Agreement and Plan of Reorganization between Ask Jeeves Inc. and Interactive Search Holdings

AGREEMENT AND PLAN OF REORGANIZATION

by and among:

ASK JEEVES, INC.,
a Delaware corporation;

AQUA ACQUISITION CORP.,
a Delaware corporation;

AQUA ACQUISITION HOLDINGS LLC,
a Delaware limited liability company;

and

INTERACTIVE SEARCH HOLDINGS, INC.,
a Delaware corporation.

MARCH 3, 2004

 

 

TABLE OF CONTENTS

		ARTICLE ONE													THE MERGERS
						1.1									The Step One Merger
						1.2									Closing; Effective Time
						1.3									Effect of the Step One Merger
						1.4									Certificate of Incorporation; Bylaws
						1.5									Directors and Officers
						1.6									Effect on Capital Stock
						1.7									Surrender of Certificates
						1.8									Tax Consequences
						1.9									Taking of Necessary Action
						1.10									Withholding
						1.11									Lost, Stolen or Destroyed Certificates
						1.12									Step Two Merger
		ARTICLE TWO													REPRESENTATIONS AND WARRANTIES OF TARGET
						2.1									Organization
						2.2									Certificate of Incorporation and Bylaws; Organizational Documents
						2.3									Capital Structure
						2.4									Authority
						2.5									No Conflicts; Required Filings and Consents
						2.6									Financial Statements
						2.7									Absence of Undisclosed Liabilities
						2.8									Absence of Certain Changes
						2.9									Litigation
						2.10									Restrictions on Business Activities
						2.11									Permits
						2.12									Title to Property
						2.13									Intellectual Property
						2.14									Environmental Matters
						2.15									Taxes
						2.16									Employee Benefit Plans
						2.17									Employee Matters
						2.18									Material Contracts
						2.19									Interested Party Transactions
						2.20									Insurance
						2.21									Compliance With Laws
						2.22									Minute Books
						2.23									Brokers’ and Finders’ Fees
						2.24									Affiliates
						2.25									Vote Required
						2.26									Foreign Corrupt Practices
						2.27									Accounts Receivable
						2.28									Customers and Suppliers
						2.29									Third Party Consents
						2.30									No Commitments Regarding Future Products
						2.31									Accounting Records; Internal Controls
						2.32									Bank Accounts, Powers of Attorney
						2.33									Opinion of Financial Advisor
						2.34									Information Provided
						2.35									Representations Complete
						2.36									No Other Representations or Warranties
		ARTICLE THREE													REPRESENTATIONS AND WARRANTIES OF ACQUIROR, MERGER SUB AND LLC
						3.1									Organization, Standing and Power
						3.2									No Prior Activities
						3.3									Capital Structure
						3.4									Authority
						3.5									No Conflict; Required Filings and Consents
						3.6									SEC Documents; Financial Statements
						3.7									Taxes
						3.8									Sufficiency of Funds
						3.9									Opinion of Financial Advisor
						3.10									Litigation
						3.11									Information Provided
						3.12									Reorganization
		ARTICLE FOUR													CONDUCT PRIOR TO THE EFFECTIVE TIME
						4.1									Conduct of Business of Target and Subsidiaries
						4.2									Restrictions on Conduct of Business of Target and Subsidiaries
						4.3									No Solicitation
		ARTICLE FIVE													ADDITIONAL AGREEMENTS
						5.1									Information Statement; Fairness Hearing and Permit; Blue Sky Laws Statement; Registration Statement; Blue Sky Laws
						5.2									Target Stockholders Meeting
						5.3									Commercially Reasonable Efforts and Further Assurances
						5.4									Consents; Cooperation
						5.5									Access to Information
						5.6									Confidentiality
						5.7									Public Disclosure
						5.8									FIRPTA
						5.9									State Statutes
						5.10									Escrow Agreement
						5.11									Listing of Additional Shares
						5.12									Affiliate Agreements
						5.13									Stock Options; Filing of Form S-8
						5.14									Employee Benefits of Target Employees
						5.15									Step Two Merger
						5.16									Reorganization Treatment
						5.17									Notices
						5.18									Indemnification; Exculpation; Insurance
						5.19									Zero Priced Options
						5.20									Tax Claims
						5.21									Targeted Media Solutions
						5.22									Delivery of Audited Financial Statements
		ARTICLE SIX													CONDITIONS
						6.1									Conditions to Obligations of Each Party
						6.2									Additional Conditions to Obligations of Target
						6.3									Additional Conditions to the Obligations of Acquiror, Merger Sub and LLC
		ARTICLE SEVEN													TERMINATION, AMENDMENT AND WAIVER
						7.1									Termination
						7.2									Termination Fee
						7.3									Effect of Termination
						7.4									Expenses
						7.5									Amendment
						7.6									Extension; Waiver
		ARTICLE EIGHT													ESCROW AND INDEMNIFICATION
						8.1									Survival of Representations and Warranties
						8.2									Escrow Fund
						8.3									Indemnification
						8.4									Damages Threshold
						8.5									Escrow Period
						8.6									Distributions; Voting
						8.7									Special Escrow Fund
						8.8									Method of Asserting Claims
						8.9									Representative of the Stockholders; Power of Attorney
						8.10									Adjustment to Escrow
		ARTICLE NINE													GENERAL PROVISIONS
						9.1									Notices
						9.2									Interpretation; Certain Definitions
						9.3									Counterparts
						9.4									Entire Agreement; Nonassignability; Parties in Interest
						9.5									Severability
						9.6									Remedies Cumulative
						9.7									Governing Law
						9.8									Rules of Construction
						9.9									Amendments and Waivers
						9.10									Attorneys’ Fees

