SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE 14D-9
Solicitation/Recommendation Statement under Section 14(d)(4) of
the
Securities Exchange Act of 1934
DIGITAL IMPACT, INC.
(Name of Subject
Company)
DIGITAL
IMPACT, INC.
(Name of Person(s)
Filing Statement)
Common Stock, Par Value $.001 Per Share
(including the associated Series A
Participating Preferred Stock Purchase Rights)
(Title of Class of Securities)
25385G 10
6
(CUSIP Number of Class of
Securities)
William
Park
President, Chief Executive Officer and Chairman of the Board of Directors
177 Bovet Road, Suite 200
San Mateo, California 94402
(650) 356-3400
(Name, address and
telephone number of person
authorized to receive notices and communications on
behalf of the person(s) filing statement)
With
copies to:
Selim Day, Esq.
Wilson Sonsini Goodrich & Rosati
Professional Corporation
12 East 49th Street
New York, NY
10017
(212) 999-5800
ý Check the box if the filing relates solely
to preliminary communications made before the commencement of a tender offer.
The
following Agreement and Plan of Merger was entered into by and among Digital
Impact, Inc. (Digital Impact),
Acxiom Corporation, a Delaware corporation (Acxiom)
and Adam Merger Corporation, a Delaware corporation and direct wholly owned
subsidiary of Acxiom, on March 25, 2005 (the Merger
Agreement). The
tender offer contemplated by the Merger Agreement has not yet commenced, and
this filing is neither an offer, a solicitation or recommendation. We urge investors and security holders to read
the following documents, when they become available, regarding the Merger
Agreement and the contemplated tender offer, because they will contain
important information:
Acxioms
Tender Offer Statement on Schedule TO, including the Offer to Purchase,
Letter of Transmittal and Notice of Guaranteed Delivery; and
Digital
Impacts Solicitation/Recommendation Statement on Schedule 14D-9.
These documents and
amendments to these documents will be filed with the United States Securities
and Exchange Commission when the tender offer commences. When these and other
documents are filed with the SEC, they may be obtained free at the SECs web
site at http://www.sec.gov. Free copies
of each of these documents (when available) can also be obtained from the
information agent for the offer, which will be announced.
EXECUTION COPY
AGREEMENT
AND PLAN OF MERGER
BY
AND AMONG
ACXIOM
CORPORATION
ADAM
MERGER CORPORATION
AND
DIGITAL
IMPACT, INC.
Dated as of March 25,
2005
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN
OF MERGER (this Agreement) is made and entered
into as of March 25, 2005, by and among Acxiom Corporation, a Delaware
corporation (Parent), Adam Merger Corporation, a Delaware corporation and direct wholly-owned
subsidiary of Parent (Purchaser),
and Digital Impact, Inc.
a Delaware corporation (the Company).
RECITALS
A. It
is proposed that Purchaser shall, as promptly as practicable, commence a tender
offer to acquire all of the outstanding shares of Company common stock, all
upon the terms and subject to the conditions set forth herein.
B. It
is also proposed that, following the consummation of the Offer (as defined in Section 1.1(a)),
Purchaser will merge with and into the Company and each Company Share (as
defined in Section 2.6(a)) that is not tendered and accepted pursuant to
the Offer will thereupon be cancelled and converted into the right to receive
cash in an amount equal to the Offer Price (as defined in Section 1.1(a)),
all upon the terms and subject to the conditions set forth herein.
C. As a condition and further inducement to
Parent and Purchaser to enter into this Agreement and incur the obligations set
forth herein, certain stockholders of the Company (each, a Stockholder) concurrently herewith are entering into a
Stockholder Agreement (the Stockholder Agreement),
dated as of the date hereof, with Parent and Purchaser, in the form attached
hereto as Exhibit A, pursuant to which each such Stockholder has,
among other things, upon the terms and subject to the conditions set forth
therein, irrevocably agreed to tender such shares of Company Common Stock.
D. Each
of the Boards of Directors of Parent, Purchaser, and Company, has (i) determined
that this Agreement is advisable, (ii) determined that this Agreement and
the transactions contemplated hereby (including the Offer and the Merger),
taken together, are in the best interests of their respective stockholders, and
(iii) approved this Agreement and the transactions contemplated hereby
(including the Offer and the Merger), all upon the terms and subject to the
conditions set forth herein.
E. As a condition and further inducement to Parent
and Purchaser to enter into this Agreement and incur the obligations set forth
herein, certain individuals have entered into employment agreements (the
Employment Agreements) with Parent in
the form attached hereto as Exhibits B-1 through B-3.
NOW, THEREFORE,
in consideration of the covenants, promises and representations set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
THE
OFFER
1.1 The
Offer.
(a) Terms
of the Offer; Conditions to Offer.
Provided that this Agreement shall not have been earlier terminated in
accordance with Article VIII, as promptly as practicable after the date
hereof (but in no event more than five (5) business days after the public
announcement of this Agreement), Purchaser shall (and Parent shall cause
Purchaser to) commence (within the meaning of Rule 14d-2 under the
Securities and Exchange Act of 1934, as amended (the Exchange Act)) a tender offer (the Offer) to purchase all of the Company Shares (as defined in
Section 2.6(a)) at a price per Company Share, subject to the terms of Section 1.1(b),
equal to a price of Three Dollars and Fifty Cents ($3.50) per Company Share,
net to the holder thereof in cash (such amount, or any different amount per
Company Share that may be paid pursuant to the Offer, is the Offer Price). The
obligation of Purchaser to accept for payment any Company Shares tendered
pursuant to the Offer (and the obligation of Parent to cause Purchaser to
accept for payment any Company Shares tendered) shall be subject only to (i) the
condition (the Minimum Condition)
that, prior to the then scheduled expiration of the Offer (as it may be
extended from time to time pursuant to Section 1.1(c)) there be validly
tendered in accordance with the terms of the Offer and not withdrawn a number
of Company Shares that, together with the Company Shares then owned by Parent
and Purchaser (if any), represents 50.1% of all then outstanding Company Shares
calculated on a fully diluted basis (including, without limitation, all Company
Shares issuable upon the conversion
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of any
convertible securities or upon the exercise of any options, warrants or rights,
excluding, however, any securities not convertible or exercisable on or prior
to August 31, 2005 (including for this purpose any securities which become
convertible or exercisable on or prior to August 31, 2005 as a result of
conversion pursuant to Section 2.6(e)) shall have been validly tendered in
accordance with the terms of the Offer and not withdrawn prior to the
expiration of the Offer and (ii) the satisfaction or waiver in accordance
with the terms of this Agreement of each of the other conditions set forth in
Annex A. Parent and Purchaser
expressly reserve the right to waive any such condition, to increase the Offer
Price, and to make any other changes in the terms and conditions of the Offer; provided,
however, that unless previously approved by the Company in writing,
neither Parent nor Purchaser may make any change to the terms and conditions of
the Offer that (i) decreases the Offer Price, (ii) changes the form
of consideration to be paid in the Offer, (iii) reduces the number of
Company Shares to be purchased in the Offer, (iv) imposes conditions to
the Offer in addition to the conditions to the Offer set forth in Annex A,
(v) amends the conditions to the Offer set forth in Annex A so as to
broaden the scope of such conditions to the Offer, (vi) extends the Offer
except as provided in Section 1.1(c), (vii) amends or waives the
Minimum Condition, or (viii) makes any other change to any of the terms
and conditions of the Offer that is adverse to the holders of Company Shares in
the reasonable and good faith judgment of the Company. The conditions to the Offer set forth in
Annex A are for the sole benefit of Parent and Purchaser and may be waived
by Parent and Purchaser, in whole or in part, at any time and from time to
time, in their sole discretion, other than the Minimum Condition, which may be
waived by Parent and Purchaser only with the prior written consent of the
Company. The failure by Parent and
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, and each such right shall be deemed an
ongoing right that may be asserted at any time and from time to time.
(b) Adjustments
to Offer Price. The Offer Price
shall be adjusted appropriately to reflect the effect of any stock split,
reverse stock split, stock dividend (including any dividend or distribution of
securities convertible into Company Common Stock), extraordinary cash
dividends, reorganization, recapitalization, reclassification, combination,
exchange of shares or other like change with respect to Company Common Stock
occurring on or after the date hereof and prior to Purchasers acceptance for
payment of, and payment for, Company Shares pursuant to the Offer.
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(c) Extension
and Expiration of Offer. Subject to
the terms and conditions of the Offer and this Agreement, the Offer shall
expire at midnight, New York Time, on the date that is twenty (20) business
days (calculated in accordance with Section 14d-1(g)(3) under the
Exchange Act) after the date the Offer is commenced (within the meaning of Rule 14d-2
under the Exchange Act); provided, however,
that (i) Purchaser shall extend the Offer for any period required by any
rule, regulation, interpretation or position of the Securities and Exchange
Commission (SEC) or its staff,
or of the Nasdaq Stock Market, Inc. (Nasdaq),
that is applicable to the Offer, and (ii) in the event that any of the
conditions to the Offer set forth on Annex A are not satisfied or waived
as of any then scheduled expiration date of the Offer, Purchaser shall extend
the Offer for successive extension periods of not more than ten (10) business
days each, until such time as either (A) all of the conditions to the
Offer are satisfied or waived, or (B) this Agreement is terminated
pursuant to the terms of Article VIII; provided, however, that notwithstanding the
foregoing clauses (i) and (ii) of this Section 1.1(c), in
no event shall (x) Purchaser be required to extend the Offer beyond the
Initial Termination Date or the Extended Termination Date, as applicable or
(y) Purchaser be required to extend the Offer beyond the termination of
this Agreement in accordance with Article VIII.
(d) Payment
for Company Shares. Subject to the
terms and conditions of the Offer and this Agreement, Purchaser shall (and
Parent shall cause Purchaser to) accept for payment, and pay for, all Company
Shares validly tendered and not withdrawn pursuant to the Offer, as promptly as
practicable after the applicable expiration date of the Offer (as it may be
extended in accordance with Section 1.1(c)). The Offer Price payable in respect of each
Company Share validly tendered and not withdrawn pursuant to the Offer shall be
paid net to the holder thereof in cash, subject to reduction only for any
applicable withholding in accordance with Section 2.7(d).
(e) Subsequent
Offering Period. Purchaser may (but
shall not be required to), only with the prior written consent of the Company,
extend the Offer for a subsequent offering period (within the meaning of Rule 14d-11
under the Exchange Act) of not less than three (3) nor more than twenty
(20) business days immediately following the expiration of the Offer. Subject to the terms and conditions of the
Offer and this Agreement, Purchaser shall (and Parent shall cause Purchaser to)
accept for payment, and pay for, all Company Shares validly tendered and not
withdrawn pursuant to the Offer as so extended by such subsequent offering
period, as promptly as practicable after any such Company
4
Shares
are tendered during such subsequent offering period. The Offer Price payable in respect of each
Company Share validly tendered and not withdrawn pursuant to the Offer, as so
extended by such subsequent offering period, shall be paid net to the holder
thereof in cash, subject to
reduction only for any applicable withholding in accordance with Section 2.7(d).
(f) Transfers
of Ownership. If the payment equal to the Offer Price or Merger
Consideration in cash is to be made to a Person (as defined in Section 9.3(f))
other than the Person in whose name the surrendered certificate formerly
evidencing Shares is registered on the stock transfer books of the Company, it
shall be a condition of payment that the certificate so surrendered shall be
endorsed properly or otherwise be in proper form for transfer and that the
Person requesting such payment shall have paid all transfer and other taxes
required by reason of the payment of the Offer Price or Merger Consideration to
a Person other than the registered holder of the certificate surrendered, or
shall have established to the satisfaction of Parent that such taxes either
have been paid or are not applicable.
(g) Schedule TO;
Offer Documents. On the date the
Offer is commenced (within the meaning of Rule 14d-2 under the Exchange
Act), Parent and Purchaser shall (i) file with the SEC a Tender Offer
Statement on Schedule TO (together with all amendments and supplements
thereto, and including all exhibits thereto, the Schedule TO)
with respect to the Offer, which shall contain as an exhibit or incorporate by
reference an Offer to Purchase, or portions thereof (the Offer to Purchase), and forms of the
letter of transmittal and summary advertisement, if any, in respect of the
Offer (together with any supplements or amendments thereto, the Offer Documents), and (ii) cause the
Offer Documents to be disseminated to all holders of Company Shares
(collectively, the Company Securityholders). Subject to the provisions of Section 6.1,
the Schedule TO and the Offer Documents may include a description of the
determinations, approvals and Recommendations (as defined in Section 1.2(a))
of the Board of Directors of the Company (the Company Board) set forth in Section 1.2(a). The Company shall promptly furnish to Parent
and Purchaser in writing all information concerning the Company that may be
required by applicable federal securities laws or reasonably requested by
Parent and Purchaser for inclusion in the Schedule TO or the Offer
Documents. Parent and Purchaser shall
provide the Company and its counsel a reasonable opportunity to review and
comment on the Schedule TO and the Offer Documents prior to the filing
thereof with the SEC. Parent and
Purchaser shall advise the
5
Company,
promptly after it receives notice thereof, of any request by the SEC or its
staff for an amendment or revision of the Schedule TO or the Offer
Documents, or comments thereon or responses thereto, or request by the SEC or
its staff for additional information in connection therewith and shall provide
to the Company and its counsel all written comments or requests for information
that Parent, Purchaser or their counsel may receive from the SEC or its staff with
respect to the Schedule TO and the Offer Documents promptly after receipt
thereof. Parent and Purchaser shall
respond to any such comments or requests from the SEC regarding the Schedule TO
and the Offer Documents. No filing of,
or amendment or supplement to, or correspondence with the SEC or its staff with
respect to the Schedule TO and the Offer Documents shall be made by Parent
and Purchaser without providing the Company a reasonable opportunity to
participate in the formulation thereof and to review and comment thereon. If at any time prior to the Appointment Time,
any information relating to the Parent, Purchaser, Company or any of their
respective directors, officers or affiliates, should be discovered by Parent,
Purchaser or the Company (including any correction to any of the information
provided by them for use in the Schedule TO or other Offer Documents)
which should be set forth in an amendment or supplement to the Schedule TO
or other Offer Documents so that the Schedule TO or other Offer Documents
would not include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other party or parties
hereto, as the case may be, and an appropriate amendment or supplement to the Schedule TO
or the other Offer Documents describing such information shall be promptly
prepared and filed with the SEC and disseminated to the Company
Securityholders, in each case as and to the extent required by applicable law.
1.2 Company
Action.
(a) Company
Determinations, Approvals and Recommendations. The Company hereby consents to the Offer and
represents and warrants to Parent and Purchaser that, at meeting duly called
and held prior to the date hereof, the Company Board has, upon the terms and
subject to the conditions set forth herein, (i) determined that this
Agreement and the transactions contemplated hereby are advisable, (ii) determined
that this Agreement and the transactions contemplated hereby (including the
Offer and the Merger), taken together, are fair to and in the best interests of
the Company Securityholders, (iii) approved this Agreement and the
transactions contemplated hereby (including the Offer and the Merger) which
6
approval
constituted approval under Section 203 of the Delaware General Corporation
Law (DGCL) as a result of which
this Agreement and the transactions contemplated hereby (including the Offer
and the Merger), are not and will not be subject to any restrictions under Section 203
of the DGCL, and (iv) resolved to recommend that the Company
Securityholders accept the Offer, tender their Company Shares to Purchaser
pursuant to the Offer and adopt this Agreement in accordance with the
applicable provisions of laws of the State of Delaware (Delaware Law) (the actions described in
clauses (i) through (iv) are referred to collectively as the Recommendations); provided, however, that Recommendations may
be withheld, withdrawn, amended or modified in accordance with the terms of Section 6.1(d). As of the date hereof, the Recommendations
were unanimous. The Company hereby
consents to the inclusion of the foregoing determinations and approvals in the
Offer Documents and, to the extent that the foregoing Recommendations are not
withheld, withdrawn, amended or modified in accordance with Section 6.1,
the Company hereby consents to the inclusion of such Recommendations in the
Offer Documents. Each director and
executive officer of the Company has executed a Stockholders Agreement.
(b) Schedule 14D-9. The Company shall (i) file with the SEC,
concurrently with the filing by Parent and Purchaser of the Schedule TO, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, and including all exhibits thereto, the Schedule 14D-9), and (ii) cause the Schedule 14D-9
to be mailed to the Company Securityholders, together with the Offer Documents,
promptly after the commencement of the Offer (within the meaning of Rule 14d-2
under the Exchange Act). Subject to the
provisions of Section 6.1(d), the Company agrees the Schedule 14D-9
shall include a description of the determinations and approvals, and shall
include the Recommendations of the Companys Board set forth in Section 1.2(a). Each of Parent and Purchaser shall promptly
furnish to the Company in writing all information concerning Parent and
Purchaser that may be required by applicable federal securities laws or
reasonably requested by the Company for inclusion in the Schedule 14D-9.
The Company shall provide Parent, Purchaser and their counsel reasonable
opportunity to review and comment on the Schedule 14D-9 prior to the
filing thereof with the SEC. The Company
shall advise Parent, promptly after it receives notice thereof, of any request
by the SEC or its staff for an amendment or revision of the with respect to the
Schedule 14D-9, or comments thereon or responses thereto, or request by
the SEC or its staff for additional information in connection therewith and
shall
7
provide
to Parent and its counsel all written comments or requests for information that
the Company or its counsel may receive from the SEC or its staff with respect
to the Schedule 14D-9 promptly after receipt thereof. The Company shall respond to any such
comments or requests from the SEC regarding the Schedule 14D-9. No filing of, or amendment or supplement to,
or correspondence with the SEC or its staff with respect to the Schedule 14D-9
shall be made by the Company without providing Parent a reasonable opportunity
to participate in the formulation thereof and to review and comment
thereon. If at any time prior to the
Appointment Time, any information relating to the Company, Parent, Purchaser,
or any of their respective directors, officers or affiliates, should be
discovered by Parent, Purchaser or the Company (including any correction to any
of the information provided by them for use in the Schedule 14D-9 which
should be set forth in an amendment or supplement to the Schedule 14D-9 so
that the Schedule 14D-9 would not include any misstatement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading), the party which discovers such information shall promptly notify
the other party or parties hereto, as the case may be, and an appropriate
amendment or supplement to the Schedule 14D-9 describing such information
shall be promptly prepared and filed with the SEC and disseminated to the
Company Securityholders, in each case as and to the extent required by
applicable law.
(c) Company
Information. In connection with the
Offer, the Company shall, or shall cause its transfer agent to, promptly
following a request by Parent, furnish Parent with such information, including,
without limitation, a list, as of the most recent practicable date, of the
Company Securityholders, mailing labels and any available listing or computer
files containing the names and addresses of all record and beneficial holders
of Company Shares, and lists of security positions of Company Shares held in
stock depositories (including, without limitation, updated lists of
stockholders, mailing labels, listings or files of securities positions, to the
extent available), and with such assistance, as Parent or its agents may
reasonably request in order to disseminate and otherwise communicate the Offer
to the record and beneficial holders of Company Shares. Such information shall be provided in such
format, including electronic form (if such information is existing in electronic
form), as may be reasonably requested by Parent and as is practicable. Subject to any and all Legal Requirements,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Merger, Parent and
Purchaser and their agents shall (i) hold in confidence the information
contained in any such
8
lists of
stockholders, mailing labels and listings or files of securities positions, (ii) use
such information only in connection with the Offer and the Merger and, (iii) if
(A) this Agreement shall be terminated pursuant to Article VIII and (B) Parent
and Purchaser shall withdraw the Offer or the Offer shall otherwise expire or
terminate in accordance with the terms hereof without Purchaser (or Parent on
Purchasers behalf) having accepted for payment any Company Shares pursuant to
the Offer, deliver (and shall use their respective reasonable efforts to cause
their agents to deliver) to the Company any and all copies and any extracts or
summaries from such information then in their possession or control.
1.3 Company
Boards of Directors and Committees; Section 14(f) of Exchange Act.
