Agreement and Plan of Merger between Google and dMarc Broadcasting

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

GOOGLE INC.

ENUMCLAW, INC.

DMARC BROADCASTING, INC.

AND, WITH RESPECT TO ARTICLES VIII, IX AND X ONLY,

H. RICHARD DALLAS

AS STOCKHOLDER REPRESENTATIVE

AND

U.S. BANK, NATIONAL ASSOCIATION

AS ESCROW AGENT

Dated as of January 16, 2006

 

TABLE OF CONTENTS

ARTICLE I   THE MERGER
1.1		The Merger
1.2		Effective Time
1.3		Effect of the Merger
1.4		Certificate of Incorporation and Bylaws
1.5		Directors and Officers
1.6		Effect of Merger on the Capital Stock of the Constituent Corporations
1.7		Dissenting Shares
1.8		Surrender of Certificates
1.9		No Further Ownership Rights in Company Capital Stock
1.10		Lost, Stolen or Destroyed Certificates
1.11		Taking of Necessary Action; Further Action
ARTICLE II  CONTINGENT CONSIDERATION PROVISIONS
2.1		General Provisions
2.2		Definitions Applicable to this Article II
2.3		Contingent Payments
2.4		Reports and Payment
2.5		Stockholder Representative Review
2.6		Disagreements
2.7		Exclusion of Excludable Contracts
2.8		Support and Control
2.9		No Guarantee of Employment
2.10		No Other Representations, Warranties or Commitments
2.11		Certain Transactions
ARTICLE III   REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1		Organization of the Company
3.2		Company Capital Structure
3.3		Subsidiaries
3.4		Authority
3.5		No Conflict
3.6		Consents
3.7		Company Financial Statements
3.8		No Undisclosed Liabilities
3.9		No Changes
3.10		Accounts Receivable
3.11		Tax Matters
3.12		Restrictions on Business Activities
3.13		Title to Properties; Absence of Liens and Encumbrances; Condition of Equipment
3.14		Intellectual Property
3.15		Agreements, Contracts and Commitments
3.16		Interested Party Transactions
3.17		Company Authorizations
3.18		Litigation
3.19		Minute Books
3.20		Environmental Matters
3.21		Brokers’ and Finders’ Fees
3.22		Employee Benefit Plans and Compensation
3.23		Insurance
3.24		Compliance with Laws
3.25		Export Control Laws
3.26		Customers and Suppliers
3.27		Complete Copies of Materials
ARTICLE IV  REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
4.1		Organization
4.2		Authority
4.3		No Conflict
4.4		Consents
4.5		Litigation
ARTICLE V  CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1		Conduct of Business of the Company and the Subsidiaries
5.2		No Solicitation
5.3		Procedures for Requesting Parent Consent
ARTICLE VI  ADDITIONAL AGREEMENTS
6.1		Company Stockholder Approval
6.2		Access to Information
6.3		Confidentiality
6.4		Public Disclosure
6.5		Reasonable Efforts
6.6		Notification of Certain Matters
6.7		Additional Documents and Further Assurances
6.8		Conversion of Preferred Stock
6.9		Treatment of Company Warrants
6.10		Amendment to Plans
6.11		Consents
6.12		Terminated Agreements
6.13		Modified Agreements
6.14		Notices
6.15		Proprietary Information and Inventions Assignment Agreement
6.16		New Employment Arrangements
6.17		Agreements and Documents Delivered at Signing
6.18		Non-Competition Agreements
6.19		Resignation of Officers and Directors
6.20		Releases of Officers
6.21		Termination of 401(k) Plan
6.22		Expenses
6.23		Spreadsheet
6.24		Release of Liens
6.25		FIRPTA Compliance
6.26		Director and Officer Liability and Indemnification
ARTICLE VII  CONDITIONS TO THE MERGER
7.1		Conditions to Obligations of Each Party to Effect the Merger
7.2		Conditions to Obligations of Parent and Sub
7.3		Conditions to Obligations of the Company
ARTICLE VIII  SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW
8.1		Survival of Representations and Warranties
8.2		Indemnification
8.3		Maximum Payments; Remedy
8.4		Claims for Indemnification; Resolution of Conflicts
8.5		Setoff for Losses
8.6		Escrow Arrangements
8.7		Third-Party Claims
8.8		Stockholder Representative
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER
9.1		Termination
9.2		Effect of Termination
9.3		Amendment
9.4		Extension; Waiver
ARTICLE X GENERAL PROVISIONS
10.1		Notices
10.2		Interpretation
10.3		Counterparts
10.4		Entire Agreement; Assignment
10.5		Severability
10.6		Other Remedies
10.7		Governing Law; Exclusive Jurisdiction
10.8		Rules of Construction
10.9		Legal Representation
10.10		Resolution of Conflicts; Arbitration

 

 