 

 

LIST OF EXHIBITS

Exhibit A		Stockholder Agreement
Exhibit B		Standstill Agreement
Exhibit C		Stock Resale Agreement
Exhibit D		Certificate of Merger
Exhibit E		Certificate of Incorporation of Target
Exhibit F		Bylaws of Target
Exhibit G		Step Two Certificate of Merger
Exhibit H		Escrow Agreement
Exhibit I		Affiliate Agreement
Exhibit J		Certificate of Ask Jeeves, Inc.
Exhibit K		Certificate of Interactive Search Holdings, Inc.
Exhibit L		Opinion of O’Melveny & Myers LLP
Exhibit M-1		Opinion of Weil, Gotshal & Manges LLP
Exhibit M-2		Opinion of Edwards & Angell LLP
Exhibit N		Opinion of Morris, Nichols, Arsht & Tunnell
Exhibit O		Employment Agreement

 

 

INDEX OF DEFINED TERMS
DEFINED TERM		SECTION
“83(b) Election”			2.3
“Accounts Receivable”			2.27
“Acquiror”			Preamble
“Acquiror Common Stock”			Recitals
“Acquiror Disclosure Schedule”			Article Three
“Acquiror Financial Statements”			3.6(b)
“Acquiror SEC Documents”			3.6(a)
“Acquiror’s 401(k) Plan”			5.14(b)
“Acquiror Plans”			5.14(a)
“Acquiror Subject Persons”			9.2
“Acquisition Proposal”			4.3(d)
“action”			2.16(d)
“Additional Stock Consideration”			1.6(g)
“Adverse Actions”			4.3(e)
“Affiliate Agreement”			5.12
“Affiliates”			2.24
“Agreement”			Preamble
“Antitrust Laws”			5.4(b)
“Balance Sheet Date”			2.8
“California Commissioner”			5.1(a)
“California Securities Law”			5.1(a)
“Cash Consideration”			1.6(c)
“Cash Per Share”			1.6(a)
“Certificate of Merger”			1.1
“Certificates”			1.7(c)
“Claims Period”			8.5
“Class A Common Stock”			1.6 (a)
“Class B Common Stock”			1.2
“Closing”			1.2
“Closing Date”			1.6(f)
“Closing Price”			Recitals
“Code”			2.13(m)
“Confidential Information”			Recitals
“Confidentiality Agreement”			5.6
“Controlled Group”			2.16(k)
“Damages”			8.3(a)
“Delaware Law”			1.1
“Dissenting Shares”			1.6(j)
“Earn-out Consideration”			1.6(a)
“Earn-out Statement”			1.6(a)
“Effective Time”			1.2
“Employee Plan”			2.16(k)
“Environmental Laws”			2.14(a)
“ERISA”			2.16(k)
“Escrow Agent”			8.2
“Escrow Agreement”			5.10
“Escrow Cash”			8.2
“Escrow Fund”			8.2
“Escrow Shares”			8.2
“Escrow Termination Date”			8.1
“Excess Merger Fees”			1.6(c)
“Exchange Act”			2.18(h)
“Exchange Agent”			1.7(a)
“Facilities”			2.14(a)
“Financial Statements”			2.6
“FIRPTA”			5.8
“Fun Web Merger”			2.1
“GAAP”			2.6
“Governmental Entity”			2.5(b)
“Group”			4.3(d)
“Hazardous Materials”			2.14(a)
“Hearing”			5.1(a)
“Hearing Notice”			5.1(a)
“HSR Act”			2.5(b)
“include,” “includes” and “including”			9.2
“Indemnified Parties”			5.18(a)
“Indemnified Person” and “Indemnified Persons”			8.3(a)
“Independent Accounting Firm”			1.6(a)
“Information Statement”			5.1(a)
“Initial Escrow Shares”			8.2
“Initial Special Escrow Shares”			8.7