(a) Composition
of Company Board. Effective upon the
acceptance for payment by Purchaser of the Company Shares pursuant to the Offer
(the Appointment Time), Parent
shall be entitled to designate the number of directors, rounded up to the next
whole number, on the Company Board that equals the product of: (i) the
total number of directors on the Company Board (giving effect to the election
of any additional directors pursuant to this Section 1.3); and (ii) the
percentage that the number of Company Shares owned by Parent and/or Purchaser
(including Company Shares accepted for payment) bears to the total number of Company
Shares outstanding. Promptly following a
request by Parent, the Company shall take all action reasonably necessary to
cause Parents designees to be elected or appointed to the Company Board,
including, without limitation, at the option of Parent, increasing the number
of directors (and amending the Bylaws if so required), or seeking and accepting
resignations of incumbent directors, or both; provided, however,
that prior to the Effective Time (as defined in Section 2.2), the Company
Board shall always have at least two members who were directors of the Company
prior to consummation of the Offer and who are not affiliated with Parent or
Purchaser (each, a Continuing Director). In the event that a Continuing Director shall
resign from the Company Board prior to the Effective Time, Parent, Purchaser
and the Company shall permit the remaining Continuing Directors to appoint the
resigning directors successor, who shall thereafter be deemed to be a
Continuing Director for all purposes of and under this Agreement. If the number
of Continuing Directors is reduced to fewer than two for any reason prior to
the Effective Time, the remaining and departing Continuing Directors shall be
entitled to designate a person to fill the vacancy or vacancies such that there
shall
9
be at
least two Continuing Directors, who shall thereafter be deemed to be a
Continuing Director for all purposes of and under this Agreement. If there shall be no Continuing Directors
prior to the Effective Time, the majority of the members of the Company Board
who are not Continuing Directors shall designate two persons to fill the
vacancies such that there shall be two Continuing Directors, who shall
thereafter be deemed to be a Continuing Director for all purposes of and under
this Agreement. The Company shall, upon Parents request
following the Appointment Time, also cause persons elected or designated by
Parent to constitute the same percentage (rounded up to the next whole number)
as is on the Company Board of (i) each committee of the Company Board
(other than as it relates to action which may be taken or is required to be
taken by the Continuing Directors pursuant to Section 1.3(c), (ii) each
board of directors (or similar body) of each Company Subsidiary and (iii) each
committee (or similar body) of each such board, in each case only to the extent
permitted by applicable law or the rules of any stock exchange on which
the Company Shares are listed.
(b) Section 14(f) of
the Exchange Act. The Companys
obligation to appoint Parents designees to the Company Board shall be subject
to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. The Company shall promptly
take all action required pursuant to this Section 1.3 and Section 14(f) and
Rule 14f-1 in order to fulfill its obligations under this Section 1.3,
and shall include in the Schedule 14D-9 such information with respect to
the Company and its directors and officers as is required under such Section 14(f) and
Rule 14f-1 in order to fulfill its obligations under this Section 1.3. Parent shall provide to the Company in
writing, and be solely responsible for any information with respect to itself
and its nominees, directors, officers and affiliates, required by such Section 14(f) and
Rule 14f-1.
(c) Required
Approvals of Continuing Directors.
Notwithstanding anything to the contrary set forth in this Agreement,
after the Appointment Time but prior to the Effective Time, the approval of a
majority of such Continuing Directors shall be required in order to (i) amend
or terminate this Agreement, or agree or consent to any amendment or
termination of this Agreement, in any case on behalf of the Company, (ii) extend
the time for performance of, or waive, any of the obligations or other acts of
Parent or Purchaser under this Agreement, (iii) waive any of the Companys
rights, benefits or privileges under this Agreement if such action would
adversely affect the interests of the Company Securityholders (other than
Parent, Purchaser and their affiliates (other than the Company and its
Subsidiaries)), or (iv) make any other determination with respect
10
to any
action to be taken or not to be taken by or on behalf of the Company relating
to this Agreement or the transactions contemplated hereby, including the Offer
and the Merger, if such action would adversely affect the interests of the
Company Securityholders (other than Parent, Purchaser and their affiliates
(other than the Company and its Subsidiaries)); or (v) approve any other
action by the Company which is reasonably likely to materially and adversely
affect the interests of the Company Securityholders (other than Parent,
Purchaser and their affiliates (other than the Company and its Subsidiaries)
with respect to the transactions contemplated by this Agreement. Without
limitation, any decrease in the amount of Merger Consideration or any change in
the form of Merger Consideration shall be deemed to materially and adversely affect
the interests of the Company Securityholders (other than Parent, Purchaser and
their affiliates (other than the Company and its Subsidiaries)).
THE MERGER
2.1 The
Merger. At the Effective Time (as defined in Section 2.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware Law, Purchaser shall be merged with and into
the Company (the Merger), the
separate corporate existence of Purchaser shall cease and the Company shall
continue as the surviving corporation.
The Company, as the surviving corporation after the Merger, is
hereinafter sometimes referred to as the Surviving Corporation.
2.2 Effective
Time; Closing. Subject to the provisions of this Agreement, the
parties hereto shall cause the Merger to be consummated by filing a Certificate
of Merger (or a Certificate of Ownership and Merger, as applicable) in
customary form with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of Delaware Law (the Certificate of Merger) (the time of such filing with the
Secretary of State of the State of Delaware (or such later time as may be
agreed in writing by the Company and Parent and specified in the Certificate of
Merger) being the Effective Time)
as soon as practicable on or after the Closing Date (as defined below). The closing of the Merger (the Closing) shall take place at a location, time and date to
be specified by the parties, which shall be no later than the second (2nd)
business day after the satisfaction or waiver of the conditions set forth in Article VII
(other than
11
those conditions that, by their terms, are not capable
of being satisfied or waived until the Closing), or at such other time, date
and location as the parties hereto agree in writing (the Closing Date).
2.3 Effect
of the Merger. At the Effective Time, the effect of the Merger shall
be as provided in this Agreement and the applicable provisions of Delaware Law.
2.4 Certificate
of Incorporation and Bylaws. At the Effective Time, the Certificate
of Incorporation of the Company shall be amended and restated in its entirety
to be identical to the Certificate of Incorporation of Purchaser, as in effect
immediately prior to the Effective Time, until thereafter amended in accordance
with Delaware Law and as provided in such Certificate of Incorporation; provided,
however, that at the Effective Time, Article I of the Certificate
of Incorporation of the Surviving Corporation shall be amended and restated in
its entirety to read as follows: The name of the corporation is Digital Impact, Inc. and the
Certificate of Incorporation shall be amended so as to comply with Section 6.11(a). At the Effective Time, the Bylaws of the
Company shall be amended and restated in their entirety to be identical to the
Bylaws of Purchaser, as in effect immediately prior to the Effective Time,
until thereafter amended in accordance with Delaware Law and as provided in
such Bylaws; provided, however, that at the Effective Time, the Bylaws of the
Surviving Corporation shall be amended so as to comply with Section 6.11(a).
2.5 Directors
and Officers. The initial directors of the Surviving Corporation
shall be the directors of Purchaser immediately prior to the Effective Time,
until their respective successors are duly elected or appointed and
qualified. The initial officers of the
Surviving Corporation shall be the officers of Company immediately prior to the
Effective Time, until their respective successors are duly appointed.
2.6 Effect
on Capital Stock. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Parent, Purchaser, the Company or the holders of any
shares of capital stock of the Company, the following shall occur:
(a) Company
Common Stock. Each share of the
Common Stock, par value $0.001 per share, of the Company (together with the
associated Company Right (as defined in Section 3.2(a)) under the Company
Rights
12
Agreement
(as defined in Section 3.2(a)) (Company Common Stock)
issued and outstanding immediately prior to the Effective Time (the Company Shares), other than (i) any shares of Company
Common Stock to be cancelled pursuant to Section 2.6(c) and (ii) the
Appraisal Shares (as defined in Section 2.6(b)), will be cancelled and
extinguished and automatically converted into the right to receive the Offer
Price in cash, without interest (the Merger Consideration),
upon surrender of the certificate representing such share of Company Common
Stock in the manner provided in Section 2.7 (or in the case of a lost,
stolen or destroyed certificate, upon delivery of an affidavit (and bond, if
required) in the manner provided in Section 2.9).
(b) Appraisal
Rights. Notwithstanding anything in
this Agreement to the contrary, shares (the Appraisal
Shares) of Company Common Stock issued and outstanding immediately
prior to the Effective Time that are held by any holder who is entitled to
demand and properly demands appraisal of such shares pursuant to, and who
complies in all respects with, the provisions of Section 262 of DGCL (Section 262) shall not be converted
into the right to receive the Merger Consideration as provided in Section 2.6(a),
but instead such holder shall be entitled to payment of the fair value of such
shares in accordance with the provisions of Section 262. At the Effective Time, the Appraisal Shares
shall no longer be outstanding and shall automatically be cancelled and shall
cease to exist, and each holder of Appraisal Shares shall cease to have any
rights with respect thereto, except the right to receive the fair value of such
shares in accordance with the provisions of Section 262. Notwithstanding the foregoing, if any such
holder shall fail to perfect or otherwise shall waive, withdraw or lose the
right to appraisal under Section 262 or a court of competent jurisdiction
shall determine that such holder is not entitled to the relief provided by Section 262,
then the right of such holder to be paid the fair value of such holders
Appraisal Shares under Section 262 shall cease and such Appraisal Shares
shall be deemed to have been converted at the Effective Time into, and shall have
become, the right to receive the Merger Consideration as provided in Section 2.6(a). The Company shall serve prompt notice to
Parent of any demands for appraisal of any shares of Company Common Stock,
withdrawals of such demands and any other instruments served pursuant to the
Delaware Law received by the Company, and Parent shall have the right to
participate in all negotiations and proceedings with respect to such
demands. Prior to the Effective Time,
the Company shall not, without the prior written consent of Parent, which
consent shall not be unreasonably withheld, delayed or conditioned make any
payment with respect to,
13
or
settle or offer to settle, any such demands, or agree to do or commit to do any
of the foregoing.
(c) Cancellation
of Treasury and Parent Owned Stock.
Each share of Company Common Stock held by the Company or Parent, or any
direct or indirect wholly-owned Subsidiary of the Company or of Parent,
immediately prior to the Effective Time shall be cancelled and extinguished
without any conversion thereof.
(d) Capital
Stock of Purchaser. Each share of
common stock, par value $0.001, of Purchaser issued and outstanding prior
immediately to the Effective Time shall be converted into one validly issued,
fully paid and nonassessable share of common stock, par value $0.001 per share,
of the Surviving Corporation.
(e) Stock
Options; Employee Stock Purchase Plans; Restricted Stock.
(i) Each
unexercised Company Option outstanding at the Effective Time shall be assumed
by Parent and converted into an option to purchase common stock of Parent, par
value $0.01 per share (the Parent Common Stock)
in accordance with this Section 2.6(e)(i).
Each unexercised Company Option so converted shall continue to have, and
be subject to, the same terms and conditions (including vesting schedule) as
set forth in the applicable Company Stock Option Plan and any agreements
thereunder immediately prior to the Effective Time, except that, as of the
Effective Time, (i) each Company Option shall be exercisable for that
number of whole shares of Parent Common Stock determined by multiplying the
number of shares of Company Common Stock subject to the outstanding Company
Option by the Exchange Ratio, rounded down to the nearest whole number of
shares of Parent Common Stock and (ii) the per share exercise price for
the shares of Parent Common Stock issuable upon exercise of such Company Option
so converted shall be equal to the quotient determined by dividing the exercise
price per Company Share at which such Company Option was exercisable
immediately prior to the Effective Time by the Exchange Ratio, rounded up to
the nearest whole cent. The Exchange Ratio shall mean the quotient determined by
dividing the Offer Price by the Market Price per share of Parent Common
Stock. No later than five business days
after the Closing, Parent shall register the shares of Parent Common Stock
issuable upon exercise of Company Option converted pursuant to this
14
Section 2.6(e)(i) by
filing a registration statement on Form S-8 (or any successor form) or
another appropriate form with the SEC, and Parent shall use commercial best
efforts to maintain the effectiveness of such registration statement and
maintain the current status of the prospectus with respect thereto for so long
as such options remain outstanding. For purposes of this Section, Market Price per share of Parent Common Stock shall be the
average closing price per share of Parent Common Stock on the Nasdaq for the
ten trading days selected by Parent and the Company by lot out of the 20
trading days ending on and including the fifth trading day prior to the
Effective Time (the Random Trading Days).
Parent and the Company shall select the Random Trading Days at 5:00 p.m.
New York time on such fifth trading day.
It is intended that Company Options assumed by Parent shall qualify
following the Effective Time as incentive stock options as defined in Section 422
of the Code to the extent Company Options qualified as incentive stock options
immediately prior to the Effective Time and the provisions of this Section shall
be applied consistent with such intent.
(ii) Prior
to the Effective Time, the Company Purchase Plan shall be terminated. The rights of participants in the Company
Purchase Plan with respect to any offering period then underway under such
Company Purchase Plan shall be determined by treating the last business day
prior to, or if more administratively advisable, the last payroll date of
Company immediately prior to, the termination of the Company Purchase Plan, as
the last day of such offering period and by making such other pro-rata
adjustments as may be necessary to reflect the shortened offering period but
otherwise treating such shortened offering period as a fully effective and
completed offering period for all purposes under such Company Purchase
Plan. Prior to the Effective Time,
Company shall take all actions (including, if appropriate, amending the terms
of such Company Purchase Plan) that are necessary to give effect to the
transactions contemplated by this Section 2.6(e)(ii).
(iii) Each
share of restricted (i.e. subject to
a lapsing right of repurchase or risk of forfeiture) Company Common Stock
granted under the Companys 1998 Stock Plan, 1999 Director Equity Plan, or
under certain Protective Covenants Agreements by and between the Company and
each of Noel McMichael and Paul Owen, executed in connection with the
acquisition of Marketleap.com, Inc. (the Restricted
Company Stock), issued and outstanding as of immediately prior to
the Effective Time shall be converted
into the right to receive the Merger Consideration subject to the applicable
terms and conditions of the corresponding Restricted Company Stock award
agreement and Company
15
Stock Option Plan pursuant to which such Restricted
Company Stock has been granted. Merger Consideration in respect of Restricted
Company Stock shall be payable at such times as Restricted Company Stock would
have become vested pursuant to the applicable vesting schedules contained in
the Restricted Company Stock award agreements in effect as of the date hereof,
subject to acceleration as provided in employment or other agreements between
the Company and each holder of Restricted Company Stock or the Company Stock
Option Plan under which it was granted.
(f) Adjustments
to Merger Consideration. The Merger
Consideration shall be adjusted to reflect fully the appropriate effect of any
stock split, reverse stock split, stock dividend (including any dividend or
distribution of securities convertible into Company Common Stock),
reorganization, recapitalization, reclassification or other like change with
respect to Company Common Stock having a record date on or after the date
hereof and prior to the Effective Time.
2.7 Surrender
of Certificates.
(a) Payment
Agent. Promptly following the date
of this Agreement, Parent shall select a bank or trust company reasonably
satisfactory to the Company to act as the payment agent (the Payment Agent) in the Merger, and shall enter into a
customary agreement with the Payment Agent, in a form reasonably satisfactory
to the Company.
(b) Parent
to Provide Cash. From
time to time after the Effective Time, Parent shall promptly provide, or cause
the Surviving Corporation to promptly provide, to the Paying Agent funds in
amounts and at the times necessary for the payment of the Merger Consideration
pursuant to this Article II upon surrender of Certificates (such funds
amount being referred to herein as the Merger
Fund).
(c) Payment
Procedures. As soon as reasonably
practicable after the Effective Time, Parent and Purchaser shall cause the
Payment Agent to mail (and shall make available for collection by hand) to each
holder of record (as of immediately prior to the Effective Time) of a
certificate or certificates (the Certificates)
which immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (other than Appraisal Shares) whose shares were converted
into the right to receive the Merger Consideration
16
pursuant
to this Article II: (i) a letter of transmittal (in customary form
which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates to the Payment Agent) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger Consideration
payable in respect thereof pursuant to this Article II (which instructions
shall provide that, at the election of the surrendering holder, Certificates
may be surrendered, and the Merger Consideration in exchange therefor
collected, by hand delivery). Upon
surrender of Certificates for cancellation to the Payment Agent, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may reasonably be
required by the Payment Agent, the holder of such Certificates shall be
entitled to receive in exchange therefor the amount of Merger Consideration to
which such holder is entitled pursuant to this Article II, and the
Certificates so surrendered shall forthwith be cancelled. Until so surrendered, outstanding
Certificates will be deemed from and after the Effective Time, for all
corporate purposes, to evidence the right to receive the Merger Consideration
payable in respect thereof pursuant to this Article II.
(d) Required
Withholding. Each of the Payment
Agent, Parent and the Surviving Corporation shall be entitled to deduct and
withhold from any consideration payable or otherwise deliverable pursuant to
this Agreement such amounts as may be required to be deducted or withheld
therefrom under the Code or any provision of state, local or foreign tax
law. To the extent such amounts are so
deducted or withheld, the amount of such consideration shall be treated for all
purposes under this Agreement as having been paid to the Person to whom such
consideration would otherwise have been paid and (ii) Parent shall
provide, or cause the Payment Agent to provide, to such Person written notice
of the amounts so deducted or withheld.
(e) No
Liability. Notwithstanding anything
to the contrary in this Section 2.7, neither the Payment Agent, the
Surviving Corporation nor any party hereto shall be liable to a holder of
shares of Company Common Stock for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(f) Investment
of Merger Fund. The Payment Agent
shall invest the cash in the Merger Fund as directed by Parent on a daily
basis; provided that no such investment or loss thereon shall affect the
amounts payable to Company stockholders pursuant to this Article II. Any interest and other income resulting
17
from
such investment shall become a part of the Merger Fund, and any amounts in
excess of the amounts payable to Company stockholders pursuant to this Article II
shall promptly be paid to Parent.
(g) Termination
of Merger Fund. Any portion of the
Merger Fund which remains undistributed to the holders of Certificates eighteen
(18) months after the Effective Time shall, at the request of the Surviving
Corporation, be delivered to the Surviving Corporation or otherwise on the
instruction of the Surviving Corporation, and any holders of the Certificates
who have not surrendered such Certificates in compliance with this Section 2.7
shall after such delivery to Surviving Corporation look only to the Surviving
Corporation for the Merger Consideration pursuant to this Article II.
2.8 No
Further Ownership Rights in Company Common Stock. From and after the
Effective Time, all cash paid upon the surrender for exchange of shares of
Company Common Stock in accordance with the terms hereof shall be deemed to
have been paid in full satisfaction of all rights pertaining to such shares of
Company Common Stock, and there shall be no further registration of transfers
on the records of the Surviving Corporation of shares of Company Common Stock
which were outstanding immediately prior to the Effective Time, other than
transfers to reflect, in accordance with settlement procedures, trades effected
prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be cancelled and exchanged as provided in this Article II.
2.9 Lost,
Stolen or Destroyed Certificates. In the event any Certificates shall
have been lost, stolen or destroyed, the Payment Agent shall pay in exchange
for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, the amount in cash as may be
payable therefor pursuant to Section 2.6.
2.10 Further
Action. At and after the Effective Time, the officers and directors
of Parent and the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of the Company and Purchaser, any deeds,
bills of sale, assignments or assurances and to take and do, in the name and on
behalf of the Company and Purchaser, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets acquired or
18
to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger.
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The Company represents
and warrants to Parent and Purchaser, except as disclosed in the Company SEC
Reports (as defined in Section 3.4(a)) filed on or prior to the date
hereof and except as disclosed in the disclosure letter supplied by
Company to Parent dated as of the date hereof (the Company
Disclosure Letter), as follows:
3.1 Organization;
Standing and Power; Charter Documents; Subsidiaries.