INDEX OF EXHIBITS

Exhibit		Description
Exhibit A		Cash Bonus Plan
Exhibit B		Form of Written Consent
Exhibit C		Form of Proxy
Exhibit D		Form of Securityholder Agreement
Exhibit E		Form of Certificate of Merger
Exhibit F		Form of Letter of Transmittal
Exhibit G		Form of Non-Competition Agreements
Exhibit H		Form of Director and Officer Resignation Letter
Exhibit I		Form of Officer Release Letter
Exhibit J		Form of Legal Opinion of Counsel of the Company
Exhibit K		Form of Legal Opinion of Reed Smith LLP
Exhibit L		Form of Legal Opinion of Counsel of Parent
Schedules		Description
Schedule 1.6(a)(i)		Key Employees
Schedule 1.6(a)(ii)		Knowledge
Schedule 2.2(s)		Approved Contracts
Schedule 2.2(z)(i)		2006-2007 Inventory Table
Schedule 2.2(z)(ii)		2008 Inventory Table
Schedule 2.2(kk)(i)		2006-2007 Revenue Table
Schedule 2.2(kk)(ii)		2008 Revenue Table
Schedule 3.14(p)(i)		Form of Employee Proprietary Information Agreement
Schedule 3.14(p)(ii)		Form of Consultant Proprietary Information Agreement
Schedule 6.1(a)		Company Stockholder Approval
Schedule 6.23		Spreadsheet
Schedule 7.2(j)		Third Party Consents
Schedule 7.2(k)		Terminated Agreements
Schedule 7.2(l)		Modified Agreements
Schedule 7.2(m)		Notices
Schedule 7.2(n)		Proprietary Information and Inventions Assignment Agreements
Schedule 7.2(p)		Non-Competition Agreements
Schedule 7.2(u)		Release of Liens
Schedule 8.2(a)(v)		Other Indemnity Matters

 

 

INDEX OF DEFINED TERMS

 