“Intellectual Property”			2.13(m)
“Interim Surviving Corporation”			1.1
“IRS”			2.3
“JAMS”			9.2
“knowledge”			9.2
“largest”			2.18(a)
“Licensed IP”			2.13(m)
“Licensed Technology”			2.13(m)
“Litigation”			2.9
“LLC”			Preamble
“made available”			9.2
“Manager”			1.6(a)
“Material Adverse Effect”			9.2
“Material Contract”			2.18
“Material Subsidiaries”			2.1
“Maximum Cash Amount”			1.6(a)
“Measurement Period”			1.6(a)
“Merger Consideration”			1.6(c)
“Mergers”			Recitals
“Merger Sub”			Preamble
“Modified Terms”			4.3(e)
“NASD”			5.7
“Net Revenues”			1.6(a)
“New Shares”			8.6(a)
“Objection Notice”			1.6(a)
“Officer’s Certificate”			8.4
“Option Exchange Ratio”			1.6(f)
“Order”			5.4(b)
“Owned IP”			2.13(m)
“Owned Technology”			2.13(m)
“Patents”			2.13(m)
“Permit”			5.1(b)
“Permit Application”			5.1(a)
“Person”			1.6(c)
“Principal Stockholders”			6.3(l)
“Property”			2.14(a)
“Proxy Statement”			5.1(e)
“Public Software”			2.13(m)
“Registration Statement”			5.1(e)
“Regulation”			2.16(k)
“Returns”			2.15(a)
“SEC”			2.3
“Securities Act”			2.3
“Series A Dividend”			1.6(a)
“Series A Preferred Stock”			1.6(a)
“Settlement Expenses”			5.20
“Special Escrow Cash”			8.7
“Special Escrow Fund”			8.7
“Special Escrow Shares”			8.7
“Specified Time”			4.3(d)
“Standstill Agreement”			Recitals
“Step One Merger”			Recitals
“Step Two Certificate of Merger”			1.12(b)
“Step Two Merger”			Recitals
“Step Two Merger Effective Time”			1.12(b)
“Stock Consideration”			1.6(c)
“Stockholder Agreement”			Recitals
“Stockholders’ Representative”			8.9
“Stock Ratio”			1.6(a)
“Stock Resale Agreement”			Recitals
“Superior Proposal”			4.3(d)
“Surviving Company”			1.12(a)
“Target”			Preamble
“Target 401(k) Plan”			5.14(b)
“Target Amount”			1.6(a)
“Target Authorizations”			2.11
“Target Balance Sheet”			2.7
“Target Capital Stock”			1.6(a)
“Target Common Stock”			1.6(a)
“Target Disclosure Schedule”			Article Two
“Target IP”			2.13(m)
“Target Option Additional Shares”			1.6(f)
“Target Option Consideration”			1.6(f)
“Target Options”			1.6(f)
“Target Products”			2.13(m)
“Target Registered IP”			2.13(m)
“Target Representatives”			4.3(a)
“Target Stock Option Plan”			1.6(f)
“Target Stockholders Meeting”			5.2
“Target stockholders,” “stockholders of Target,” “former Target stockholders” and “former stockholders of Target”			9.2
“Target Subject Persons”			9.2
“Target Technology”			2.13(m)
“Tax Claims”			5.20
“Taxes”			2.15(a)
“Technology”			2.13(m)
“Termination Date”			7.1(b)
“Termination Fee”			7.2(c)
“the date of this Agreement” and “the date hereof”			9.2
“Third Party Intellectual Property Rights”			2.13(m)
“Traffic Acquisition Costs”			1.6(a)
“Unvested Share Waiver”			1.6(b)
“Unvested Target Shares”			1.6(b)
“Zero Priced Options”			1.6(f)