(a) Organization;
Standing and Power. The Company and
each of its Subsidiaries is a corporation or other organization duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, has the requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary other than in such
jurisdictions where the failure to be so organized, existing, qualified and in
good standing, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company (as defined in Section 9.3(e)). For purposes of this Agreement, Subsidiary, when used with respect to any party, shall mean
any corporation or other organization, whether incorporated or unincorporated,
at least a majority of the securities or other interests of which by their
terms ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its subsidiaries, or by such party and one or more of its
subsidiaries.
(b) Charter
Documents. The Company has delivered
or made available to Parent: (i) a true and correct copy of the
Certificate of Incorporation and Bylaws of the Company, each as amended to date
(collectively, the Company Charter Documents)
and (ii) the certificate of incorporation and
19
bylaws,
or like organizational documents (collectively, Subsidiary
Charter Documents), of each of its Subsidiaries, and each such
instrument is in full force and effect.
The Company is not in violation of any of the provisions of the Company
Charter Documents and each of its Subsidiaries are not in violation of their
respective Subsidiary Charter Documents, except as would not reasonably be
expected to have a Material Adverse Effect on the Company.
(c) Subsidiaries. Exhibit 21.1 to the Companys Annual
Report on Form 10-K for the fiscal year ended March 31, 2004 includes
all the Subsidiaries of the Company which are Subsidiaries as of the date
hereof. All the outstanding shares of
capital stock of, or other equity interests in, each such Subsidiary have been
validly issued and are fully paid and nonassessable and are, except as set
forth in such Exhibit 21.1, owned directly or indirectly by the Company,
free and clear of all pledges, claims, liens, charges, encumbrances, options
and security interests of any kind or nature whatsoever, including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests, except for
restrictions imposed by applicable securities laws (collectively, Liens), except in each case as would not have a Material
Adverse Effect on the Company.
3.2 Capital
Structure.
(a) Capital
Stock. The authorized capital stock
of the Company consists of: (i) 100,000,000 shares of Common Stock, par
value $0.001 per share, and (ii) 5,000,000 shares of preferred stock, par
value $0.001 per share (the Company Preferred Stock),
1,000,000 of which shares have been designated as Series A Participating
Preferred Stock (Company Series A
Preferred Stock) and have been reserved for issuance upon exercise
of preferred stock purchase rights (the Company
Rights) issuable pursuant to that certain Preferred Stock Rights
Agreement, dated as of March 4,
2005 between the Company and ComputerShare Investor Services LLC (the Company Rights Agreement). At the close of business on March 23,
2005: (i) 37,237,172 shares of Company Common Stock were issued and
outstanding, (ii) 633,339 shares of Company Common Stock were issued and
held by the Company in its treasury, and (iii) no shares of Company
Series A Preferred Stock were issued and outstanding. All of the outstanding shares of capital
stock of the Company are, and all shares of capital stock of the Company which
may be issued as contemplated or permitted by this Agreement will be, when
issued, duly
20
authorized
and validly issued, fully paid and nonassessable and not subject to any
statutory preemptive rights.
(b) Stock
Options. As of the close of business
on March 23, 2005: (i) 6,584,328 shares of Company Common Stock are
subject to issuance pursuant to outstanding options to purchase Company Common
Stock under the Company Stock Option Plans (equity or other equity-based
awards, whether payable in cash, shares or otherwise granted under or pursuant
to the Company Stock Option Plans are referred to in this Agreement, but
excluding the Restricted Company Stock, are referred to in this Agreement as Company Options), and (ii) as of March 23,
2005, 5,687,339 shares of Company Common Stock are reserved for future issuance
under the Company Purchase Plans. All
shares of Company Common Stock subject to issuance under the Company Stock
Option Plans and the Company Purchase Plan, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
would be duly authorized, validly issued, fully paid and nonassessable. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation or other similar rights with
respect to the capital stock of the Company.
The Company has made available to Parent true and correct lists, dated
as of March 23, 2005 of all holders of Company Options, the number of
Company Options held, exercise prices and the number of Company Options vested
as of March 23, 2005.
(c) Voting
Debt. No bonds, debentures, notes or
other indebtedness of the Company having the right to vote on any maters on
which stockholders of the Company may vote (Voting Debt)
is issued or outstanding as of the date hereof.
(d) Other
Securities. Except as otherwise set
forth in this Section 3.2, as of the date hereof, except for the exercises
or conversions of options, warrants or other securities outstanding as of the
date hereof, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements, rights of first refusal or undertakings
of any kind to which the Company or any of its Subsidiaries is a party or by
which any of them is bound obligating the Company or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock, Voting Debt or other voting securities of the Company
or any of its Subsidiaries, or obligating the Company or any of its
Subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking.
21
3.3 Authority;
Non-Contravention; Necessary Consents.
(a) Authority. The Company has all requisite corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby (including the Offer and the Merger). The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby has been duly
authorized by all necessary corporate action on the part of Company and no
other corporate proceedings on the part of Company are necessary to authorize
the execution and delivery of this Agreement or to consummate transactions
contemplated hereby (including the Offer and the Merger), subject only to the
adoption of this Agreement by the Companys stockholders, if and to the extent
required by applicable law, and the filing of the Certificate of Merger
pursuant to Delaware Law. This Agreement
has been duly executed and delivered by the Company and, assuming due execution
and delivery by Parent and Purchaser, constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to applicable bankruptcy, insolvency, moratorium or similar
laws relating to creditors rights and general principles of equity.
(b) NonContravention. The execution and delivery of this Agreement
by the Company does not, and performance of this Agreement by the Company will
not: (i) conflict with or violate the Company Charter Documents or any Subsidiary
Charter Documents of any Subsidiary of the Company, (ii) subject to
obtaining the adoption of this Agreement by the Companys stockholders, if and
to the extent required by applicable law, and compliance with the requirements
set forth in Section 3.3(c), conflict with or violate any Legal
Requirement applicable to the Company or any of its Subsidiaries or by which
the Company or any of its Subsidiaries or any of their respective properties is
bound, or (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or give to others any rights of payment, termination, amendment, acceleration
or cancellation of, or result in the creation of a Lien on any of the
properties or assets of the Company or any of its Subsidiaries pursuant to, any
Company Material Contract (as defined in Section 3.12) except, with
respect to clause (ii) or (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which (a) would not substantially
impair the Company from performing its obligations hereunder and (b) would
not have a Material Adverse Effect on Company.
22
(c) Necessary
Consents. No consent, approval,
order or authorization of, or registration, declaration or filing with any
supranational, national, state, municipal, local or foreign government, any
instrumentality, subdivision, court, administrative agency or commission or
other governmental authority or instrumentality, or any quasi-governmental or
private body exercising any regulatory, taxing, importing or other governmental
or quasi-governmental authority (a Governmental Entity)
is required to be obtained or made by the Company or its Subsidiaries in
connection with the execution, delivery and consummation of this Agreement and
the transactions contemplated hereby (including the Offer and the Merger),
except for: (A) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware and appropriate documents with the relevant
authorities of other states in which Company and/or Parent are qualified to do
business, and (B) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal, foreign and state securities (or related) laws and antitrust and trade
competition laws (including the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the HSR Act)).
The consents, approvals, orders, authorizations, registrations,
declarations and filings set forth in (A) and (B) are referred to
herein as the Necessary Consents.
3.4 SEC
Filings; Financial Statements.
(a) SEC
Filings. The Company has timely
filed or furnished all required registration statements, prospectuses, reports,
schedules, forms, statements and other documents required to be filed or
furnished by it with the SEC since March 31, 2002. The Company has made available to Parent all
such registration statements, prospectuses, reports, schedules, forms,
statements and other documents in the form filed with the SEC. All such required registration statements,
prospectuses, reports, schedules, forms, statements and other documents
(including those that the Company may file or furnish subsequent to the date
hereof), as amended, are referred to herein as the Company SEC
Reports. As of their
respective dates (or if subsequently amended or supplemented, on the date of
such amendment or supplement), the Company SEC Reports (i) were prepared
in accordance and complied in all material respects with the requirements of
the Securities Act of 1933, as amended (the Securities
Act), the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Company SEC Reports and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light
23
of the
circumstances under which they were made, not misleading. None of the Companys Subsidiaries is, or has
at any time been, required to file or furnish any form, reports or other
documents with the SEC, and none of the Companys Subsidiaries is, or has at any
time been, required to file or furnish any material forms, reports or other
documents with any foreign, state or other securities regulatory body other
than Nasdaq.
(b) Financial
Statements. Each of the consolidated
financial statements (including, in each case, any related notes thereto)
contained in the Company SEC Reports (the Company Financials):
(i) complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, (ii) was prepared in accordance
with United States generally accepted accounting principles (GAAP) applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, for normal and recurring year-end
adjustments and as may be permitted by the SEC on Form 10-Q, 8-K or any
successor or like form under the Exchange Act), and (iii) fairly presented
(and with respect to unaudited interim financial statements fairly presented in
all material respects) the consolidated financial position of the Company as at
the respective dates thereof and the consolidated results of the Companys
operations and cash flows for the periods indicated. The balance sheet of the Company contained in
the Company SEC Reports as of December 31, 2004 is hereinafter referred to
as the Company Balance Sheet. The
books and records of the Company and its Subsidiaries have been maintained in
accordance with past practice and GAAP.
PricewaterhouseCoopers LLP has
not resigned or been dismissed as independent public accountant of the Company
as a result of or in connection with any disagreement with the Company on a
matter of accounting practices which materially impacts or would require the
restatement of any previously issued financial statements, covering one or more
years or interim periods for which the Company is required to provide financial
statements, such that they should no longer be relied upon.
(c) The
Schedule 14D-9 and, if applicable, the Proxy Statement (and any amendment
thereof or supplement thereto) will comply as to form in all material respects
with applicable federal securities laws.
The Schedule 14D-9 and, if applicable, the Proxy Statement, on the
date filed with the SEC and the date first published, sent or given to the
Company Securityholders, will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein,
24
in light
of the circumstances under which they were made, not misleading; provided,
however, that no representation or warranty is made by the Company with respect
to information supplied by Parent or Purchaser in writing for inclusion or
incorporation by reference in the Schedule 14D-9 and the Proxy
Statement. The information provided by
the Company in writing to the Parent or Purchaser for inclusion or
incorporation by reference in the Schedule TO or the Offer Documents will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(d) The Company has designed and implemented
disclosure controls and procedures, within the meaning of Rule 13a-15(e) of
the Exchange Act, to ensure that material information relating to the Company,
including its consolidated Subsidiaries, is made known to the management of the
Company by others within those entities, and (i) has disclosed, based on
its most recent evaluation, to the Parent and to the Companys outside auditors
and the audit committee of the Company Board (A) all significant
deficiencies and material weaknesses in the design or operation of internal
controls over financial reporting (as defined in rule 13a-15(f) of
the Exchange Act) which are reasonably likely to adversely affect the Companys
or its Subsidiaries ability to record, process, summarize and report financial
data, and (B) any fraud, whether material or not material, that involves
management or other employees of the Company or its Subsidiaries who have or
had a significant role in the Companys internal controls over financial
reporting. The certificates of the Chief
Executive Officer and Chief Financial Officer of the Company required by Rule 13a-14
under the Exchange Act with respect to the Company SEC Reports, as applicable,
were true and correct as of the date made.
(e) Each of the Company and its Subsidiaries
maintains accurate books and records reflecting its assets and liabilities and
maintains effective internal accounting controls over financial reporting as
required by Rule 13a-154 or Rule 15d-15, as applicable, of the
Exchange Act, that provide assurance that (i) transactions are executed
with managements authorization; (ii) transactions are recorded as
necessary to permit preparation of the consolidated financial statements of the
Company and to maintain accountability for the Companys consolidated assets; (iii) access
to the Companys consolidated assets is permitted only in accordance with
managements authorization; (iv) the reporting of the Companys
consolidated assets is compared with existing assets at regular
25
intervals; and (v) accounts, notes and other
receivables and inventory are recorded accurately, and proper and adequate
procedures are implemented to effect the collection thereof on a current and
timely basis. Further, to the Knowledge
of the Company and its Subsidiaries, no facts or circumstances exist as of the
date hereof that would reasonably be expected to prevent or otherwise delay the
assessment of management of the Company of internal control over financial
reporting that concludes that the internal control over financial reporting of
the Company and its Subsidiaries is effective as required by Section 404
of the Sarbanes-Oxley Act as of the time such assessment is required.
(f) The Company has provided or made available to
Parent true and complete copies of all comment letters received by the Company
from the SEC since March 31, 2001 and all responses to such comment
letters by or on behalf of the Company.
3.5 Absence
of Certain Changes or Events. Except as disclosed in the Company SEC
Reports on file with the SEC, since the Balance Sheet Date and through the date
hereof, each of the Company and its Subsidiaries has conducted its respective
business in the ordinary course of business consistent with past practice and
there has not been:
(a) Any
Material Adverse Effect on the Company;
(b) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash, stock or property) in respect of, any of the Companys or any
of its Subsidiaries capital stock, or any purchase, redemption or other
acquisition by the Company or any of its Subsidiaries of any of the Companys
capital stock or any other securities of the Company or its Subsidiaries or any
options, warrants, calls or rights to acquire any such shares or other
securities except for repurchases from Employees following their termination
pursuant to the terms of their pre-existing stock option or purchase
agreements;
(c) any
split, combination or reclassification of any of the Companys or any of its
Subsidiaries capital stock;
(d) any
grant by the Company or any of its Subsidiaries to any current or former
director, officer or employee of the Company or any of its Subsidiaries of any
increase in compensation or pay any bonus, except for
26
non-material
increases of cash or equity compensation in the ordinary course of business
granted to employees who are not executive officers of the Company;
(e) any
grant by the Company or any of its Subsidiaries to any such current or former
director, officer or employee of any increase in severance, retention or
termination pay, except to the extent required under any agreement (or in the
case of any employee not covered by an employment agreement to the extent
granted in accordance with the Companys employment compensation policies that
have been provided in writing to Parent) in each case in effect as the date
hereof;
(f) any
amendment or modification to any Company Options or other equity-based
compensation awards;
(g) any
material change in financial or tax accounting methods, principles or practices
by the Company or any of its Subsidiaries except insofar as may have been
required by a change in GAAP or Law and have been disclosed in Company SEC
Reports;
(h) any
material Tax election by the Company or any of its Subsidiaries or settlement
or compromise by the Company or any of its Subsidiaries of any material Tax
liability or refund;
(i) any
incurrence, assumption or guarantee by the Company or any of its Subsidiaries
of any Indebtedness individually or in the aggregate in excess of $1,000,000,
other than in the ordinary course of business;
(j) any
creation or assumption by the Company or any of its Subsidiaries of any Lien on
any material asset of the Company or any of its Subsidiaries other than in the
ordinary course of business;
(k) any
making of any loans, advances or capital contributions to, or investments in,
any other Person, other than (A) to the Company or any direct or indirect
wholly-owned Subsidiary of the Company, and (B) other than advances of
expenses to employees, consultants or directors made in the ordinary course of
business;
(l) any
write off by the Company or any of its Subsidiaries as uncollectible any notes
or accounts receivable, except for write offs in the ordinary course of
business consistent with past practice;
27
(m) any
cancellation of any material debts or waiver of any material claims or rights
by the Company or any of its Subsidiaries;
(n) (A) any
direct or indirect acquisition by the Company or any of its Subsidiaries, or
agreement to acquire, by merging or consolidating with, or by purchasing or by
any other manner, any equity interest in, business of or any substantial
portion of the assets of, any Person or any acquisition by the Company or any
of its Subsidiaries of any assets that are material to the Company and its
Subsidiaries taken as a whole, (B) any sale, lease, license, Lien or other
disposition of any Intellectual Property of the Company or any of its
Subsidiaries, other than sales and licenses of products to customers in the
ordinary course of business, (C) any incurrence or agreement to incur any
new capital expenditures by the Company or any of its Subsidiaries that are in
excess of $1,000,000 in any calendar quarter, or (D) any assignment,
termination (other than pursuant to its terms) or relinquishment by the Company
or any of its Subsidiaries of any contract, license or other right which
produced net revenue to the Company in excess of $250,000 during fiscal year
2004;
(o) any
violation of any Legal Requirement by the Company or any of its Subsidiaries
applicable to the Company or any of its Subsidiaries or by which the Company or
any of its Subsidiaries or any of their respective businesses or properties is
bound, except for conflicts, violations and defaults that would not have a
Material Adverse Effect on the Company; or
(p) any
authorization, commitment or agreement to take any action referred to in this Section 3.5.
3.6 Taxes.
(a) For
the purposes of this Agreement, the term Tax or,
collectively, Taxes, shall mean any and all
federal, state, local and foreign taxes, assessments and other governmental
charges, duties, impositions and liabilities, including taxes based upon or
measured by gross receipts, income, profits, sales, use and occupation, and
value added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, together with all interest, penalties
and additions imposed with respect to such amounts, and any obligations with
respect to such amounts arising as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period or under any agreements
or arrangements with any other Person and
28
including
any liability for taxes of a predecessor entity. The Company and each of its Subsidiaries have
filed all material federal, state, local and foreign returns, estimates,
information statements and reports relating to Taxes (Tax Returns)
required to be filed by any of them and have paid, or have adequately reserved
(in accordance with GAAP) for the payment of, all Taxes required to be paid (whether
or not shown on any Tax Returns), and the most recent financial statements
contained in the Company SEC Reports reflect an adequate reserve (in accordance
with GAAP) for all Taxes payable by the Company and its Subsidiaries through
the date of such financial statements.
(b) No
material deficiencies for any Taxes have been asserted or assessed, or, to the
Knowledge (as defined in Section 9.3(b)) of the Company, proposed, against
the Company or any of its Subsidiaries that are not subject to adequate reserves
(in accordance with GAAP). No audit or
other examination of any Tax Return of the Company or any of its Subsidiaries
is presently in progress, nor has the Company or any of its Subsidiaries been
notified of any request for such an audit or other examination.
(c) Except
as set forth in Section 3.6(c) of the Company Disclosure Letter, none
of the Company and its Subsidiaries is party to any tax-sharing, allocation or
indemnification agreement.
(d) Neither
the Company nor any of its Subsidiaries (A) has been a member of an
affiliated group filing a consolidated federal Tax Return (other than a group
the common parent of which was the Company) or (B) has any liability for
the Taxes of any Person (other than the Company or any of its Subsidiaries) under
Reg. §1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(e) None
of the Company and its Subsidiaries has constituted either a distributing corporation or a controlled
corporation (within the meaning of Section 355(a) (1) (A) of
the Code) in a distribution of stock to which Section 355 of the Code (or
so much of Section 356 of the Code as relates to Section 355 of the
Code) applies and which occurred within two (2) years of the date of this
Agreement.
(f) Each of the Company and its Subsidiaries
currently computes its taxable income using the accrual method of accounting
and has used the accrual method of accounting to compute its taxable income for
all taxable years
29
ending on or after March 31, 1998. None of the Company and its Subsidiaries has
agreed, or is required, to make any material adjustment under Section 481
of the Code affecting any taxable year ending on or after March 31, 1998. None
of the Company and its Subsidiaries has made any, or is obligated under any
Contract or agreement to make any, payment that is or was subject to limits on
deductibility under Code Section 162(m).
Neither the Company nor any of its Subsidiaries is a party to any
agreement, contract, arrangement, or plan that has resulted or would result,
separately or in the aggregate, in the payment of any excess
parachute payment within the meaning of Code §280G (or any
corresponding provision of state, local or foreign Tax law) in connection with
the transactions contemplated hereunder.
(g) The
Company and its Subsidiaries have made available to Parent correct and complete
copies of (i) all of their material Tax Returns filed since March 31,
2001, (ii) all audit reports, letter rulings, technical advice memoranda
and similar documents issued by a Governmental Authority within the past five (5) years
relating to the federal, state, local or foreign Taxes due from or with respect
to the Company and its Subsidiaries, and (iii) any closing letters or
agreements entered into by the Company or any of its Subsidiaries with any
Governmental Authority within the past five (5) years with respect to
Taxes.
