
foreign antitrust Laws; and (iii) any filings required under the Securities Act,
the Exchange Act and any applicable state securities Laws or any other Laws
relating to the Transactions. The Company, Principal Stockholder and Parent each
shall cause all documents that it is responsible for filing with any
Governmental Entity under this Section 6.3(a) to comply in all material respects
with all applicable Laws.
(b) Exchange of Information. The Company, Principal
Stockholder and Parent each shall promptly supply the other with any information
which may be required in order to effectuate any filing or application pursuant
to Section 6.3(a). Except where prohibited by applicable Laws, and subject to
the Confidentiality Agreement, each of the parties shall consult with the other
prior to taking a position with respect to any such filing, shall permit the
other to review and discuss in advance, and consider in good faith the views of
the other party in connection with any analyses, appearances, presentations,
memoranda, briefs, white papers, arguments, opinions and proposals before making
or submitting any of the foregoing to any Governmental Entity by or on behalf of
any party in connection with any investigations or proceedings in connection
with this Agreement or the Transactions (including under any antitrust,
competition or fair trade Laws), coordinate with the other in preparing and
exchanging such information and promptly provide the other (and its counsel)
with copies of all filings, presentations or submissions (and a summary of any
oral presentations) made by such party with any Governmental Entity in
connection with this Agreement or the Transactions; provided, that with respect
to any such filing, presentation or submission, each of the parties need not
supply the other party (or its counsel) with copies (or, in the case of oral
presentations, a summary) to the extent that any Law applicable to such party
requires such party or its subsidiaries to restrict or prohibit access to any
such properties or information.
(c) Notification. The Company, Principal Stockholder
and Parent each shall notify the other promptly upon its receipt of: (i) any
comments from any officials of any
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Governmental Entity in connection with any filings made pursuant to this
Agreement; and (ii) any request by any officials of any Governmental Entity for
amendments or supplements to any filings made pursuant to, or information
provided to comply in all material respects with, any Laws. Whenever any event
occurs that is required to be set forth in an amendment or supplement to any
filing made pursuant to Section 6.3(a), each of the parties, as the case may be,
shall promptly inform the other party of such occurrence and cooperate in filing
with the applicable Governmental Entity such amendment or supplement.
(d) Efforts and Actions to Cause Closing to Occur.
Upon the terms and subject to the conditions set forth in this Agreement, the
Company, Principal Stockholder and Parent each shall use its commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other party in doing all
things necessary, proper or advisable to consummate and make effective, in the
most expeditions manner practicable, the Transactions, including using its
commercially reasonable efforts to accomplish the following: (i) the taking of
all reasonable acts necessary to cause the conditions precedent set forth in
Article VIII to be satisfied; (ii) the obtaining of all necessary actions or
non-actions, waivers, consents, approvals, orders and authorizations from
Governmental Entities and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings with
Governmental Entities) and the taking of all reasonable steps as may be
necessary to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity; (iii) the obtaining of all Necessary Consents; (iv) the
resolution of such objections, if any, as may be asserted with respect to the
Transactions under the HSR Act, applicable foreign antitrust Laws or any other
antitrust, competition or fair trade Laws; (v) the defending of any suits,
claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
Transactions, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed; (vi) the
execution or delivery of any additional instruments necessary to consummate the
Transactions and to fully carry out the purposes of this Agreement; and (vii)
obtain releases of all Encumbrances reflected in the Company Disclosure
Schedule; provided, however, that notwithstanding the foregoing or anything to
the contrary set forth in this Agreement or in any agreement, certificate,
instrument or other document delivered in connection with the Transactions,
nothing in this Agreement or in any agreement, certificate, instrument or other
document delivered in connection with the Transactions shall be deemed to
require Parent, the Company or Principal Stockholder, or any Subsidiary or
Affiliate thereof, to agree to any divestiture by itself or any of its
Affiliates of shares of capital stock or of any business, assets or property, or
the imposition of any limitation on the ability of any of them to conduct their
businesses or to own or exercise control of such assets, properties and stock.
Section 6.4 State Takeover Laws. If any state takeover law
becomes or is deemed applicable to this Agreement or the Transactions, then the
Company, Principal Stockholder and Parent each shall use its commercially
reasonable efforts to assist in any effort by the other party to render such
statute inapplicable to the Transactions.
Section 6.5 Third-Party Consents. As soon as practicable
following the date hereof, the Company shall use commercially reasonable efforts
to obtain the consents, waivers and approvals, and to provide the notices,
required under Section 3.4 and Section 3.12(b)
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(collectively, the "Consents"); provided, however, that the Company shall not be
required to pay any money, incur any liability or modify any Contract in any
manner whatsoever materially adverse to the Company in connection with obtaining
any Consents. The Company shall keep Parent reasonably informed of its efforts
to obtain such consents, waivers and approvals (including reactions and
responses of third parties thereto).
Section 6.6 Publicity. The initial press release with respect
to the execution of this Agreement shall be a joint press release acceptable to
Parent, Principal Stockholder and the Company. Thereafter, until the Closing, or
the date the Transactions are terminated or abandoned pursuant to Article IX,
neither the Company, Principal Stockholder nor Parent, nor any of their
respective Affiliates, shall issue or cause the publication of any press release
or other external public announcement with respect to this Agreement or the
Transactions without prior consultation with the other parties hereto, except as
may be required by Law or by any listing agreement with a national securities
exchange or trading market; provided, however, that in the event that Parent,
Principal Stockholder and the Company are required by Law or by any listing
agreement with a national securities exchange or trading market to issue any
press release or make any public announcement with respect to this Agreement or
the Transactions, the party required to issue such press release or make such
public announcement shall consult in good faith with the other parties hereto
regarding the terms of such press release or the substance of any such public
announcement.