 

AGREEMENT AND PLAN OF REORGANIZATION

     This Agreement and Plan of Reorganization (the “Agreement”) is made and entered into as of March 3, 2004, by and among Ask Jeeves, Inc., a Delaware corporation (“Acquiror”), Interactive Search Holdings, Inc., a Delaware corporation (“Target”), Aqua Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Acquiror (“Merger Sub”), and Aqua Acquisition Holdings LLC, a single member Delaware limited liability company wholly owned by Acquiror (the “LLC”).

RECITALS

     A.     The Boards of Directors of Target, Acquiror and Merger Sub and the manager of the LLC believe it is fair to and in the best interests of their respective companies and the stockholders or sole member of their respective companies that Target and the LLC combine into a single company through the merger of Merger Sub with and into Target (the “Step One Merger”) and the merger of Target, as surviving corporation of the Step One Merger, with and into the LLC (the “Step Two Merger,” and together with the Step One Merger, the “Mergers”), with the LLC being the ultimate surviving entity in the Mergers, and, in furtherance thereof, have approved and declared the advisability of this Agreement and the Mergers.

     B.     Pursuant to the Mergers, subject to the terms hereof, the outstanding shares of capital stock of Target shall be converted into the right to receive shares of Acquiror’s common stock, par value $0.001 per share (the “Acquiror Common Stock”), and cash as set forth herein.

     C.     Concurrently with the execution and delivery of this Agreement, each of the Principal Stockholders is entering into a Stockholder Agreement in the form attached hereto as Exhibit A (each a “Stockholder Agreement”), a Standstill Agreement in the form attached hereto as Exhibit B (each a “Standstill Agreement”), and a Stock Resale Agreement in the form attached hereto as Exhibit C (each, a “Stock Resale Agreement”).

     D.     Target, Acquiror, Merger Sub and the LLC desire to make certain representations and warranties, covenants and other agreements in connection with the Mergers.

     E.     The parties intend, by executing this Agreement, to adopt a plan of reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the “Code”), and to cause the Mergers together to qualify as a reorganization under the provisions of Section 368 of the Code.

 

AGREEMENT

     For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

 

ARTICLE ONE

The Mergers

          1.1 The Step One Merger. At the Effective Time and subject to and upon the terms and conditions of this Agreement, the Certificate of Merger in connection with the Step One Merger attached hereto as Exhibit D (the “Certificate of Merger”) and the applicable provisions of the Delaware General Corporation Law (“Delaware Law”), Merger Sub shall be merged with and into Target, the separate corporate existence of Merger Sub shall cease and Target shall continue as the surviving corporation of the Step One Merger. Target as the interim surviving corporation following the Step One Merger is hereinafter sometimes referred to as the “Interim Surviving Corporation.”           