(h) To the Knowledge of the Company, none of the
Company and its Subsidiaries is or has been a party to a reportable
transaction as defined in Treasury Regulations Section 1.6011-4(b).
3.7 Intellectual
Property.
(a) As used herein, the term Intellectual Property means all trademarks, service marks,
trade names, Internet domain names, designs, insignia, logos, slogans, other
similar designators of source or origin and general intangibles of like nature,
together with all goodwill of the Company and its Subsidiaries symbolized by
any of the foregoing and registrations and applications relating to the
foregoing (collectively, Trademarks);
patents, including any continuations, divisional, continuations-in-part,
renewals, reissues and applications for any of the foregoing, as well as any
invention disclosures (collectively, Patents);
copyrights (including registrations and applications for any of the foregoing
and common law copyrights) (collectively Copyrights);
computer programs (whether in source code, object code or other form),
including any and all software implementations of algorithms, models and
methodologies,
30
and all documentation, including, but not limited
to, user manuals and training materials, related to any of the foregoing
(collectively, Software Programs); databases and
compilations, including, but not limited to, any and all data and collections
of data (such as, but not limited to, all customer-related data), confidential
information, technology, know-how, inventions, processes, formulae, algorithms,
models and methodologies (collectively Trade Secrets)
held for use or used in the business of the Company and each of its
Subsidiaries as conducted as of the Closing Date or as presently contemplated
to be conducted. As used herein, Company Owned IP
means Intellectual Property that is owned by the Company or any of its
Subsidiaries. Company Licensed IP means all
Intellectual Property owned by a third party and licensed to the Company or any
of its Subsidiaries, or to which the Company or any of its Subsidiaries obtains
any rights, under any IP Agreement. IP Agreement means any agreement under which a party
licenses Intellectual Property to Company or any its Subsidiaries, provided
that a non-disclosure agreement is not an IP Agreement and a confidentiality
provision in an agreement does not, in the absence of a license of any other
Intellectual Property (other than the disclosure of Trade Secrets) make such
agreement an IP Agreement. Company IP
means all Company Owned IP, Company Licensed IP and any other Intellectual
Property used by the Company or any of its Subsidiaries.
(b) Section 3.7(b) of the Company
Disclosure Letter sets forth a complete and accurate list of, for Company Owned
IP, all existing U.S. and foreign registrations and applications for Patents,
Trademarks and Copyrights.
(c)
(i) Except as set forth in the IP Agreements as
of the date hereof, the Company and its Subsidiaries are not obligated to pay
any material royalties, honoraria or other amounts (other than registration,
maintenance, and similar fees with respect to the registration and maintenance
of registered Patents, Trademarks and Copyrights) to any third party(is) with
respect to the use of any material Company Licensed IP or material Company Owned
IP.
(ii) To
the Companys Knowledge, except as set forth in the IP Agreements as of the
date hereof, the Company and its Subsidiaries are not obligated to pay any
material royalties, honoraria or other amounts (other than registration,
maintenance, and similar fees with respect to the registration and maintenance
of registered Patents, Trademarks and Copyrights) to any third
31
party(is)
with respect to the use of any other material Intellectual Property used by the
Company or any of its Subsidiaries.
(d) Except as set forth in Section 3.7(d) of
the Company Disclosure Letter:
(i) the Company or its Subsidiaries are the sole
and exclusive owners of all material Company Owned IP and have, to Companys
Knowledge, a valid right to use all material Company Owned IP and material
Company Licensed IP as currently used, free and clear of all Liens other than
Liens arising in the ordinary course of business;
(ii) to the Companys Knowledge, the Company or
its Subsidiaries have a valid right to use any other material Intellectual
Property used by the Company or any of its Subsidiaries as currently used, free
and clear of all Liens other than Liens arising in the ordinary course of
business;
(iii) the Company or any of its Subsidiaries is
listed in the records of the applicable United States, state, or foreign
registry as the sole current owner of record for each application and
registration included in the Company Owned IP;
(iv) any applications and registrations of
material Company Owned IP have been duly maintained, are, to Companys
Knowledge, valid and subsisting, in full force and effect and have not been
cancelled, expired, dedicated to the public domain or abandoned;
(v) except as set forth in Section 3.9 of the
Company Disclosure Letter, there is no claim, action, suit, arbitration,
alternative dispute resolution action or any other judicial, administrative or
registration authority proceeding in any jurisdiction pending (or, to the
Companys Knowledge, threatened) involving (A) the Company Owned IP, or (B) to
the Companys Knowledge, any other material Company IP, alleging
misappropriation, infringement, dilution or other violation of the intellectual
property rights of any third party or challenging the Company or any of its
Subsidiaries ownership, use, validity, enforceability or registrability of any
such Company IP;
(vi) to the Companys Knowledge, no third party is
misappropriating, infringing, diluting or otherwise violating any material
Company Owned IP or any other material Company IP and no such claims, suits,
32
arbitration or other adversarial proceedings have
been brought or threatened against any third party by the Company or any of its
Subsidiaries;
(vii) the Company and each of its Subsidiaries
takes (and with respect to material Software Programs that are included in
material Company Owned IP, have taken) reasonable measures to protect the
confidentiality of all material Trade Secrets constituting material Company
Owned IP, and (to the Companys Knowledge) no such Trade Secret has been
disclosed or authorized to be disclosed to any third party other than pursuant
to a written non-disclosure agreement that protects the proprietary interests
of the Company and the applicable Subsidiaries of the Company in and to such
Trade Secrets;
(viii) the
consummation of the transactions contemplated hereby will not result in the
loss or impairment of the Companys or any of its Subsidiaries current right
to own, use or bring any action for the infringement of, any of any material
Company Owned IP, nor will such consummation require the consent of any third
party in respect of any material Company IP or material IP Agreement; and
(ix) all
material Software Programs included in the Company Owned IP were developed
either (A) by employees of the Company or any of its Subsidiaries within
the scope of their employment or (B) by independent contractors who have
assigned (1) all of their ownership rights and (2) all other rights
(subject in the case of this subclause (2) to the retention of the right
to use residual general Knowledge retained in unaided memory or non-material
code developed by such independent contractors prior to or outside the scope of
the development of the Software for the Company or any of its Subsidiary) to
such Software Programs to the Company or any of its Subsidiaries pursuant to a
written agreement. Except as set forth in Section 3.7(d)(ix) of the
Company Disclosure Letter, to the Companys Knowledge, no third party (other
than the independent contractors described in (B) above or Persons who are
subject to written non-disclosure agreements that protect the proprietary
interests of the Company and the applicable Subsidiaries of the Company in and
to such Software Programs and any Trade Secrets embodied therein) has had
access to any of the source code for any of such material Software Programs,
and there has been no disclosure of any such source code to any competitor of
the Company, and no act has been done or omitted to be done by the Company or
any of its Subsidiaries the result of which would be to dedicate to the public
domain or
33
entitle
any governmental entity to hold abandoned or dedicated to the public domain any
of such Software Programs.
(e) The
Software Programs owned by the Company or any of its Subsidiaries materially
contribute in each case to the functionality and processes of the products and
services set forth in Section 3.7(e) of the Company Disclosure Letter
as implemented as of the date hereof.
3.8 Compliance;
Permits.
(a) Compliance. Neither the Company nor any of its
Subsidiaries is in violation of any Legal Requirement (including, without
limitation, any laws related to privacy, data protection and the collection and
use of personal information gathered or used by the Company and its
Subsidiaries, any environmental laws, the Sarbanes-Oxley Act and any laws, rules and
regulations related to any of the foregoing, as well as, to the Companys
Knowledge, any privacy policies of the Company and its Subsidiaries) applicable
to the Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries or any of their respective businesses or properties is bound, except
for conflicts, violations and defaults that would not have a Material Adverse
Effect on the Company. To the Companys
Knowledge, the Company and its Subsidiaries take steps commercially reasonable
to comply with all Legal Requirements, as well as the Companys privacy
policies, for the protection of personal information against loss and against
unauthorized access, use, modification, disclosure or other misuse. As of the date hereof, no material
investigation or review by any Governmental Entity is pending or, to the
Knowledge of the Company, has been threatened in a writing delivered to the
Company or any of its Subsidiaries, against the Company or any of its
Subsidiaries. There is no material
judgment, injunction, order or decree against the Company or any of its
Subsidiaries. No written notice has been
received by the Company or any of its Subsidiaries alleging any violation of
any of the foregoing Legal Requirements.
(b) Permits. The Company and its Subsidiaries hold, to the
extent legally required, all material permits, licenses, variances, exemptions,
orders and approvals from Governmental Entities (Permits)
that are required for the operation of the business of the Company, as
currently conducted (collectively, Company Permits). As of the
date hereof, no suspension or cancellation of any of the Company Permits is
pending or, to the Knowledge of Company,
34
threatened. The Company and its Subsidiaries are in
compliance in all material respects with the terms of the Company Permits.
3.9 Litigation.
(a) As
of the date hereof, there are no claims, suits, actions or proceedings, or to
the Companys Knowledge, investigations, pending or, to the Knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
or any of their respective businesses or assets or any of the directors or
officers of the Company or any of its Subsidiaries or, to the Knowledge of the
Company, its other employees, stockholders or representatives (in each case
insofar as any such matters relate to their activities with the Company or any
of its Subsidiaries) at law or in equity, before any Governmental Entity,
arbitrator or arbitration panel that has resulted or would reasonably be expected
to result in a liability to the Company or any of its Subsidiaries in excess of
$500,000 or that is seeking injunctive relief that would reasonably be expected
to result in a liability to the Company or any of its Subsidiaries in excess of
$500,000. Neither the Company nor any of its Subsidiaries is subject to any
outstanding judgment against the Company or any of its Subsidiaries or naming
the Company or any of its Subsidiaries as a party or, to the Knowledge of the
Company, by which any of the employees of the Company or any of its
Subsidiaries is prohibited or restricted from engaging in or otherwise
conducting the business of the Company or any of its Subsidiaries as presently
conducted that has or would reasonably be expected to result in a liability to
the Company or any of its Subsidiaries in excess of $500,000. Section 3.9(a) of
the Company Disclosure Schedule shall include a complete and accurate
summary of each such suit, claim, action, proceeding, investigation and
judgment set forth therein, together with a summary of its status as well as
the damages or other relief sought or imposed thereby.
(b) To
the Knowledge of the Company, there is
no investigation or review by any Governmental Entity or self-regulatory
authority with respect to the Company or any of its Subsidiaries (excluding
investigations and reviews of Intellectual Property applications by the
Intellectual Property offices of a Governmental Entity) or any of their
respective employees (insofar as any such investigation or review relates to
their activities with the Company or any of its Subsidiaries) actually pending
or, to the Knowledge of the Company, threatened, nor has any Governmental
Entity or self-regulatory authority indicated to the
35
Company or any of its Subsidiaries in writing or, to
the Knowledge of the Company, orally, an intention to conduct the same.
3.10 Employee
Benefit Plans.
(a) Documents. Section 3.10(a) of the Company
Disclosure Letter sets forth a list of the following: (i) all severance
and employment agreements of the Company with directors or executive officers, (ii) all
material severance programs and policies of each of the Company or its
Subsidiaries, (iii) all plans or agreements of the Company or its Subsidiaries
relating to any of its current or former employees, consultants or directors
(each, an Employee) pursuant to which
benefits would vest or an amount would become payable or the terms of which
would otherwise be altered, in any case, by virtue of the transactions
contemplated hereby, (iv) each Retirement Plan (as defined in Section 3.10(b)(ii))
of the Company (a Company Retirement Plan),
(v) each employee stock purchase plan of the Company, including the 1999
Employee Stock Purchase Plan (the Company Purchase Plans),
(vi) each stock option plan, stock award plan, stock appreciation right
plan, phantom stock plan, stock option, other equity or equity-based
compensation plan, equity or other equity based award to any Person (whether
payable in cash, shares or otherwise) (to the extent not issued pursuant to any
of the foregoing plans) or other plan or Contract of any nature with any Person
(whether or not an Employee) pursuant to which any stock, option, warrant or
other right to purchase or acquire capital stock of the Company or right to
payment based on the value of Company capital stock has been granted or
otherwise issued, but, in any case excluding the Company Purchase Plans
(collectively, Company Stock Option Plans), and (vii) each
material Benefit Plan that Company maintains, sponsors or is a party to and
under which Company has a liability under that provides benefits to Employees,
former Employees, independent contractors (or their dependents or
beneficiaries). The Company has delivered
or made available to Parent for review all material documents relating to each
of the items listed on Section 3.10(a) of the Company Disclosure
Letter.
(b) Benefit
Plan Compliance.
(i) With respect to each material bonus, pension,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, stock-related or performance
award, retirement, vacation, severance, disability, death benefit, sick,
hospitalization, medical, loan (other than travel allowances and relocation
packages), fringe
36
benefit, disability, sabbatical, leave of absence,
layoff, vacation, day or dependent care, cafeteria (Code 125), accident, legal
services, financial education/advice, welfare and other plan, arrangement or
understanding providing benefits to any Employee, employment agreement (or
beneficiaries or dependents of Employees), consulting agreement or severance
agreement with any current or former officer or director of the Company or its
Subsidiaries, or any material employment agreement, consulting agreement or
severance agreement for any current Employee (collectively, Benefit Plans) of the Company or any of its Subsidiaries (Company Benefit Plans), no event has occurred and
there exists no condition or set of circumstances, in connection with which the
Company or any of its Subsidiaries would be subject to any liability under the
Employee Retirement Income Security Act of 1974, as amended (ERISA), the Internal Revenue Code of 1986, as amended (the Code) or any other applicable Legal
Requirement, except as has not or would not reasonably be expected to have a
Material Adverse Effect on the Company.
(ii) Each
Company Benefit Plan has been administered and operated in accordance with its
terms, with the applicable provisions of ERISA, HIPAA, the Code and all other
applicable Legal Requirements and the terms of all applicable collective
bargaining agreements, except, in each case, as has not or would not reasonably
be expected to have a Material Adverse Effect on the Company. Any Company Retirement Plan (as defined
below) intended to be qualified under Section 401(a) and its related
trust under Section 501(a) of the Code has obtained an updated
favorable determination letter (or opinion letter) in accordance with the IRS
remedial amendment period ending February 28, 2002 as to its qualified
status under the Code or is entitled to rely on an opinion letter issued to the
sponsor of the prototype document upon which such Company Retirement Plan is
based pursuant to applicable guidance, or has remaining a period of time to
apply for such determination or opinion letter.
For purposes of this Agreement, Retirement Plan
shall mean a material arrangement for the provision of Retirement Benefit
Rights (as defined below) to Employees (and, if applicable, beneficiaries
thereof). For purposes of this
Agreement, Retirement Benefit Rights shall
mean, with respect to an entity, any pension, lump sum, gratuity, or a like benefit
provided or generally intended to be provided on retirement or on death in
respect of an Employees relationship as a service provider to an entity or its
Subsidiaries, including any nonqualified deferred compensation plan or
agreement. Material post-retirement
health benefits and any other self-insured health benefit arrangements are
deemed to be Retirement Benefit Rights.
Material deferred compensation payments required to be made
37
to an
Employee in respect of the termination of employment are also deemed to be Retirement
Benefit Rights.
(iii) To
the Knowledge of the Company, no material oral or written representation or
commitment with respect to any material aspect of any Company Benefit Plan has
been made to an Employee (or his or her beneficiary or dependent) of the
Company or any of its Subsidiaries by an authorized Employee of the Company
that is not materially in accordance with the written or otherwise preexisting
terms and provisions of such Company Benefit Plans. To the Knowledge of the Company, neither the
Company nor any of its Subsidiaries has entered into any agreement, arrangement
or understanding, whether written or oral, with any trade union, works council
or other Employee representative body or any material number or category of its
Employees which would prevent, restrict or materially impede the implementation
of any lay-off, redundancy, severance or similar program within its or their
respective workforces (or any part of them).
(iv) There
are no material unresolved claims or disputes under the terms of, or in
connection with, any Company Benefit Plan (other than routine undisputed claims
for benefits), and no action, legal or otherwise, has been commenced with
respect to any material claim.
(v) All
contributions, premiums and other payments required by law, plan provisions, or
otherwise, under any Benefit Plan, has been properly remitted by the applicable
due date, except as would not have a Material Adverse Effect on the Company.
(c) Multiple
Employer and Multiemployer Plans. At
no time has the Company or any other person or entity under common control
within the meaning of Section 414(b), (c), (m) or (o) of the Code (a Controlled Group Affiliate) with the Company participated
in and/or been obligated to contribute to any Company Benefit Plan in which any
persons which are not or were not at the relevant time, Controlled Group
Affiliates of the Company and/or their Employees, have participated. No Company Benefit Plan is a multiemployer
plan within the meaning of Section 3(37) of ERISA.
(d) Continuation
Coverage. No Company Benefit Plan
provides health benefits (whether or not insured), with respect to Employees
after retirement or other termination of service (other than coverage mandated
by
38
applicable
Legal Requirements or benefits, the full cost of which is borne by the
Employee) other than individual arrangements the amounts of which are not
material.
(e) Effect
of Transaction. The execution of
this Agreement and the consummation of the transactions contemplated hereby
will not (either alone or upon the occurrence of any additional or subsequent
events) constitute an event under any Company Benefit Plan that will or may
result in any material payment (whether of severance pay or otherwise),
acceleration of payment, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any
Employee. There is no contract,
agreement, plan or arrangement with an Employee to which the Company or any of
its Subsidiaries is a party as of the date of this Agreement, that,
individually or collectively and as a result of the transactions contemplated
hereby (whether alone or upon the occurrence of any additional or subsequent
events), would reasonably be expected to give rise to the payment of any amount
that would not be deductible pursuant to Section 280G of the Code.
(f) Labor. No collective bargaining agreement is being
negotiated or renegotiated in any material respect by the Company or any of its
Subsidiaries. As of the date of this
Agreement, there is no material labor dispute, strike or work stoppage against
Company or any of its Subsidiaries pending or, to the Knowledge of the Company,
threatened which may materially interfere with the business activities of the
Company. As of the date of this
Agreement, to the Knowledge of the Company, none of the Company, any of its
Subsidiaries or any of their respective representatives or Employees has
committed any material unfair labor practice in connection with the operation
of the business of the Company, and there is no material charge or complaint
against the Company or any of its Subsidiaries by the National Labor Relations
Board or any comparable governmental agency pending or threatened in writing.
(g) Pension
Plans. The Company or a Subsidiary
does not and has not ever maintained a plan subject to the provisions of Code Section 412
or subject to the supervision of the Pension Benefit Guarantee Corporation.
3.11 Environmental
Matters.
(a) Hazardous
Material. Except as would not result
in a Material Adverse Effect on the Company, no underground storage tanks and
no amount of
39
any
substance that has been designated by any Governmental Entity or by applicable
federal, state or local law to be radioactive, toxic, hazardous or otherwise a
danger to health or the environment, including PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, but excluding office and janitorial
supplies, (a Hazardous Material) are present,
as a result of the actions of the Company or any of its Subsidiaries or any
affiliate of the Company, or, to the Knowledge of the Company, as a result of
any actions of any third party or otherwise, in, on or under any property,
including the land and the improvements, ground water and surface water
thereof, that the Company or any of its Subsidiaries has at any time owned,
operated, occupied or leased.
(b) Hazardous
Materials Activities. Except as
would not result in a Material Adverse Effect on the Company: (i) neither
the Company nor any of its Subsidiaries has transported, stored, used,
manufactured, disposed of, released or exposed its Employees or others to
Hazardous Materials in violation of any law in effect on or before the Closing
Date and (ii) neither the Company nor any of its Subsidiaries has disposed
of, transported, sold, used, released, exposed its Employees or others to or
manufactured any product containing a Hazardous Material (collectively, Hazardous Materials Activities) in violation of any rule,
regulation, treaty or statute promulgated by any Governmental Entity in effect
prior to or as of the date hereof to prohibit, regulate or control Hazardous
Materials or any Hazardous Material Activity.