Section 6.7 Ancillary Agreements. Each of Parent, Principal
Stockholder and the Company shall cause each of the Ancillary Agreements to
which it is intended to be a party to be executed and delivered to the other
party at the Closing in accordance with the terms and subject to the conditions
set forth herein.
Section 6.8 Subsequent Actions.
(a) After the Closing, if Parent shall consider or be
advised that any deeds, bills of sale, instruments of conveyance, assignments,
assurances or any other actions or things are necessary or desirable to vest,
perfect or confirm ownership (of record or otherwise) in Parent, its right,
title or interest in, to or under any or all of the Acquired Assets or otherwise
to carry out this Agreement, then the Company shall execute and deliver all
deeds, bills of sale, instruments of conveyance, powers of attorney, assignments
and assurances and take and do all such other actions and things as may be
requested by Parent in order to vest, perfect or confirm any and all right,
title and interest in, to and under such rights, properties or assets in Parent
or otherwise to carry out this Agreement.
(b) After Closing, if the Company shall consider or
be advised that any instruments of assumption or any other actions or things are
necessary or desirable for the company to assign to Parent, and for Parent to
assume from the Company, any or all of the Assumed Liabilities or to otherwise
carry out this Agreement, then Parent shall execute all documents and take and
do all actions and things as may be requested by the Company in order for the
Company to assign to Parent, and for Parent to assume from the Company, all
Assumed Liabilities or otherwise carry out this Agreement.
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Section 6.9 Waiver of Bulk Sales Requirement. Each of the
parties waives compliance with any applicable bulk sales laws, including,
without limitation, the Uniform Commercial Code Bulk Transfer provisions.
Section 6.10 Audited Financial Statements. As soon as
practicable after the date of this Agreement, but no later than fourteen (14)
calendar days prior to the Closing Date, the Company shall deliver to Parent the
Audited Financial Statements.
Section 6.11 Notice of Certain Matters. The Company and
Principal Stockholder shall give prompt notice to Parent of: (a) the occurrence
or non-occurrence of any event, the occurrence or non-occurrence of which could
reasonably be expected to cause any representation or warranty of the Company or
Principal Stockholder set forth in this Agreement to be untrue or inaccurate at
the Closing or any time prior to the Closing such that any closing condition set
forth in Section 8.2(a) would not be satisfied; and (b) any failure of the
Company or Principal Stockholder to comply with or satisfy any covenant or
agreement to be complied with by the Company or Principal Stockholder under this
Agreement at the Closing or at any time prior to the Closing such that any
closing condition set forth in Section 8.2(b) would not be satisfied; provided,
however, that any disclosure by the Company or Principal Stockholder pursuant to
this Section 6.11 shall not: (x) affect or be deemed to modify in any respect
any of the representations or warranties of the Company or Principal Stockholder
set forth in this Agreement (or in any certificate, instrument or other document
delivered by the Company or Principal Stockholder (or any officer thereof) to
Parent in connection with the Transactions), or the conditions to the
obligations of the parties to consummate the Transactions in accordance with the
terms and conditions hereof; (y) be deemed to amend or supplement the Company
Disclosure Schedule, or prevent or cure any misrepresentations, breach of
warranty or breach of covenant by the Company or Principal Stockholder; or (z)
otherwise limit or affect any remedies available to Parent as a result of or
arising out of such disclosure, including, without limitation, Parent's right to
indemnification under this Agreement.
Section 6.12 Non-Transferable Assets.
(a) Notwithstanding anything to the contrary set forth in
this Agreement or in any of the Ancillary Agreements, nothing contained in this
Agreement or in any of the Ancillary Agreements shall be construed as, or
constitute, an attempt, agreement or other undertaking to transfer or assign to
Parent any asset, property or right that would otherwise constitute an Acquired
Asset, but that by its terms is not transferable or assignable to Parent
pursuant to this Agreement without the consent, waiver, approval, authorization,
qualification or other order or one or more Governmental Authorities or other
Persons and if such consent, waiver, approval, authorization, qualification or
other order is not obtained prior to the Closing (each, a "Non-Transferable
Asset").
(b) From and after the Closing and, with respect to each
such Non-Transferable Asset, until the earlier to occur of (i) such time as such
Non-Transferable Asset shall be properly and lawfully transferred or assigned to
Parent and (ii) such time as the material benefits intended to be transferred or
assigned to Parent have been procured by alternative means pursuant to Section
6.12(c) hereof, (A) the Non-Transferable Assets shall be held by the Company in
trust exclusively for the benefit of Parent, and (ii) each of the Company,
Principal
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Stockholder and Parent shall cooperate in any good faith, reasonable arrangement
designed to provide or cause to be provided for Parent the material benefits
intended to be transferred or assigned to Parent under each of the
Non-Transferable Assets and, in furtherance thereof, to the extent permitted
under the terms of each such Non-Transferable Asset and under applicable Law (A)
Parent shall u