         1.2 Closing; Effective Time. The closing of the Step One Merger (the “Closing”) shall take place as soon as practicable, and in no event later than two (2) business days after the satisfaction or waiver of each of the conditions set forth in Article Six below or at such other time as the parties agree (the “Closing Date”). In connection with the Closing, the parties shall cause the Step One Merger to be consummated by filing the Certificate of Merger with the Secretary of State of the State of Delaware, in accordance with the relevant provisions of Delaware Law (the time of such filing being the “Effective Time”). The Closing shall take place at the offices of O’Melveny & Myers LLP, 2765 Sand Hill Road, Menlo Park, California, or at such other location as the parties agree.           

         1.3 Effect of the Step One Merger. At the Effective Time, the effect of the Step One Merger shall be as provided in this Agreement, the Certificate of Merger and the applicable provisions of Delaware Law. Without limiting the foregoing, at the Effective Time, all the property, rights, privileges, powers and franchises of Target and Merger Sub shall vest in the Interim Surviving Corporation, and all debts, liabilities and duties of Target and Merger Sub shall become the debts, liabilities and duties of the Interim Surviving Corporation.

         1.4 Certificate of Incorporation; Bylaws.

                 (a) At the Effective Time, the Certificate of Incorporation of Target shall be amended to read in its entirety as set forth as Exhibit E hereto until thereafter amended as provided by Delaware Law and such Certificate of Incorporation.

                 (b) At the Effective Time, the Bylaws of Target shall be amended to read in their entirety as set forth as Exhibit F hereto until thereafter amended as provided by Delaware Law, the Certificate of Incorporation of the Interim Surviving Corporation and such Bylaws.           

         1.5 Directors and Officers. At the Effective Time, the directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Interim Surviving Corporation, and the officers of Merger Sub immediately prior to the Effective Time, shall be the officers of the Interim Surviving Corporation, in each case, until their respective successors are duly elected or appointed and qualified.           

         1.6 Effect on Capital Stock. By virtue of the Step One Merger and without any action on the part of Merger Sub, Target or any of its stockholders, the following shall occur at the Effective Time:                

                  (a) Treatment of Vested Target Capital Stock.   

                           (i) Each share of Target’s Class A common stock, par value $0.0001 per share (“Class A Common Stock”), and Class B common stock, par value $0.0001 per share (“Class B Common Stock”, and together with the Class A Common Stock, “Target Common Stock”, and, collectively with the Series A Preferred Stock, the “Target Capital Stock”) issued and outstanding and fully-vested immediately prior to the Effective Time shall be converted into the right to receive, subject to the terms of Section 8.2 and Section 8.7, (A) the number of shares of Acquiror Common Stock that is equal to the quotient obtained by dividing (1) 9,300,000 less the number of Target Option Additional Shares by (2) the sum of the total number of issued and outstanding shares of Target Common Stock (whether vested or unvested), the total number of shares of Target Common Stock issuable upon conversion of the issued and outstanding shares of Series A Preferred Stock and the total number of shares of Target Common Stock issuable upon exercise of Target Options assumed by Acquiror at the Effective Time (the “Stock Ratio”), (B) cash equal to the quotient obtained by dividing (1) $150,000,000 less any Excess Merger Fees and less the Series A Dividend (the “Maximum Cash Amount”) by (2) the sum of (x) the total number of issued, outstanding and fully-vested shares of Target Common Stock immediately prior to the Effective Time, plus (y) the total number of shares of Target Common Stock issuable upon conversion of the issued and outstanding shares of Series A Preferred Stock immediately prior to the Effective Time, plus (z) if (and only if) an Unvested Share Waiver is not obtained with respect to any Unvested Target Shares, the total number of Unvested Target Shares not subject to an Unvested Share Waiver immediately prior to the Effective Time (the “Cash Per Share”), and (C) if applicable, a portion of the Earn-out Consideration equal to the Earn-out Consideration divided by the sum of the total number of issued and outstanding and fully-vested shares of Target Common Stock immediately prior to the Effective Time, plus the total number of shares of Target Common Stock issuable upon conversion of the issued and outstanding shares of Series A Preferred Stock immediately prior to the Effective Time, plus, if (and only if) an Unvested Share Waiver is not obtained with respect to any Unvested Target Shares, the total number of Unvested Target Shares not subject to an Unvested Share Waiver immediately prior to the Effective Time ...