3.12 Contracts.
(a) Material
Contracts. Section 3.12(a) of
the Company Disclosure Letter sets forth a list of all Company Material
Contracts, other than those Company Material Contracts which have been filed
with the Company SEC Reports. For
purposes of this Agreement, Company Material Contract shall mean any of the following Contracts
to which the Company or any of its Subsidiaries is bound as of the date hereof:
(i) any
material contracts (as such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC) with respect
to Company and its Subsidiaries;
40
(ii) any
Contract containing any covenant limiting the right of the Company or its
Subsidiaries to engage in any line of business, make use of any material
Intellectual Property or compete with any Person in any line of business, or
that purports to bind any successor to or affiliate of the Company (after
consummation of the Offer or the Merger), to any such restrictions;
(iii) any Contract or series of related Contracts
for the purchase of materials, supplies, goods, services, equipment or other
assets (other than a Contract terminable on notice of 30 days or less without
penalty) that provides for future payment obligations during the next 12 months
by the Company or its Subsidiaries of $250,000 or more;
(iv) any Contract or series of related Contracts
that will result in net revenues to the Company and its Subsidiaries of
$250,000 or more during the Companys fiscal year 2005;
(v) any lease of personal property providing for
future payment obligations of $100,000 or more during the next 12 months;
(vi) any mortgage, pledge, security agreement,
deed of trust or other instrument granting a material Lien upon any property
owned or leased by the Company or a Subsidiary;
(vii) Contract
under which the Company or a Company Subsidiary has borrowed any money from, or
issued any note, bond, debenture or other evidence of indebtedness for borrowed
money to, any Person (other than the Company or a Company Subsidiary) or any
other note, bond, debenture or other evidence of indebtedness for borrowed
money issued to any Person (other than the Company or a Company Subsidiary) in
any such case which, individually, is in excess of $100,000;
(viii) any Contract
under which the Company or a Company Subsidiary has, directly or indirectly,
made any advance, loan, extension of credit or capital contribution to, or
other investment in, any Person (other than the Company or a direct or indirect
wholly-owned Subsidiary), in any such case which, individually, is in excess of
$100,000;
(ix) agreement
or instrument providing for indemnification by the Company or any of its
Subsidiaries of any Person with respect to material liabilities relating to any
current or former business of the
41
Company,
a Subsidiary or any predecessor Person other than indemnification obligations
of the Company or any Subsidiary pursuant to the provisions of a Contracts with
customers entered into in the ordinary course of business and any provisions of
lease agreements for real or personal property;
(x) any Contract that contains a put, call or
similar right pursuant to which the Company or any of its Subsidiaries could be
required to purchase or sell, as applicable, any equity interests of any Person
or other assets;
(xi) any partnership, joint venture or other similar
agreement or arrangement relating to the formation, creation, operation,
management or control of any partnership or joint venture in which the Company
or any of its Subsidiaries is a party or has a voting or economic interest;
and
(xii) any
Contract, or group of Contracts with a Person (or group of affiliated Persons),
the termination or breach of which would be reasonably expected to have a
Material Adverse Effect on any material division or business unit or other
material operating group of product or service offerings of the Company or
otherwise have a Material Adverse Effect on the Company.
(b) No
Breach. All Company Material
Contracts are valid and in full force and effect except to the extent they have
previously expired in accordance with their terms or if the failure to be in
full force and effect, individually or in the aggregate, would not reasonably
be expected to be material to the Company or its Subsidiaries, taken as a
whole. Neither the Company nor any of
its Subsidiaries has violated any provision of, or committed or failed to
perform any act which, with or without notice, lapse of time or both would
constitute a default under the provisions of, any Company Material Contract,
except in each case for those violations and defaults which, individually or in
the aggregate, would not reasonably be expected to be material to the Company
or its Subsidiaries, taken as a whole.
Since March 31, 2004, no counterparty to any Company Material
Contract disclosed, or required to be disclosed, on the Company Disclosure Schedule in
response to Sections 3.12(a)(iv), (a)(v) and (a)(xii) above, has
given notice in writing of any intention to cancel or otherwise terminate prior
to the end of the applicable contract term, such Company Material Contract.
3.13 Takeover
Statutes. The Company Board has taken all actions so that the
restrictions contained in Section 203 of the DGCL, and any other similar
42
Legal Requirement, will not apply to Parent or Purchaser
during the pendency of this Agreement, including the execution, delivery or
performance of this Agreement and the transactions contemplated hereby
(including the Offer and the consummation of the Merger).
3.14 Rights
Plan. The Company has taken all actions necessary to render the
Company Rights Agreement inapplicable to the execution and delivery of the
Agreement and the transactions contemplated hereby (including the Offer and the
consummation of the Merger).
3.15 Brokers
and Finders Fees.
(a) No
broker, investment banker, financial advisor or other Person, other than Credit
Suisse First Boston LLC (CSFB) pursuant
to an engagement letter dated March 4, 2005, the fees and expenses of
which will be paid by the Company, is entitled to any brokers, finders,
financial advisors or other similar fee or commission in connection with this
Agreement or any transaction contemplated hereby.
(b) True
and correct copies of all agreements between the Company and CSFB concerning
the transactions contemplated hereby, including without limitation, any fee
arrangements, have been previously provided or made available to Parent.
3.16 Off-Balance
Sheet Transactions and Public Accountant. There have been no off-balance
sheet arrangements, as such term is defined in Item 303(c) of Regulation
S-K of the SEC, effected by the Company or its Subsidiaries since March 31,
2002. To the Knowledge of the Company,
PricewaterhouseCoopers LLP is, and has been throughout the periods covered by
the financial statements contained in the Company SEC Reports, independent
with respect to the Company within the meaning of Regulation S-X.
3.17 No
Undisclosed Liabilities. Except as disclosed in the Company
Financials or the Company SEC Reports, since the date of the Company Balance
Sheet and through the date hereof, neither the Company nor any of its
Subsidiaries has any liabilities required under GAAP to be set forth on a
consolidated balance sheet which, has or would be reasonably expected to have a
Material Adverse Effect on the Company, except for (a) liabilities set
forth or reflected in the Company Balance Sheet or identified in the related
notes thereto;
43
(b) liabilities incurred since the date of the
Company Balance Sheet in the ordinary course of business; and (c) liabilities
incurred in connection with the tender offer (as may be amended from time to
time) for the Companys Common Stock commenced by infoUSA, Inc. and DII
Acquisition Corp. on February 24, 2005, or pursuant to this Agreement or
the transactions contemplated hereby, including the Offer and the Merger.
3.18 Potential
Conflict of Interest. Except as set forth in the Company SEC Reports,
since March 31, 2004 and through the date hereof, there have been no transactions,
agreements, arrangements or understandings between the Company or any of its
Subsidiaries, on the one hand, and their respective affiliates, on the other
hand, that would be required to be disclosed under Item 404 of Regulation S-K
under the Securities Act (except for amounts due as normal salaries and bonuses
and in reimbursements of ordinary expenses).
Except as disclosed in the Company SEC Reports filed prior to the date
hereof, neither the Company nor any of its Subsidiaries has outstanding, or has
arranged any outstanding extension of credit to directors or officers within
the meaning of Section 402 of the Sarbanes-Oxley Act of 2002.
3.19 Properties.
The Company and each of its Subsidiaries have good title, free and clear of all
Liens, to all material tangible properties and assets reflected in the Company
Financials contained in the Companys quarterly report on Form 10-Q for
the fiscal period ended December 31, 2004, as being owned by Company and
its Subsidiaries as of the date thereof, and all material tangible properties
and assets purchased by the Company and/or its Subsidiaries since December 31,
2004 which are material, individually or in the aggregate, to the Companys
business as currently conducted, other than (i) any properties or assets
that have been sold or otherwise disposed of in the ordinary course of business
since the date of such Company Financials, (ii) Liens disclosed in the
notes to such Company Financials and (iii) Liens arising in the ordinary
course of business after the date of such Company Financials. None of the Company or any of its
Subsidiaries owns or operates, or has ever owned or operated, any real
property.
3.20 Insurance.
Company and each of its Subsidiaries is presently insured, and during each of
the past three calendar years has been insured, against such risks, as to the
Companys Knowledge, that companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. The policies of fire, theft, liability and other
insurance maintained with respect to the assets or businesses of Company and
its Subsidiaries provide, to the
44
Companys Knowledge, adequate coverage against
loss. All such policies are in full force
and effect and all premiums due thereon have been paid to the date hereof. Company and its Subsidiaries have complied in
all material respects with the terms of such policies. As of the consummation
of the Offer, the Company and its Subsidiaries shall continue to have coverage
under such policies and bonds with respect to events occurring prior to the
consummation of the Offer. As of the
date hereof, there is no claim pending under any of such policies as to which
coverage has been denied or disputed by the underwriters of such policies. The
Company has no Knowledge of any threatened termination of, or material premium
increase with respect to, any such policies.
3.21 Opinion
of Financial Advisor. The Company Board has received the opinion of
CSFB dated March 24, 2005, to the effect that, as of the date thereof, the
Offer Price is fair from a financial point of view to the Company
Securityholders (other than affiliates of the Company). The Company will deliver, promptly after its
receipt, a true and complete copy of such opinion to the Parent. The Company has been authorized by CSFB to
permit the inclusion of such opinion in its entirety in the Offer Documents,
the Schedule 14D-9 and the Proxy Statement.
3.22 Required
Vote. The only vote of holders of any class or series of Company
capital stock necessary to approve and adopt this Agreement is, if required by
applicable Law, the adoption of this Agreement by the affirmative vote of the
holders of at least a majority of the outstanding shares of Company Common
Stock. The affirmative vote of any holders of any other class of Company
capital stock is not necessary to approve this Agreement or to consummate any
of the transactions contemplated hereby.
3.23 Employment
Agreements. At least two of the following three individuals are
Employees of the Company and have not
anticipatorily repudiated the Employment Agreements: William C. Park, Gerardo Capiel and Kevin Johnson;
provided, however, that with respect to any such individual, in the event such
individuals employment with the Company is terminated for death or disability,
such individual shall nonetheless be deemed to be an Employee of the Company
and have not anticipatorily repudiated
the Employment Agreements. The
failure of such representation to be true as of immediately prior to the
expiration date of the Offer shall be deemed to be a Material Adverse Effect on
the Company.
45
3.24 Other
Agreements. Neither the Company nor any of its Subsidiaries has
entered into any Contract with any officer or director of the Company or any
Company Subsidiary in connection with the transactions contemplated by this
Agreement.
REPRESENTATIONS
AND WARRANTIES OF PARENT
AND
PURCHASER
Parent and Purchaser
represent and warrant to the Company, except as disclosed in the Parent SEC
Reports (as defined in Section 4.3) filed on or prior to the date hereof
and except as disclosed in the disclosure letter supplied by Parent and
Purchaser to the Company dated as of the date hereof (the Parent
Disclosure Letter), as follows:
4.1 Organization;
Standing and Power; Charter Documents; Subsidiaries.
(a) Organization;
Standing and Power. Each of Parent
and the Purchaser and each of their respective Subsidiaries is a corporation or
other organization duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization, has the
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary other than in such jurisdictions where the failure to so qualify or
to be good standing, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Parent or Purchaser, as the case
may be.
(b) Charter
Documents. Each of Parent and
Purchaser has delivered or made available to the Company: (i) a true and
correct copy of its Certificate of Incorporation and Bylaws (or like
organizational documents), each as amended to date (collectively, the Parent Charter Documents) and (ii) the Subsidiary
Charter Documents of each of its Subsidiaries, and each such
46
instrument
is in full force and effect. Neither
Parent nor Purchaser is in violation of any of the provisions of the Parent
Charter Documents and each of its Subsidiaries are not in violation of their
respective Subsidiary Charter Documents, except as would not reasonably be
expected to have a Material Adverse Effect on Parent or Purchaser, as the case
may be.
4.2 Authority;
Non-Contravention; Necessary Consents.
(a) Authority. Each of Parent and Purchaser has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby (including the Offer and
the Merger). The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
(including the Offer and the consummation of the Merger) has been duly
authorized by all necessary corporate action on the part of Parent and Purchaser
and no other corporate proceedings on the part of Parent or Purchaser are
necessary to authorize the execution and delivery of this Agreement or
transactions contemplated hereby (including the Offer and the Merger), subject
only to the filing of the Certificate of Merger pursuant to Delaware Law. This Agreement has been duly executed and
delivered by Parent and Purchaser and, assuming due execution and delivery by
the Company, constitutes the valid and binding obligation of Parent,
enforceable against Parent and Purchaser in accordance with its terms, subject
to applicable bankruptcy, insolvency, moratorium or similar laws relating to
creditors rights and general principles of equity.
(b) NonContravention. The execution and delivery of this Agreement
by Parent and Purchaser does not, and performance of this Agreement by Parent
and Purchaser will not: (i) conflict with or violate the Parent Charter
Documents or any other Subsidiary Charter Documents of any Subsidiary of Parent
or (ii) subject to compliance with the requirements set forth in Section 4.2(c),
conflict with or violate any Legal Requirement applicable to Parent, Purchaser
or any of Parents other Subsidiaries or by which Parent, Purchaser or any of
Parents other Subsidiaries or any of their respective properties is bound, or (iii) result
in any breach of or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the properties or assets of the Company or any of
its Subsidiaries pursuant to, any Parent Material Contract except, with respect
to clause (ii) or (iii), for any such conflicts, violations,
47
breaches,
defaults or other occurrences which (a) would not substantially impair the
Parent or Purchaser from performing its obligations hereunder and (b) would
not have a Material Adverse Effect on Parent.
As used in this Agreement, Parent
Material Contract shall mean any Contract, or group of Contracts
with a Person (or group of affiliated Persons), the termination or breach of
which would be reasonably expected to have a material adverse effect on any
material division or business unit or other material operating group of product
or service offerings of Parent or otherwise have a Material Adverse Effect on
Parent.
(c) Necessary
Consents. No consent, approval,
order or authorization of, or registration, declaration or filing with any
Governmental Entity is required to be obtained or made by Parent or Purchaser
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby (including the Offer and the
consummation of the Merger), except for (A) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which Company and/or
Parent are qualified to do business, and (B) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal, foreign and state securities (or related)
laws and antitrust and trade competition laws (including the HSR Act).
4.3 SEC
Filings; Financial Statements.
(a) Parent
has filed all required registration statements, prospectuses, reports,
schedules, forms, statements and other documents (including exhibits and all
other information incorporated by reference) required to be filed by it with
the SEC since March 31, 2002.
Parent has made available to the Company all such registration
statements, prospectuses, reports, schedules, forms, statements and other
documents in the form filed with the SEC.
All such required registration statements, prospectuses, reports,
schedules, forms, statements and other documents (including those that Parent
may file subsequent to the date hereof), as amended, are referred to herein as
the Parent SEC Reports. As of their respective dates (or if
subsequently amended or supplemented, on the date of such amendment or
supplement), the Parent SEC Reports (i) were prepared in accordance and
complied in all material respects with the requirements of the Securities Act,
or the Exchange Act, as the case may be, and the rules and regulations of
the SEC thereunder applicable to such Parent SEC Reports and (ii) did not
contain any untrue statement of a material fact or
48
omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) The
Schedule TO and the Offer Documents, and if applicable, the Proxy Statement
(and in each case any amendment thereof or supplement thereto), will comply as
to form in all material respects with applicable federal securities laws. The Schedule TO and the Offer Documents,
and if applicable, the Proxy Statement, when filed with the SEC and on the date
first published, sent or given to the Company Securityholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however,
that no representation or warranty is made by Parent or Purchaser with respect
to information supplied by the Company in writing for inclusion or incorporation
by reference in the Schedule TO or the Offer Documents, or if applicable,
the Proxy Statements. The information
provided by Parent and Purchaser in writing to the Company for inclusion or
incorporation by reference in the Schedule 14D-9 or, if applicable, the
Proxy Statement will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
4.4 Funds.
Parent has as of the date of this Agreement, and will have upon the expiration
date of the Offer (as the same may be extended from time to time pursuant to
this Agreement) and at the Effective Time, and will make available to Purchaser
at the expiration date of the Offer and at the Effective Time, through cash on
hand and/or its committed credit facility (a true and complete copy of which
has been made available to the Company), the funds necessary to consummate the
Offer and the Merger.
4.5 No
Company Shares. As of the date hereof, neither Parent nor Purchaser
beneficially owns any shares of Company capital stock.
4.6 Brokers
and Finders Fees. No broker, investment banker, financial advisor or
other Person, other than Stephens Inc. pursuant to an engagement letter dated March 25, 2005, the fees and
expenses of which will be paid by Parent, is entitled to any brokers, finders,
financial advisors or other
49
similar fee or commission in connection with this
Agreement or any transaction contemplated hereby.
CONDUCT
PRIOR TO THE EFFECTIVE TIME
5.1 Conduct
of Business by the Company.
(a) Ordinary
Course. During the period from the
date hereof and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Appointment Time, the Company, and each
of its Subsidiaries shall, except as otherwise expressly contemplated by this
Agreement, as set forth in the Company Disclosure Letter, or to the extent that
Parent shall otherwise consent in writing, which consent shall not be
unreasonably withheld, delayed or conditioned, carry on its business, in all
material respects, in the ordinary course and use commercially reasonable
efforts to (i) preserve intact its present business organization, (ii) keep
available the services of its present executive officers, and (iii) preserve
its relationships with customers, suppliers, licensors, licensees, and others
with which it has business dealings; provided, however, that no
failure by the Company to take any action otherwise required by this Section 5.1
shall be deemed to constitute a breach of, or inaccuracy in, any of the
representations and warranties of the Company set forth in this Agreement if
and to the extent that Parent shall consent to such failure in writing pursuant
to this Section 5.1.
(b) Required
Consent. In addition, without
limiting the generality of Section 5.1(a), except as permitted by the
terms of this Agreement (including Section 6.1), and except as provided in
the Company Disclosure Letter, without the prior written consent of Parent,
during the period from the date hereof and continuing until the earlier of the
termination of this Agreement pursuant to its terms or the Appointment Time,
the Company shall not do any of the following, and shall not permit its
Subsidiaries to do any of the following:
(i) Declare,
set aside or pay any dividends on or make any other distributions (whether in
cash, stock, equity securities or property) in respect of any capital stock or
split, combine or reclassify any capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for any capital stock, other than any such transaction by a Subsidiary
50
of it
that remains a Subsidiary of it after consummation of such transaction, in the
ordinary course of business consistent with past practice;
(ii) Purchase,
redeem or otherwise acquire, directly or indirectly, any shares of its capital
stock or the capital stock of its Subsidiaries, except (A) repurchases of
unvested shares at cost in connection with the termination of the services
relationship with any service provider pursuant to stock option or purchase
agreements in effect on the date hereof or purchase agreements entered into the
ordinary course of business consistent with past practice after the date
hereof, and (B) repurchases of vested shares in connection with the
withholding of shares upon vesting of restricted stock;
(iii) Issue,
deliver, sell, authorize, pledge or otherwise encumber any shares of capital
stock, Voting Debt or any securities convertible into shares of capital stock
or Voting Debt, or subscriptions, rights, warrants or options to acquire any
shares of capital stock or Voting Debt or any securities convertible into
shares of capital stock or Voting Debt, or enter into other agreements or
commitments of any character obligating it to issue any such securities or
rights, other than: (A) issuances of Company Common Stock upon the
exercise of Company Options existing on the date hereof in accordance with
their terms (including cashless exercises) or granted pursuant to clause (D) hereof,
(B) issuance of shares of Company Common Stock to participants in the
Company Purchase Plans pursuant to the terms thereof, and (C) issuances of
Company Common Stock upon the exercise of other options, warrants or other
rights of Company outstanding on the date hereof in accordance with their terms
(including cashless exercises);
(iv) Cause,
permit or authorize any amendments to the Company Charter Documents or any of
the Subsidiary Charter Documents of its Subsidiaries;
(v) Acquire
or agree to acquire by merging or consolidating with, or by purchasing any
equity interest in or all or a substantial portion of the assets of, or by
any other manner, any business or any Person or division thereof;
(vi) Enter
into any joint ventures, strategic partnerships or alliances that are material
to any of its divisions or business;
51
(vii) Except
as previously disclosed in the Company SEC Reports filed prior to the date
hereof, (A) sell, lease, license, mortgage or otherwise encumber or
dispose of any properties or assets involving, individually or the aggregate,
an amount greater than $100,000, or (B) purchase any assets in excess of
$100,000;
(viii) Make any
loans, advances or capital contributions to, or investments in, any other
Person, other than: (A) loans or investments by it or a Subsidiary of it
to or in it or any wholly-owned Subsidiary of it, (B) employee loans or
advances made in the ordinary course of business or (C) in the ordinary
course of business consistent with past practice which are not, individually or
in the aggregate, material to it and its Subsidiaries taken as a whole;
(ix) Except
as required by GAAP or the SEC, make any material change in its methods or
principles of accounting since the date of the Company Balance Sheet;
(x) Make
or change any material Tax election;
(xi) Settle
any claim (including any Tax claim), action or proceeding for money damages,
except any such claims, actions or proceedings for money damages in an amount
less than $100,000 in any one case, except as set forth in Section 6.15;
(xii) Except
as required by Legal Requirements or Contracts currently binding on the Company
or its Subsidiaries, or pursuant to which their respective properties are
bound: (1) increase in any manner the amount of compensation or fringe
benefits of, pay any bonus to or grant severance, retention or termination pay
to any executive officer or director of the Company or materially increase the
foregoing with respect to Employees of the Company and its Subsidiaries
generally, (2) make any increase in or commitment to increase any Company
Benefit Plan (including any severance plan), adopt or amend or make any
commitment to adopt or amend any Company Benefit Plan or make any contribution,
other than regularly scheduled contributions, to any Company Benefit Plan, (3) waive
any stock repurchase rights, accelerate, amend or change the period of
exercisability of Company Options or restricted stock, or reprice any Company
Options or authorize cash payments in exchange for any Company Options (other
than the acceleration of the offering period pursuant to
52
Section 2.6(e)(ii)),
(4) enter into any employment, consulting, retirement, deferred
compensation, severance, retention, termination or indemnification agreement
with any Employee, (5) make any material oral or written representation or
commitment with respect to any material aspect of any Company Benefit Plan that
is not materially in accordance with the existing written terms and provision
of such Company Benefit Plan, (6) grant any stock appreciation right,
phantom stock award, stock-related award or performance award (whether payable
in cash, shares or otherwise) to any Person (including any Employee), or (7) enter
into any agreement with any Employee the benefits of which are (in whole or in
part) contingent or the terms of which are materially altered upon the
occurrence of a transaction involving Company of the nature contemplated
hereby; provided, however, that nothing herein shall be construed
as prohibiting Company from (a) increasing compensation or fringe benefits
and payment of bonuses to Employees of the Company, who are not executive
officers and directors, in the ordinary course of business in connection with
periodic compensation reviews or ordinary course promotions, and (b) granting
severance or termination pay pursuant to a severance or termination policy or
agreement in effect as of the date hereof and either disclosed in the Company
SEC Reports or a copy of which has been provided or made available to Parent
prior to the date hereof;
(xiii) Subject
Parent or the Surviving Corporation or any of their respective affiliates or
Subsidiaries to any non-compete on any of their respective businesses following
the Closing, other than in connection with ordinary course distribution
agreements;
(xiv) Grant any
exclusive rights with respect to any material Intellectual Property of the
Company or any Subsidiary;
(xv) Modify
or amend in a manner adverse in any material respect to such party, or
terminate any Company Material Contract other than in the ordinary course of
business consistent with past practice or waive, release or assign any material
rights or claims thereunder, in a manner adverse in any material respect to
Company, other than any modification, amendment or termination of any such
Company Material Contract in the ordinary course of business; or
(xvi) Incur any
indebtedness for borrowed money or guarantee any such indebtedness of another
Person, issue or sell any debt securities or options, warrants, calls or other
rights to acquire any debt securities
53
of it,
guarantee any debt securities of another Person, enter into any keep well or
other agreement to maintain any financial statement condition of any other
Person (other than any Subsidiary of it), off-balance sheet transaction,
synthetic leases, hedging or derivative instruments or enter into any
arrangement having the economic effect of any of the foregoing (collectively, Indebtedness) other than additional Indebtedness under
existing debt facilities or like replacement debt facilities in excess of
Indebtedness of the Company outstanding as of the date hereof;
(xvii) Neither the
Company nor any of its Subsidiaries will permit any insurance policy naming it
as a beneficiary or a loss payee to be cancelled or terminated (except by
expiration pursuant to its terms) without notice to Parent; provided, however,
that the Company will continue to maintain adequate insurance as described in
the first sentence of Section 3.20; and
(xviii) Agree in
writing or otherwise to take any of the actions described in (i) through
(xvii) above.
ADDITIONAL
AGREEMENTS
6.1 Acquisition
Proposals.
(a) No
Solicitation. The Company agrees
that neither it nor any of its Subsidiaries nor any of the officers and
directors of it or its Subsidiaries shall, and that it shall use commercially
reasonable efforts to cause its and its Subsidiaries employees, agents and
representatives (including any investment banker, attorney, consultant,
accountant or agent retained by it or any of its Subsidiaries) not to (and
shall not authorize any of them to), directly or indirectly: (i) solicit,
initiate, encourage, knowingly facilitate or induce any inquiry with respect
to, or the making, submission or announcement of, any Acquisition Proposal (as
defined in Section 6.1(f)), (ii) participate in any discussions or
negotiations regarding, or furnish to any Person any nonpublic information or
afford access to the business, properties, assets, books or records of the
Company or any of its Subsidiaries with respect to any Acquisition Proposal, (iii) engage
in discussions with any Person with respect to any Acquisition Proposal, except
as to the existence of these provisions, (iv) approve, endorse or
recommend any
54
Acquisition
Proposal (except to the extent specifically permitted pursuant to the
provisions of Section 6.1(d)), (v) grant any waiver or release under
any standstill or similar agreement with respect to any class of equity
securities of the Company or any Subsidiaries, or (vi) enter into any
definitive agreement (or any letter of intent) with respect to any Acquisition
Proposal or requiring the Company to abandon, terminate or fail to consummate
the transactions contemplated by this Agreement. The Company and its Subsidiaries shall
immediately cease any and all existing activities, discussions or negotiations
with any third parties conducted heretofore with respect to any Acquisition
Proposal. The Company and its
Subsidiaries shall use commercially reasonable efforts to cause any such Person
(or its agents or advisors) in possession of confidential information about the
Company that was furnished by or on behalf of the Company to return or destroy
all such information.
(b) Notification
of Acquisition Proposals.
(i) As promptly as practicable (but in no event
later than 48 hours) after receipt by the Company or any of its advisors of any
Acquisition Proposal, any indication that any Person is considering making an
Acquisition Proposal or any request for information relating to the Company or
any of its Subsidiaries or for access to the business, properties, assets,
books or records of the Company or any of its Subsidiaries by any Person that
may be considering making, or has made, an Acquisition Proposal, the Company
shall provide Parent with oral and written notice of the material terms and
conditions of such Acquisition Proposal (including, without limitation, the
identity of such Person) together with a copy of the applicable Acquisition
Proposal, if written.
(ii) The Company shall inform Parent as promptly
as practicable (and in any event within one business day) of any written
changes in the material terms or conditions to any Acquisition Proposal
received (including any change in the price, structure or form of the
consideration) and, upon Parents request, the Company shall update Parent on
the general status of any ongoing discussions or negotiations regarding or
relating to any Acquisition Proposal received.
(iii) Notwithstanding
anything to the contrary contained in Sections 6.1(b)(i) and (b)(ii),
if the Company receives an Acquisition Proposal or any request for information
relating to the Company or any of its Subsidiaries, or for access to the
business, properties, assets, books or records of the Company
55
or any
of its Subsidiaries by any Person that may be considering making or has made an
Acquisition Proposal pursuant to the terms of a non-disclosure agreement
between such party and the Company in effect prior to the date hereof, the
Company shall not be obligated to disclose the identity of such Person and
shall be entitled to redact any references to such Person in any written
materials provided to Parent.
(c) Superior
Offers.
(i) Notwithstanding anything to the contrary
contained in this Section 6.1, if at any time prior to the acceptance for
payment of Company Shares in the Offer, the Company receives an unsolicited,
bona fide written Acquisition Proposal from a third party (under circumstances
in which the Company has complied in all material respects with its obligations
under this Section 6.1(a) with respect to such Acquisition Proposal)
that its Board of Directors has in good faith concluded (at a meeting of such
Board at which it consults prior to such determination with its outside legal
counsel and its financial advisor) is, or is reasonably likely to result in, a
Superior Offer (as defined in Section 6.1(f)), it (and its Subsidiaries
employees, agents and representatives (including any investment banker,
attorney, consultant, accountant or other agents retained by it or any of its
Subsidiaries)) may then take any of the following actions:
(1) Furnish
nonpublic information to the third party making such Acquisition Proposal, provided
that prior to furnishing any such nonpublic information to such party, the
Company (A) (1) gives Parent written notice of its intention to furnish
nonpublic information and (2) receives from the third party an executed
confidentiality agreement (a copy of which shall be provided to Parent), the
terms of which are at least as restrictive as the terms contained in the
Confidentiality Agreement (as defined in Section 6.5(a)) and (B) contemporaneously
with furnishing any such nonpublic information to such third party, furnishes
such nonpublic information to Parent (to the extent such nonpublic information
has not been previously so furnished); or
(2) Grant
a waiver or release with respect to the third party making the Acquisition
Proposal and its affiliates under a standstill or similar agreement to allow
the third party making such Acquisition Proposal to engage in negotiations with
the Company with respect to such proposal (but not
56
allow
such third party to acquire any class of equity securities of the Company or
any of its Subsidiaries); or
(3) Engage
in negotiations with the third party with respect to the Acquisition Proposal, provided
that concurrently with entering into negotiations with such third party, it
gives Parent written notice of the its intention to enter into negotiations
with such third party.
(ii) In each case referred to in the foregoing
clauses (1) through (3) the Company may only take such action if,
prior to taking such action, the Company Board determines in good faith (at a
meeting of such Board), after consultation with outside legal counsel to the
Company, that its failure to take such action would be inconsistent with
fulfilling its fiduciary duties under applicable law and complies with the
material provisions of this Section 6.1 with respect to such Acquisition
Proposal.
(d) Changes
of Recommendations. The
Company Board (or any committee thereof) shall not withhold, withdraw, amend or
modify, or propose publicly or announce publicly its intention to withhold,
withdraw, amend or modify, in a manner adverse to Parent or Purchaser, the
Company Boards Recommendations (including, without limitation, recommending
that its stockholders accept an Acquisition Proposal made by a third party)
(any of the foregoing actions, whether by the Board of Directors or a committee
thereof, a Change of Recommendation), except
as expressly permitted by this Section 6.1(d).
(i) Prior
to acceptance for payment of Company Shares in the Offer, the Company Board (or
a committee thereof) may make a Change of Recommendation if, and only if, all
of the following conditions precedent are satisfied:
(1) A Superior Offer is pending at the time the
Company Board determines to make a Change of Recommendation;
(2) The
Company Board has concluded in good faith (at a meeting of such Board), after
consultation with outside legal counsel to the Company, that its failure to
make a Change of Recommendation would be inconsistent with fulfilling its
fiduciary duties under applicable law and complies
57
in all
material respects with the provisions of this Section 6.1 with respect to such Acquisition
Proposal;
(3) the Company has delivered to Parent a written
notice (a Notice of Superior Offer) that
(x) advises Parent that the Company Board has received a Superior Offer,
(y) summarizes the material terms and conditions of such Superior Offer
and attaches a complete copy of the Superior Offer (subject to Section 6.1(b)(iii)),
and (z) identifies the Person making such Superior Offer (for the purpose
of clarification, if there occurs any amendment, waiver or modification to any
material term of a Superior Offer after a Notice of Superior Offer is provided
to Parent, the condition in this clause (3) shall not be satisfied unless
a separate Notice of Superior Offer is provided to Parent that reflects any
such amendment, waiver or modification);
(4) either (x) on or before the expiration
of the three business day period following the delivery to Parent of any Notice
of Superior Offer, the Parent does not make a written offer (a Matching Bid) in response to such Superior Offer, or (y)
following receipt of a Matching Bid within the three business day period
following the delivery to Parents receipt of any Notice of Superior Offer, the
Company Board determines in good faith (at a meeting of the Company Board at
which it consults prior to such determination with its outside legal counsel
and its financial advisor) that after
taking into account the Matching Bid, that the Superior Offer to which the
Notice of Superior Offer applies continues to be a Superior Offer.
(e) Compliance
with Tender Offer Rules. Nothing
contained in this Agreement shall prohibit the Company or the Company Board (or
a committee thereof) from taking and disclosing to its stockholders a
position contemplated by Rules 14d-9 and 14e-2(a) promulgated under
the Exchange Act.
(f) Certain
Definitions. For purposes of this Agreement, the following terms shall have
the following meanings:
(i) Acquisition Proposal, with respect to a the Company, shall
mean any offer or proposal relating to any transaction or series of related
transactions involving: (A) any purchase from such party or acquisition,
direct or indirect, by any Person or group (as
defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) of more than a fifteen percent (15%) interest in the
total outstanding voting securities of the Company or
58
any of
its Subsidiaries or any tender offer or exchange offer that if consummated
would result in any Person or group
beneficially owning fifteen percent (15%) or more of the total outstanding
voting securities of the Company or any of its Subsidiaries or any merger,
consolidation, business combination or similar transaction involving the
Company or any of its Subsidiaries pursuant to which the stockholders of the
Company immediately preceding such transaction hold less than eighty-five
percent (85%) of the equity interests in the surviving or resulting entity of
such transaction or any direct or indirect parent thereof, (B) any sale,
lease (other than in the ordinary course of business), exchange, transfer,
license (other than in the ordinary course of business), acquisition or
disposition of more than fifteen percent (15%) of the assets of the Company
(including its Subsidiaries taken as a whole), or (C) any liquidation or
dissolution of such party; and
(g) Superior Offer, with
respect to the Company, shall mean any Acquisition Proposal (provided, that for
the purposes of this definition, (1) the applicable percentages in clause (A) of
the definition of Acquisition Proposal shall be more than 50% as opposed to 15%
or 85%; provided, further that such transaction, if consummated, would also
result in the applicable Person having the power to elect a majority of the
Company Board of Directors immediately following consummation of such
transaction and (2) any sale, lease, exchange, transfer, license or other
disposition referred to in clause (B) of the definition of Acquisition
Proposal shall be for all or substantially all of the assets (including the
capital stock or assets of the Companys Subsidiaries) of the Company), on
terms that the Company Board has in good faith concluded, taking into account
all the terms and conditions of the Acquisition Proposal, at a meeting of the
Company Board at which prior to such conclusion it consults with its outside
legal counsel and its financial adviser, to be more favorable, from a financial
point of view, to all the Companys stockholders (in their capacities as
stockholders) than the terms of the Offer and Merger and is reasonably likely
to be completed, taking into account all legal, financial, regulatory and other
aspects of the proposal and the third party making the proposal available to
the Company Board.
6.2 Proxy
Statement. If approval of the Companys stockholders is required by
Delaware Law following the Appointment Time in order to consummate the Merger
other than pursuant to Section 253 of the Delaware Law, as soon as
practicable following the Appointment Time, Parent, Purchaser and Company will
prepare with the SEC a proxy statement for use in connection with
59
the solicitation of proxies from the Companys
stockholders in connection with the Merger and the Stockholders Meeting (as
defined In Section 6.3(a)) (the Proxy
Statement). Parent and
Purchaser, respectively, shall each promptly furnish the Company, in writing,
all information concerning Parent and Purchaser that may be required by
applicable securities laws or reasonably requested by the Company for inclusion
in the Proxy Statement. As soon as practicable following the Appointment Time,
the Company shall file a preliminary Proxy Statement with the SEC. The Company shall advise Parent, promptly
after it receives notice thereof, of any request by the SEC or its staff for an
amendment or revisions to the Proxy Statement, or comments thereon and
responses thereto, or requests by the SEC or its staff for additional
information in connection therewith and shall provide Parent and its counsel
all written comments or requests for information that the Company or its
counsel may receive from the SEC or its staff with respect to the Proxy
Statement promptly after receipt thereof.
The Company shall respond to any such comments or requests from the SEC
regarding the Proxy Statement. No filing
of, or amendment or supplement to, or correspondence with the SEC or its staff
with respect to the Proxy Statement shall be made by the Company without
providing Parent a reasonable opportunity to participate in the formulation
thereof and to review and comment thereon.
As promptly as practicable after the all comments and requests by the
SEC have been resolved, in the reasonable judgment of the Company (or, in the
event that the SEC has informed the Company that will not review the
preliminary Proxy Statement, then as promptly as practicable following the
tenth (10th) day following the filing of the preliminary Proxy
Statement), the Company shall file a definitive Proxy Statement with the SEC
and disseminate the definitive Proxy Statement to its stockholders. If at any time prior to the Stockholders
Meeting, any information relating to the Parent, Purchaser, or any of their
respective directors, officers or affiliates, should be discovered by Parent,
Purchaser or the Company (including any correction to any of the information
provided by them for use in the Proxy Statement) which should be set forth in
an amendment or supplement to the Proxy Statement so that the Proxy Statement
would not include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other party or parties
hereto, as the case may be, and an appropriate amendment or supplement to the
Proxy Statement describing such information shall be promptly prepared and
filed with the SEC and disseminated to the Companys stockholders, in each case
as and to the extent required by applicable law.
60
6.3 Meeting
of Stockholders.
(a) Meeting
of Stockholders. If approval of the
Company stockholders is required by Delaware Law in order to consummate the
Merger other than pursuant to Section 253 of the Delaware Law, as soon as
reasonably practicable after the mailing of the Proxy Statement to the Company
stockholders, the Company will take all action necessary in accordance with
Delaware Law and its Certificate of Incorporation and Bylaws to call, hold and
convene a meeting of its stockholders to consider adoption of this Agreement
(the Stockholders Meeting). Following the Appointment Time, the Company
will use commercially reasonable efforts to solicit from its stockholders
proxies in favor of the adoption of this Agreement and the Merger, and will
take all other action necessary or advisable to secure the vote or consent of
their respective stockholders required by the rules of Nasdaq or Delaware
Law to obtain such approvals.
Notwithstanding anything to the contrary contained in this Agreement,
the Company may adjourn or postpone its Stockholders Meeting to the extent
necessary to ensure that any necessary supplement or amendment to the Proxy
Statement is provided to its respective stockholders in advance of a vote on
the Merger and this Agreement or, if as of the time for which the Stockholders
Meeting is originally scheduled (as set forth in the Proxy Statement) there are
insufficient shares of Company Common Stock represented (either in person or by
proxy) to constitute a quorum necessary to conduct the business of such
Stockholders Meeting. The Company shall
ensure that its Stockholders Meeting is called, noticed, convened, held and conducted,
and that all proxies solicited by its in connection with the Stockholders
Meeting are solicited in compliance with Delaware Law, its Certificate of
Incorporation and Bylaws, the rules of Nasdaq and all other applicable
Legal Requirements.
(b) Voting
Agreement. Each of Parent and
Purchaser shall vote all Company Shares acquired in the Offer (or otherwise
beneficially owned by it or any of its respective Subsidiaries as of the
applicable record date) in favor of the adoption of this Agreement in accordance
with Delaware Law at the Stockholders Meeting or otherwise. Parent shall vote all of the shares of
capital stock of Purchaser beneficially owned by it, or sign a written consent
in lieu of a meeting of the stockholders of Purchaser, in favor of the adoption
of this Agreement in accordance with Delaware Law
(c) Short-Form Merger. Notwithstanding the provisions of this Section 6.3
or Section 6.4 hereof, in the event that Parent, Purchaser or any other
61
Subsidiary
of Parent, shall acquire at least ninety percent (90%) of the issued and
outstanding Company Shares pursuant to the Offer or otherwise, each of Parent,
Purchaser and the Company shall take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of the stockholders of the Company, in
accordance with Section 253 of the DGCL.
6.4 Board
Recommendation. Except to the extent expressly permitted by Section 6.1(d):
(i) the Company Board shall recommend that the stockholders of the Company
vote in favor of adoption of this Agreement and the Merger at the Stockholders
Meeting, (ii) the Proxy Statement shall include a statement to the effect
that the Company Board has recommended that the Companys stockholders vote in
favor of adoption of this Agreement and the Merger at the Stockholders
Meeting, and (iii) neither the Company Board nor any committee thereof
shall withdraw, amend or modify, or propose or resolve to withdraw, amend or
modify in a manner adverse to Parent, the recommendation of Company Board that
the stockholders of the Company vote in favor of adoption of this Agreement and
the Merger.
6.5 Confidentiality;
Access to Information.
(a) Confidentiality.
The parties acknowledge that the Company and Parent have previously executed a
Confidentiality Agreement dated March 9, 2005 (the Confidentiality
Agreement), which Confidentiality Agreement will continue in full
force and effect in accordance with its terms and each of Parent, Purchaser and
the Company will hold, and will cause its respective directors, officers,
Employees, agents and advisors (including attorneys, accountants, consultants,
bankers and financial advisors) to hold, any Proprietary Information (as defined in the Confidentiality
Agreement) confidential in accordance with the terms of the Confidentiality
Agreement.
(b) Access
to Information.
(i) The
Company will (1) afford Parent and Parents accountants, counsel and other
representatives reasonable access during normal business hours and upon
reasonable notice to the Companys properties, books, records, analysis,
projections, plans and personnel during the period prior to the Effective Time
to obtain all information concerning its business as Parent may reasonably
request, and (2) furnish Parent on a timely basis with such financial
62
and
operating data and other information with respect to the business and
properties of the Company and the Company Subsidiaries (to the extent such
information exists) as Parent may from time to time reasonably request and use
commercially reasonable efforts to make available at reasonable times during
normal business hours to the officers, employees, accountants, counsel,
financing sources and other representatives of the Parent the appropriate
individuals (including management personnel, attorneys, accountants and other
professionals) for discussion of the Companys business, properties, prospects
and personnel as Parent may reasonably request; provided, however,
the Company may restrict such access to the extent that (A) any law,
treaty, rule or regulation of any Governmental Entity applicable to the
Company or its Subsidiaries requires the Company or its Subsidiaries to
restrict or prohibit access to any such properties, personnel or information (B) such
access would interfere with the conduct of the business of the Company or its
Subsidiaries, or (C) such access would otherwise be in breach of any confidentiality
obligation or provision in any agreement or contract or other obligation by
which the Company or any of its Subsidiaries is bound (a summary of the
material terms of which the Company shall provide Parent upon any request for
information by Parent that is subject to such confidentiality agreement).
(ii) No investigation heretofore conducted, or
conducted pursuant to this Section 6.5 shall affect any representation or
warranty made by the parties hereunder.
6.6 Public
Disclosure. Without limiting any other provision of this Agreement,
neither Parent, the Company nor any of their respective affiliates shall issue
or cause the publication of any press release or public statement with respect
to this Agreement and the transactions contemplated hereby (including the Offer
and the consummation of the Merger) without the prior written consent of the
other party, except (i) as provided in Section 6.1 and (ii) as
may otherwise be required by law or any listing agreement with Nasdaq or any
other applicable national or regional securities exchange (in which case the
party required to make such disclosure shall use reasonable efforts to consult
with the other parties hereto and will use reasonable efforts to agree on the
language of any such press release or public statement).
63
6.7 Regulatory
Filings; Reasonable Efforts.
(a) Regulatory
Filings. Each of Parent, Purchaser and the Company shall coordinate and
cooperate with one another and shall each use commercially reasonable efforts
to (i) comply with, take, or cause to be taken, all appropriate action,
and do, or cause to be done, all things necessary, proper or advisable under,
and shall each refrain from taking any action that would impede compliance with,
all Legal Requirements, (ii) obtain from any Governmental Entities any
consents, licenses, permits, waivers, clearances approvals, authorizations or
orders required to be obtained or made by Parent or the Company or any of their
respective Subsidiaries, or avoid any action or proceeding by any Governmental
Entity (including, without limitation, those in connection with the HSR Act),
in connection with the authorization, execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby (including the
Offer and the consummation of the Merger), (iii) make or cause to be made
the applications or filings required to be made by Parent or the Company or any
of their respective Subsidiaries under or with respect to the HSR Act, the
Securities Act, the Exchange Act, or any applicable state or securities or blue
sky laws or the securities laws of any foreign country, and any other
applicable laws in connection with the authorization, execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
(including the Offer and the consummation of the Merger), and pay any fees due
of it in connection with such applications or filings, as promptly as is
reasonably practicable, (iv) comply at the earliest practicable date with
any request under or with respect to the HSR Act and any such other applicable
laws for additional information, documents or other materials received by
Parent or the Company or any of their respective Subsidiaries from the Federal
Trade Commission or the Department of Justice or any other Governmental Entity
in connection with such applications or filings or the transactions
contemplated by this Agreement (including the Offer and the consummation of the
Merger), and (v) coordinate and cooperate with, and give due consideration
to all reasonable additions, deletions or changes suggested by the other party
in connection with, making (A) any filing under or with respect to the HSR
Act or any such other applicable laws and (B) any filings, conferences or
other submissions related to resolving any investigation or other inquiry by
any such Governmental Entity. Each of Parent and the Company will cause all
documents that it is responsible for filing with any Governmental Entity under
this Section 6.7(a) to comply in all material respects with all
applicable Legal Requirements.
(i) Without
limiting the generality of the foregoing, each of the Company and Parent will
file the Notification and Report Forms with
64
the
United States Federal Trade Commission (FTC) and the
Antitrust Division of the United States Department of Justice (the DOJ) as required by the HSR Act on or before the date that
is five business days following the public announcement of this Agreement and
will promptly file with the appropriate Governmental Entities any other filings
reasonably determined by the parties to be necessary under any other antitrust
and trade competition laws; and
(ii) Notwithstanding
anything set forth in Section 6.7(a)(i) and any other provision
hereof, in connection with the receipt of any necessary governmental approvals
or clearances (including under the HSR Act), neither Parent nor any of its
Subsidiaries shall be required to take any Action of Divestiture (as defined
below) which would be reasonably likely to materially and adversely impact
affect Parent (together with its Subsidiaries) (a Restricted
Divestiture). For purposes
of this Agreement, an Action of Divestiture
shall mean any action under which Parent (together with its Subsidiaries) shall
be required to sell, hold separate or otherwise dispose of or conduct its
business in a specified manner, or agree to sell, hold separate or otherwise
dispose of or conduct its business in specified manner, or permit the sale,
holding separate or other disposition of, any of its assets or the conduct of
its business in a specified manner.
(b) Exchange
of Information. Parent, Purchaser
and Company each shall promptly supply the other with any information that may
be required in order to effectuate any filings or application pursuant to Section 6.7(a). Except where prohibited by applicable Legal
Requirements, and subject to the Confidentiality Agreement, each of Company and
Parent shall coordinate and cooperate with one
another in connection with any analyses, appearances, presentations, memoranda,
briefs, white papers, arguments, opinions and proposals submitted to any
Governmental Entity by or on behalf of any party hereto in connection with any
investigations or proceedings in connection with this Agreement or the
transactions contemplated hereby (including the Offer and
the consummation of the Merger) (including under
any antitrust or fair trade Legal Requirement), 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 contemplated hereby (including the Offer and the consummation of
the Merger), provided that with respect to any such filing, presentation
or submission, each of Parent and the Company need not supply the
65
other
(or its counsel) with copies (or in case of oral presentations, a summary) to
the extent that any law, treaty, rule or regulation of any Governmental
Entity applicable to such party requires such party or its Subsidiaries to
restrict or prohibit access to any such properties or information.
(c) Notification. Each of Parent, Purchaser and the Company
will notify the other promptly upon the receipt of: (i) any comments from
any officials of any Governmental Entity in connection with any filings made
pursuant hereto 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 Legal
Requirements. If a party hereto intends to independently participate in any meeting
with any Governmental Entity in respect of any filings, investigation or other
inquiry, then such party shall give the other party reasonable prior notice of
such meeting. Whenever any event
occurs that is required to be set forth in an amendment or supplement to any
filing made pursuant to Section 6.7(a), Parent, Purchaser or the Company,
as the case may be, will promptly inform the other of such occurrence and
cooperate in filing with the applicable Governmental Entity such amendment or
supplement.
(d) Reasonable
Efforts. Subject to the express
provisions of Section 6.1 hereof and upon the terms and subject to the
conditions set forth herein, each of the parties agrees to use 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 parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement (including the Offer and the Merger), including using commercially
reasonable efforts to accomplish the following: (i) the taking of
commercially reasonable acts necessary to cause the conditions precedent set
forth in Annex A and Article VII to be satisfied, (ii) the
obtaining of all necessary actions or nonactions, 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, if any) and the taking of
commercially 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, approvals or waivers from third parties, (iv) the
defending of any suits, claims, actions, investigations or proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby (including the Offer and the Merger),
including
66
seeking
to have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, and (v) the execution or delivery
of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement
(including the Offer and the Merger).
6.8 Notification
of Certain Matters.
(a) By
the Company. The Company shall give
prompt notice to Parent and Purchaser of any representation or warranty made by
it contained in this Agreement becoming untrue or inaccurate, or any failure of
the Company to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement, in each case, such that the conditions set forth in Annex A or Article VII
would not be satisfied.
(b) By
Parent. Parent and Purchaser shall
give prompt notice to the Company of any representation or warranty made by it
contained in this Agreement becoming untrue or inaccurate, or any failure of
Parent to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement, in each case, such that the conditions set forth in Annex A or Article VII
would not be satisfied.
(c) The delivery of any notice pursuant to this Section 6.8
shall not affect the remedies available hereunder to the party receiving such
notice or the representations or warranties of the parties or the conditions to
the obligations of the parties hereto.
6.9 Third-Party
Consents. As soon as practicable following the date hereof, Parent
and the Company will each use commercially reasonable efforts to obtain any
material consents, waivers and approvals under any of its or its Subsidiaries
respective Contracts required to be obtained in connection with the consummation
of the transactions contemplated hereby.
6.10 Employees
and Employee Benefits.
(a) Parent
Plans. On and after the Effective Time (or, at the discretion of Parent, the
expiration of applicable existing Company or Company Subsidiary policies or Contracts
if later), Parent and/or any Subsidiary of Parent shall provide to Employees and employees of the Surviving
Corporation who
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shall have been Employees of
the Company immediately prior to the Effective Time (Continuing Employees)
participation in benefit plans offered to similarly situated employees of
Parent and/or its Subsidiary (the Parent
Plans) provided such Continuing Employees satisfy the eligibility
requirements of the Parent Plans taking into consideration years of service
described in Section 6.10(b).
(b) Service Credit. Following the Effective Time, Parent shall
take all necessary actions to provide that Continuing Employees will receive
full credit for years of service with Company and any of its Subsidiaries under
the Parent Plans. Parent and/or any
Subsidiary of Parent shall give credit under those of its Parent Plans that are
welfare benefit plans for all co-payments made, amounts credited toward
deductibles and out-of-pocket maximums, and time accrued against applicable
waiting periods, by Continuing Employees (including their eligible dependents),
in respect of the calendar year in which the Effective Time occurs. Parent and/or any Subsidiary of Parent shall
waive all requirements for evidence of insurability and pre-existing conditions
otherwise applicable to the Continuing Employees, to the extent that such
evidence or conditions would have been waived had the Continuing Employees been
Parent/Subsidiary Employees during their period of services with the Company,
under the Parent Plans in which such Continuing Employees become eligible to
participate on or following the Effective Time.
6.11 Indemnification.
(a) From
and after the Effective Time, Parent will, and will cause the Surviving
Corporation to, fulfill and honor in all respects the obligations of the
Company pursuant to any indemnification agreements between the Company and its
present and former directors and officers and any other Employee (the Indemnified Parties) and any indemnification provisions set
forth in the Company Charter Documents as in effect on the date hereof, in each
case to the full extent permitted by applicable law. The Certificate of Incorporation and Bylaws of
the Surviving Corporation will contain provisions with respect to exculpation
and indemnification that are at least as favorable to the Indemnified Parties
as those contained in the Certificate of Incorporation and Bylaws of the
Company as in effect on the date hereof, which provisions will not be amended,
repealed or otherwise modified in any manner that would adversely affect the
rights thereunder of the Indemnified Parties, unless such modification is
required by law.
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(b) For
a period of six (6) years after the Effective Time, Parent will cause the
Surviving Corporation to maintain directors and officers liability insurance
covering those persons who are covered by the Companys directors and officers
liability insurance policy as of the date hereof in an amount and on terms no
less favorable than those applicable to the current directors and officers of
the Company.
(c) If
Parent, the Surviving Corporation or any of their successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (ii) transfers
all or substantially all of its properties and assets to any Person, then, in
each such case, proper provisions shall be made so that the successors and
assigns of Parent or the Surviving Corporation, as the case may be, shall
assume the obligations set forth in this Section 6.11.
(d) This Section 6.11 is intended to be for the benefit of, and
shall be enforceable by, the Indemnified Parties and their heirs and personal
representatives and shall be binding on Parent and the Surviving Corporation
and their successors and assigns.
6.12 Prohibition
on Acquiring Shares. Except as contemplated by this Agreement
pursuant to the Offer and the Merger, at all times during the period commencing
with the execution and delivery of this Agreement and continuing until the
earlier to occur of the termination of this Agreement pursuant to Article VIII
hereof and the Appointment Time, Parent shall not acquire, and shall use
commercially reasonable efforts to ensure that none of its affiliates and
associates (as such terms are defined in Section 203 of the DGCL) acquire,
(i) beneficial ownership of, (ii) the right to acquire pursuant to
any agreement, arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, warrants or options or otherwise, or (iii) the
right to vote pursuant to any agreement, arrangement or understanding, any
Company Shares.
6.13 Section 16
Matters. Prior to the Effective Time, Parent and the Company shall
take all such steps as may be required (to the extent permitted under
applicable law) to cause any dispositions of Company Common Stock (including
derivative securities with respect to Company Common Stock) resulting from the
transactions contemplated by Article I and Article II of this
Agreement by each individual who is subject to the reporting requirements of
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Section 16(a) of the Exchange Act with
respect to the Company to be exempt under Rule 16b-3 promulgated under the
Exchange Act.
6.14 Purchaser
Compliance. Parent shall cause Purchaser to comply with all of
Purchasers obligations under or relating to this Agreement. Purchaser shall not engage in any business
which is not in connection with the Offer or the Merger with and into the
Company pursuant to this Agreement.
6.15 Stockholder
Litigation. The Company shall give Parent the opportunity to
participate at Parents expense in (but not control) the defense or settlement
of any stockholder litigation against the Company and its officers, directors
or affiliates relating to this Agreement and the transactions contemplated
hereby; provided that Parent shall have executed a joint defense agreement in a
form reasonably acceptable to the Company.
The Company shall not agree to any settlement of such stockholder
litigation without Parents consent (which shall not be unreasonably withheld,
delayed or conditioned).
6.16 Assumption of Retention
Agreements. Effective upon the Effective Time, Parent and Purchaser
hereby expressly assume and agree to perform the retention agreements by and
between the Company and key employees identified in Section 3.10(e) of
the Company Disclosure Letter, which were revised on January 25, 2005 and
further amended as of March 4, 2005, in the same manner and to the same
extent that the Company would be required to perform such retention agreements
if no such succession had taken place.
CONDITIONS
TO THE MERGER
7.1 Conditions
to the Obligations of Each Party to Effect the Merger. The respective
obligations of Parent, Purchaser and the Company to consummate the Merger shall
be subject to the satisfaction or waiver, where permissible, prior to the Effective
Time, of each of the following conditions:
(i) Stockholder
Approval. If approval of the Merger
by the Companys stockholders is required by Delaware Law, this Agreement shall
have been approved and adopted, and the Merger shall have been duly
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approved,
by the requisite vote under applicable law, by the stockholders of the Company.
(ii) Purchase
of Company Shares. Purchaser (or
Parent on Purchasers behalf) shall have accepted for payment and paid for the
Company Shares validly tendered pursuant to the Offer and not withdrawn.
(iii) No
Order. No court or other
Governmental Entity of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, judgment,
decree, injunction or other order (whether temporary, preliminary or permanent)
which (i) is in effect and (ii) has the effect of making the Merger
illegal or otherwise prohibits consummation of the Merger.
TERMINATION,
AMENDMENT AND WAIVER
8.1 Termination
Prior to Appointment Time. This Agreement may be terminated and the
Offer may be abandoned at any time prior to the Appointment Time, by action
taken or authorized by the Board of Directors (or with respect to the Parent,
an authorized committee of the Board of Directors) of the terminating party or
parties, and except as provided below, whether before or after the requisite
approvals of the stockholders of the Company or Parent:
(a) by
mutual written consent duly authorized by the Boards of Directors of Parent and
the Company (or with respect to the Parent, an authorized committee of the
Board of Directors);
(b) by
either the Company or Parent, if the Offer shall have expired or been
terminated in accordance with the terms hereof without Purchaser (or Parent on
Purchasers behalf) having accepted for payment any Shares pursuant to the
Offer on or before May 25, 2005
(the Initial Termination Date);
provided, however, that in the event that the condition set forth
in clause (ii) of Annex A shall not have been satisfied on or
prior to the Initial Termination Date, either Parent or the Company may elect
to extend the Initial Termination Date, by written notice to the other prior to
or on the Initial Termination Date, until July 25, 2005 (the Extended Termination Date); and
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provided
further, that the right to terminate this Agreement pursuant to this Section 8.1(b) shall
not be available to any party hereto who has breached in any material respect
any of its representations, warranties, covenants or agreements set forth in
this Agreement (or with respect to the Company, a stockholder has breached in
any material respect any of the representations, warranties, covenants or agreements
of such stockholder in a Stockholder Agreement) and in each case such breach
has been the principal cause of or resulted in any of the conditions to the
Offer set forth in Annex A having failed to be satisfied on or before the
Initial Termination Date or the Extended Termination Date;
(c) by
the Company,
(i) prior to the Appointment Time, if there has
been a breach by the Parent or Purchaser of any representation, warranty,
covenant or agreement set forth in this Agreement, which breach shall result in
any condition set forth in Annex A not being satisfied, and (A) (x) such
breach is not capable of being cured, or (y) if such breach is capable of being
cured, such breach is not cured within 20 days after the breaching party
receives notice of such breach from the non-breaching party, provided that if
the breaching party fails to continue to use commercially reasonable efforts to
cure such breach during such 20 day cure period, then the breaching party shall
no longer be entitled to such cure period), and (B) no Triggering Event
shall have occurred prior to such breach; or
(ii) upon a Change of Recommendation in order to
enter into a definitive agreement with respect to a Superior Offer in
accordance with Section 6.1(d); provided, however, it is a
condition precedent to the Companys right to terminate this Agreement pursuant
to this Section 8.1(c)(ii), that the Company shall have complied in all
material respects with the provisions of Section 6.1 with respect to the
Superior Offer which resulted in such Change of Recommendation, and Section 8.3(b)(i).
(d) by
Parent,
(i) prior to the Appointment Time, if there has
been a breach by Company of any representation, warranty, covenant or agreement
set forth in this Agreement, which breach shall result in any condition set
forth in Annex A not being satisfied, and (x) such breach is not
capable of being cured, or (y) if such breach is capable of being cured, such
breach is not cured within 20 days after the breaching party receives notice of
such breach from the
72
non-breaching party, provided that if the breaching
party fails to continue to use commercially reasonable efforts to cure such
breach during such 20 day cure period, then the breaching party shall no longer
be entitled to such cure period); or
(ii) if
a Triggering Event (as defined below in this Section 8.1) shall have
occurred at any time prior to the adoption of this Agreement by the required
vote of the stockholders of the Company (if required); or
(iii) the
Offer shall have remained open for not less than forty (40) business days, all
of the conditions set forth in Annex A hereto, other than the Minimum
Condition and the conditions in paragraphs (c) and (e) of Annex A
hereto, are, immediately prior to such termination, satisfied without giving
effect to any waiver thereof, and the Minimum Condition has not been satisfied.
(e) by
either the Company or Parent if a Governmental Entity shall have issued an
order, decree or ruling or taken any other action (including the failure to
have taken an action), in any case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Offer or the Merger such
that the conditions set forth in Article VII or Annex A shall not be
capable of being satisfied, which order, decree, ruling or other action is
final and nonappealable.
For purposes of this
Agreement, a Triggering Event
shall be deemed to have occurred if, prior to the Appointment Time, any of the
following shall have occurred: (A) a Change of Recommendation; (B) the
Company shall have failed to include the Recommendations in the Schedule 14D-9
or permit the inclusion of the Recommendations in the Offer Documents; (C) the
Company Board shall have for any reason approved, or recommended that the
Companys stockholders approve, any Acquisition Proposal; or (D) any of
the Company or its executive officers or directors shall have materially
breached the obligations applicable to it, him or her, set forth in Section 6.1(a)(i) through
6.1(a)(vi) (subject to Section 6.1(c)) or the penultimate sentence of
Section 6.1(a).
8.2 Notice
of Termination; Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 8.1 hereof, this
Agreement shall be of no further force or effect without liability of any party
or parties hereto, as applicable (or any stockholder, director, officer,
employee, agent, consultant or representative of such party or parties) to the
other party or parties
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hereto, as applicable, except (i) as set forth in
Section 6.5(a), this Section 8.2, and Section 8.3 and Article IX
hereof, each of which shall survive the termination of this Agreement, and (ii) that
nothing herein shall relieve any party or parties hereto, as applicable, from
liability for any willful breach of this Agreement. No termination of this Agreement shall affect
the obligations of the parties hereto set forth in the Confidentiality Agreement,
all of which obligations shall survive termination of this Agreement in
accordance with their terms.
8.3 Fees
and Expenses.
(a) General. Except as set forth in this Section 8.3,
all fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses whether or not the Merger is consummated except that each of the
Company and Parent shall pay one-half of the expenses related to any filing
made under the HSR Act.
(b) Company
Payments.
(i) In
the event that this Agreement is terminated by the Company pursuant to Section 8.1(c)(ii),
the Company shall concurrently with (and as a condition precedent to its right
to terminate pursuant to Section 8.1(c)(ii), if applicable), pay Parent a
fee equal to five million two hundred fifty thousand dollars ($5,250,000) in
immediately available funds (the Termination Fee)
by wire transfer to an account or accounts designated in writing by Parent.
(ii) The
Company shall pay to Parent a fee equal to the Termination Fee, by wire
transfer of immediately available funds to an account or accounts designated in
writing by Parent, within five (5) business days after demand by Parent,
in the event that (1) (A) this Agreement is terminated by Parent or
the Company pursuant to Section 8.1(b) and all of the conditions
(other than the conditions set forth in paragraphs (c) and (e)) set forth
in Annex A hereto are immediately prior to such termination satisfied
(without giving effect to any waiver thereof) and the Minimum Condition has not
been satisfied, or (B) this Agreement is terminated by Parent pursuant to Section 8.1(d)(ii) hereof
prior to the Appointment Time, or (C) this Agreement is terminated by
Parent pursuant to Section 8.1(d)(iii) hereof prior to the
Appointment Time, and (2) following the execution and delivery of this
Agreement and prior to the termination of this Agreement, a third party shall
publicly make an Acquisition Proposal (or with
74
respect
to infoUSA, Inc. and DII Acquisition Corp., such entities shall modify
their existing Acquisition Proposal such that the net cash price offered to
Company Securityholders exceeds the Offer Price) and shall not have publicly
withdrawn such Acquisition Proposal, and (3) within twelve (12) months
following the termination of this Agreement, either an Acquisition is
consummated or the Company enters into a definitive agreement providing for an
Acquisition.
(iii) Interest
and Costs; Other Remedies. The
Company acknowledges that the agreements contained in this Section 8.3(b) are
an integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Parent would not enter into this Agreement;
accordingly, if the Company fails to pay in a timely manner the amounts due
pursuant to this Section 8.3(b), and, in order to obtain such payment,
Parent makes a claim that results in a judgment against the Company for the
amounts set forth in this Section 8.3(b), the Company shall pay to Parent
its reasonable costs and expenses (including reasonable attorneys fees and
expenses) in connection with such suit, together with interest on the amounts
set forth in this Section 8.3(b) at the prime rate of Citibank, N.A.
in effect on the date such payment was required to be made. Payment of the fees described in this Section 8.3(b) shall
not be in lieu of damages incurred in the event of breach of this Agreement.
(iv) Certain
Definitions. For the purposes of
this Agreement, Acquisition shall mean any of the
following transactions (other than the transactions contemplated by this
Agreement): (i) a merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company pursuant to which the stockholders of the Company immediately preceding
such transaction hold less than fifty percent (50%) of the aggregate voting or
equity interests in the surviving or resulting entity of such transaction or
any direct or indirect parent thereof, (ii) a sale or other disposition by
the Company or any of its Subsidiaries of assets representing in excess of
fifty percent (50%) of the aggregate fair market value of the Companys
business (on a consolidated basis) immediately prior to such sale, (iii) the
acquisition by any Person or group (including by way of a tender offer or an
exchange offer or issuance by the party or such Person or group), directly or
indirectly, of beneficial ownership or a right to acquire beneficial ownership
of shares representing in excess of fifty percent (50%) of the voting power of
the then outstanding shares of capital stock of the Company, or (iv) a
liquidation or dissolution of the Company.
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8.4 Amendment.
Subject to applicable law and the other provision of this Agreement (including Section 1.3(c)),
this Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors, at any time before or after
adoption of this Agreement by the stockholders of the Company, provided,
after any such adoption, no amendment shall be made which by law or in
accordance with the rules of any relevant stock exchange requires further
approval by such stockholders without such further stockholder approval. This Agreement may not be amended except by
execution of an instrument in writing signed on behalf of each of Parent,
Purchaser and the Company.
8.5 Extension;
Waiver. Subject to applicable law and the other provision of this
Agreement (including Section 1.3(c)), at any time prior to the Effective
Time either party hereto, by action taken or authorized by their respective
Board of Directors, may, to the extent legally allowed: (i) extend the
time for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
made to such party contained herein or in any document delivered pursuant
hereto, and (iii) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
GENERAL
PROVISIONS
9.1 Non-Survival
of Representations and Warranties. The representations and warranties
of the Company, Parent and Purchaser contained in this Agreement, or any
instrument delivered pursuant to this Agreement, shall terminate at the
Effective Time, and only the covenants that by their terms survive the
Effective Time and this Article IX shall survive the Effective Time.
9.2 Notices.
All notices and other communications hereunder shall be in writing and shall be
deemed duly given (i) on the date of delivery if delivered personally, (ii) on
the date of confirmation of receipt (or, the first business day following such
receipt if the date is not a business day) of transmission by
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telecopy or facsimile, or (iii) on the date of
confirmation of receipt (or, the first business day following such receipt if
the date is not a business day) if delivered by a nationally recognized courier
service. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
(a) if
to Parent or Purchaser, to:
Acxiom
Corporation
Information Way
P.O. Box 8180
Little Rock, Arkansas 72203
Attention: Chief Legal Officer
Telephone No.: (501) 342-1000
Telecopy No.: (501) 342-5610
with a
copy to:
Kutak
Rock LLP
425 West Capital Avenue
Little Rock, Arkansas 72201-3409
Attention: John P. Fletcher, Esq.
Telephone No.: (501) 975-3110
Telecopy No.: (501) 975-3001
(b) if
to the Company, to:
Digital
Impact, Inc.
117 Bovet Road
San Mateo, California 94402
Attention: Kenneth Hirschman, Esq.
Telephone No.: (650) 356-3400
Telecopy No.: (650) 356-3592
with a
copy to:
Wilson
Sonsini Goodrich & Rosati
Professional Corporation
12 East 49th Street
New
York, New York 10017
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Attention: Selim
Day, Esq.
Telephone No.: (650) 493-9300
Telecopy No.: (650) 493-6811
9.3 Interpretation;
Knowledge.
(a) When
a reference is made in this Agreement to Exhibits, such reference shall be to
an Exhibit to this Agreement unless otherwise indicated. When a reference is made in this Agreement to
Sections, such reference shall be to a section of this Agreement unless
otherwise indicated. When a reference is
made in this Agreement to Annexes, such reference shall be to an Annex of
this Agreement unless otherwise indicated.
For purposes of this Agreement, the words include,
includes and including,
when used herein, shall be deemed in each case to be followed by the words without
limitation. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. When reference is made herein to the business of an entity, such reference shall be deemed
to include the business of all such entity and its Subsidiaries, taken as a
whole.
(b) For
purposes of this Agreement, the term Contract shall
mean any legally binding written, oral or other agreement, contract,
subcontract, settlement agreement, lease, understanding, instrument, note,
option, warranty, purchase order, license, sublicense, insurance policy,
benefit plan or other commitment or undertaking of any nature.
(c) For
purposes of this Agreement, the term Legal Requirements
shall mean any federal, state, local, municipal, foreign or other law, statute,
constitution, principle of common law, resolution, ordinance, code, order,
edict, decree, rule, regulation, ruling or requirement issued, enacted,
adopted, promulgated, implemented or otherwise put into effect by or under the
authority of any Governmental Entity.
(d) For
purposes of this Agreement, the term Knowledge means,
with respect to a party hereto, with respect to any matter in question, that
any of the executive officers of such party, has actual knowledge of such
matter.
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(e) For
purposes of this Agreement, the term Material Adverse Effect,
when used in connection with an entity, means any change, event, violation,
inaccuracy, circumstance or effect (any such item, an Effect),
that is, individually or in the aggregate with any other such Effects,
materially adverse to the business, assets, financial condition or operations
of such entity taken as a whole with its Subsidiaries or would have a material
adverse effect on the ability of any party to consummate the Offer or the
Merger; provided, however, that no Effect that results from any
of the following, alone or in combination, be deemed to constitute, nor shall
any of the following be taken into account in determining whether there has
been, a Material Adverse Effect on any entity: (A) any actions taken, or
failure to take action, to which the other party to this agreement has
consented in writing, (B) any change in such entitys stock price or
trading volume, in and of itself, (C) any failure by such entity to meet
published analyst revenue or earnings projections, in and of itself, (D)
changes affecting any of the industries in which such entity operates generally
which do not negatively affect the
entity disproportionately compared to others in the industries, (E)
changes in the U.S. economy or capital
markets generally, or (F) the outbreak or escalation of war, hostilities
or terrorist activities, either in the United States or abroad which do not
negatively affect the entity disproportionately compared to others in the
industries in which the entities operate, (G) any Effect related to the
announcement or pendency of this Agreement, including actions taken by or
losses of employees (other than those employees referred to in Section 3.23),
customers or suppliers (or notices related thereto), or (F) any litigation
arising out of or related to any alleged breach of fiduciary duty or
misstatements or omissions in disclosures related to this Agreement.
(f) For
purposes of this Agreement, the term Person shall
mean any individual, corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization, entity
or Governmental Entity.
(g) The term in the
ordinary course of business and similar expressions, with respect
to any action, means such action is (i) is taken in the ordinary
course of the normal operations of such Person and (ii) not required by
applicable law or such Persons charter documents to be authorized by the Board
of Directors of such Person.
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9.4 Counterparts.
This Agreement may be executed in two or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other party, it being understood that all parties need not sign the same
counterpart.
9.5 Entire
Agreement; Third-Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Disclosure Letter
and the Parent Disclosure Letter (i) constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, it being understood that the
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement and (ii) are
not intended to confer upon any other Person any rights or remedies hereunder,
except as specifically provided, following the Effective Time, in Section 6.11. Section 6.11 is intended to be for the
benefit of, and shall be enforceable by the Indemnified Parties and their heirs
and personal representatives and shall be binding on Parent and the Surviving
Corporation and its successors and assigns.
In the event Parent or the Surviving Corporation or its successor or
assign (i) consolidates with or merges into any other Person and shall not
be the continuing or surviving corporation or entity in such consolidation or
merger or (ii) transfers all or substantially all of its properties and
assets to any Person, then, and in each case, proper provision shall be made so
that the successor and assign of Parent or the Surviving Corporation, as the
case may be, honor the obligations set forth with respect to Parent or the
Surviving Corporation, as the case may be, in Section 6.11.
9.6 Severability.
In the event that any provision of this Agreement or the application thereof,
becomes or is declared by a court of competent jurisdiction to be illegal, void
or unenforceable, the remainder of this Agreement will continue in full force
and effect and the application of such provision to other Persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the greatest extent
possible, the economic, business and other purposes of such void or
unenforceable provision.
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9.7 Other
Remedies; Specific Performance.
(a) Other
Remedies. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached.
(b) Specific
Performance. It is accordingly
agreed that the parties shall be entitled to seek an injunction or injunctions
to prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
9.8 Governing
Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts of law thereof. Each
of the parties hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the Court of Chancery of the State of Delaware, and
any appellate court thereof, for any litigation arising out of or relating to this
Agreement or the agreements delivered in connection herewith or the
transactions contemplated hereby or thereby, to the extent the Court of
Chancery has jurisdiction over the claims alleged in such litigation, or, if
the Court of Chancery does not have jurisdiction over the claims alleged in
such litigation, the courts of the State of Delaware and of the United States
of America located in the State of Delaware, and each of the parties hereby
irrevocably and unconditionally (i) agrees not to commence any such
litigation except in such courts, (ii) waives any objection to the laying
of venue of any such litigation in such Delaware courts and (iii) agrees
not to plead or claim in any Delaware court that such litigation brought
therein has been brought in an inconvenient forum. Each party to this Agreement
irrevocably consents to service of process in the manner provided for notices
in Section 9.2. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
9.9 Rules of
Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or
81
rule of construction providing that ambiguities
in an agreement or other document will be construed against the party drafting
such agreement or document.
9.10 Assignment.
The provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, provided
that no party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of each other party
hereto, except that Parent or Purchaser may transfer or assign, in whole or
from time to time in part, to one or more of its affiliates, the right to
purchase all or a portion of the Company Shares pursuant to the Offer, but no
such transfer or assignment will relieve Parent or Purchaser of its obligations
under the Offer or prejudice the rights of tendering stockholders to receive
payment for Company Shares validly tendered and accepted for payment pursuant
to the Offer.
9.11 Waiver
of Jury Trial. EACH OF PARENT, PURCHASER AND THE COMPANY HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, PURCHASER OR THE COMPANY
IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF
SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
*****
82
IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed by their duly
authorized respective officers as of the date first written above.
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ACXIOM
CORPORATION
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By:
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/s/ Jerry C. Jones
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Jerry C. Jones
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Business Development / Legal Leader
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ADAM
MERGER CORPORATION
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By:
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/s/ Jerry C. Jones
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Jerry C. Jones
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Vice President / Assistant Secretary
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DIGITAL
IMPACT, INC.
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By:
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/s/ William C. Park
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William C. Park
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President, Chief Executive Officer and Chairman of the Board of
Directors
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****AGREEMENT AND PLAN OF
REORGANIZATION****
83
ANNEX
A
CONDITIONS
TO THE OFFER
Reference is made to that
certain Agreement and Plan of Merger, dated as of March 25, 2005 (the Agreement) by and among Acxiom
Corporation, a Delaware corporation (Parent),
Adam Merger Corporation, a
Delaware corporation and a wholly-owned subsidiary of Parent (Purchaser), and Digital Impact, Inc.,
a Delaware corporation (the Company) (capitalized terms that
are used but not otherwise defined in this Annex A shall have the respective
meanings ascribed thereto in the Agreement).
Notwithstanding any other
provisions of the Offer and in addition to (and not in limitation of) the
rights of Purchaser to extend and amend the Offer at any time in its sole
discretion (subject to the terms and conditions of the Agreement), Purchaser
shall not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange
Act (relating to the obligation of Purchaser to pay for or return tendered
Company Shares promptly after termination or withdrawal of the Offer), pay for,
and may delay the acceptance for payment of or, subject to the restriction
referred to above, the payment for, any tendered Company Shares if by the
expiration of the Offer (as it may be extended pursuant to Section 1.1(c) of
the Agreement), (i) the Minimum Condition has not been satisfied, (ii) each
of any waiting period under the HSR Act applicable to the purchase of the
Company Shares pursuant to the Offer and the waiting period under any other
comparable antitrust or trade regulation reasonably deemed applicable to the
purchase of the Company Shares pursuant to the Offer by the parties shall not
have expired or terminated or (iii) any of the following events shall have
occurred and continue to exist:
(a) there
shall be pending or overtly threatened any suit, action or proceeding by any
Governmental Entity (i) challenging the acquisition by Purchaser or Parent
of any Company Shares (ii) seeking to restrain or prohibit the
consummation of the Offer or the Merger, or (iii) seeking a Restricted
Divestiture;
(b) there
shall be any statute, rule, regulation, judgment, order or injunction enacted,
entered, enforced, promulgated, or deemed applicable, pursuant to an
authoritative interpretation by or on behalf of a Government Entity, to the
Offer or the Merger, or any other action shall be taken by any Governmental
Entity, , that is reasonably likely to result in any of the consequences
referred to in the immediately preceding paragraph )(a) of this
Annex A;
(c) any
of the representations and warranties of the Company set forth in the Agreement
(i) shall not have been true and correct in all respects as of the date of
the Agreement, and (ii) shall not be true and correct in all respects on
and as of the scheduled expiration date of the Offer with the same force and
effect as if made on and as of such date, (in the case of clause (i) and (ii) disregarding
all qualifications based on materiality, Material Adverse Effect and the
like) except, in the case of the foregoing clauses (i) and (ii), (A) for
any failure to be so true and correct as
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has not had and would not reasonably be expected have,
individually or in the aggregate, a Material Adverse Effect on the Company, and
(B) for changes contemplated by this Agreement;
(d) there shall have occurred and be continuing at the time immediately
prior to such obligation of Purchaser (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities exchange
in the United States or the Nasdaq Stock Markets National Market (other than a
shortening of trading hours or any trading halt triggered solely as a result of
a specified increase or decrease in a market index), or (ii) a declaration
of a banking moratorium or any suspension of payments in respect of banks in
the United States;
(e) the Company shall have
failed to perform in any material respect any agreement, covenant or obligation
of the Company to be performed or complied with by it prior to the Appointment
Time under this Agreement;
(f) since the date of this
Agreement, there shall have occurred and be continuing any event, change or
development that, individually or in the aggregate, has had or reasonably would
be expected to have a Material Adverse Effect on the Company; or
(g) this
Agreement shall have been terminated in accordance with its terms;
and which in any such
case makes it inadvisable, in the reasonable and good faith judgment of Parent
or Purchaser, to proceed with the Offer and/or with such acceptance for payment
of or payment for Shares.
The
conditions to the Offer set forth herein are for the sole benefit of Parent and
Purchaser and may be waived by Parent and Purchaser, in whole or in part, at
any time and from time to time, in their sole discretion, other than the
Minimum Condition, which may be waived by Parent and Purchaser only with the
prior written consent of the Company.
The failure by Parent and Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, and each such
right shall be deemed an ongoing right that may be asserted at any time and
from time to time.
* * * * *
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