Term		Section Reference in Agreement
2006-2007 Inventory Table		2.2(z)
2006-2007 Revenue Table		2.2(kk)
2008 Inventory Table		2.2(z)
2008 Revenue Table		2.2(kk)
280G Approval		6.1(d)
401(k) Plan		6.21
acquire		2.2
Acquisition Contract		2.7(a)
Action of Divestiture		6.5
Additional Escrow Amount		1.6(a)
Adjusted Listener Count		2.2
Affiliate		2.2
Affiliated		2.2
Agreement		Preamble
[***]		2.2
Arbitron		2.2
AudioAds Product		2.2
AudioAds Operating Group		2.2
Authorized Claim		8.6(d)
Balance Sheet Date		3.7
Barter Transaction		2.2
Basket		8.3(e)
[***]		2.7(c)
[***]		2.7(f)
Board Recommendation		6.1(c)
Bonus Unit		1.6(c)(iii)
Broadcast Automation Product		2.2
Business		1.6(a)
Business Day(s)		1.6(a)
California Law		1.7(a)
Cash Bonus Plan		Recitals
Certificate of Incorporation		3.1(a)
Certificate of Merger		1.2
Chad		2.7(e)(i)
Charter Documents		3.1(a)
Claim Date		8.4(a)(i)
Closing		1.2
Closing Date		1.2
Closing Stockholder Consent		1.6(a)
COBRA		3.22(a)
Code		1.6(a)
Company		Preamble
Company Authorizations		3.17
Company Capital Stock		1.6(a)
Company Common Stock		1.6(a)
Company Disclosure Schedule		Article III
Company Employee Plan		3.22(a)
Company Indemnified Person		6.26
Company Intellectual Property		3.14(a)
Company Options		1.6(a)
Company Preferred Stock		1.6(a)
Company Registered Intellectual Property		3.14(b)
Company Series A Common Stock		1.6(a)
Company Series A Preferred Stock		1.6(a)
Company Series B Common Stock		1.6(a)
Company Series B-1 Preferred Stock		1.6(a)
Company Series B-2 Preferred Stock		1.6(a)
Company Stock Certificates		1.8(c)
Company System		2.2
Company Warrants		1.6(a)
Confidential Information		2.5(b)
Conflict		3.5
Consultant Proprietary Information Agreement		3.14(p)
Contaminants		3.14(v)
Contingent Payment		1.6(a)
Contingent Payment Holdback		8.5(b)(ii)
Contingent Payment Report		2.2
Contract		1.6(a)
Contracts		1.6(a)
Costs of Revenues		2.2
[***]		2.2
Covered Inventory Amount		2.2
Covered Net Revenue		2.2
Covered Radio Advertisement		2.2
[***]		2.2
Covered Radio Media		2.2
[***]		2.2
Covered Radio Spot		2.2
Covered Radio Station		3.26(a)
Covered Unused Radio Spot		2.2
Covered Used Radio Spot		2.2
Current Balance Sheet		3.7
Customers		3.26(a)
[***]		2.2
[***]		2.7(d)
[***]		2.7(d)
Delaware Law		1.1
Director and Officer Resignation Letter		6.19
Dispute Arbitration Decision		2.6(c)
Dispute Period		2.6(a)
Dispute Settlement Agreement		2.6(c)
Dissenting Share Payments		1.7(c)
Dissenting Shares		1.7(a)
DOL		3.22(a)
Dollars or $		1.6(a)
Effective Time		1.2
Employee		3.22(a)
Employee Agreement		3.22(a)
Employee Proprietary Information Agreement		3.14(p)
Environmental Permits		3.20(c)
Equipment		3.13(d)
ERISA		3.22(a)
ERISA Affiliate		3.22(a)
Escrow Agent		1.6(a)
Escrow Amounts		1.6(a)
Escrow Distribution Holdback		8.6(b)
Escrow Fund		8.6(a)
Escrow Period		8.6(b)
Excess Third Party Expenses		6.22
Exchange Agent		1.8(a)
Exchange Documents		1.8(c)
Exchange Fund		1.8(a)
Excludable Contract		2.7(b)
Excludable Contract Notice		2.7(f)
[***]		2.7(e)(iii)(2)
Excluded Contract		2.7(e)
Export Approvals		3.25(a)
Final Determination		2.6(c)
Financials		3.7
FIRPTA Compliance Certificate		6.25
FMLA		3.22(a)
GAAP		1.6(a)
Governmental Entity		3.6
Hazardous Material		3.20(a)
Hazardous Materials Activities		3.20(b)
HIPAA		3.22(a)
HSR Act		3.6
Indemnifiable Matters		8.2(a)
Indemnified Parties		8.2(a)
Indemnifying Party		8.4(a)(ii)
Initial Escrow Amount		1.6(a)
Initial Merger Consideration		1.6(a)
Intellectual Property Rights		3.14(a)
Interim Financials		3.7
International Employee Plan		3.22(a)
[***]		2.2
Inventory Contingency Payment		2.2
Inventory Contingency Report		2.4(c)(i)
Inventory Payment Period		2.2
Inventory Reference Amount		2.2
IRS		3.22(a)
Key Employees		1.6(a)
Knowledge		1.6(a)
Known		1.6(a)
Launch Contingency Date		2.3(a)
Launch Contingent Payment		2.3(a)
Launch Milestone		2.3(a)
Lease Agreements		3.13(b)
Leased Real Property		3.13(b)
Letter of Transmittal		1.8(c)
Lien		1.6(a)
Liens		1.6(a)
Listener Count		2.2
Loss		8.2(a)
Losses		8.2(a)
Material Adverse Effect		1.6(a)
Material Contract		3.15(a)
Material Contracts		3.15(a)
Maximum Inventory Contingent Consideration		2.2
Maximum Revenue Contingent Consideration		2.2
Merger		Recitals
Merger Consideration		1.6(a)
Modified Agreements		6.13
Non-Competition Agreements		6.18
Non-Disclosure Agreement		1.6(a)
Notices		6.14
Objection Deadline		8.4(a)(iv)
Objection Notice		8.4(a)(iii)
Offer Letter		6.16(a)
Officer’s Certificate		8.4(a)(i)
Officer Release Letter		6.20
Open Source Materials		3.14(t)
Parent		Preamble
Parent (for purposes of Article II)		2.2
Parent Charter Documents		4.3
Parent Disclosure Schedule		Article IV
Parties		2.2
Party		2.2
Payable Claim		8.5(c)
Payable Contingent Payment		8.5(b)
Payable Overage		2.6(e)
Payment Adjustment Fund		2.1(e)
Payment Dispute Report		2.6(a)
Payment Overage		2.4(b)(iii)
PBGC		3.22(a)
Pension Plan		3.22(a)
Person		1.6(a)
Plans		1.6(a)
Products		3.14(a)
Programming Automation Customer		3.26(a)
Pro Rata Portion		1.6(a)
Proxy		Recitals
PTO		3.14(b)
[***]		2.2
[***]		2.2
Radio Spot		2.2
Registered Intellectual Property		3.14(a)
Related Agreements		1.6(a)
Representative		2.5(b)
Requisite Stockholder Vote		3.4
Resolved Claims		8.4(b)(iii)
Returns		3.11(b)(i)
Revenue Contingency Payment		2.2
Revenue Contingency Report		2.4(b)(i)
Revenue Payment Period		2.2
Revenue Reference Amount		2.2
RevenueSuite Agreement		3.15(a)(xiv)
RevenueSuite Customer		3.26(a)
Review Request		2.5(a)
Ryan		2.7(e)(ii)
Securityholder Agreement		Recitals
Settled Claims		8.4(b)(i)
Settlement Memorandum		8.4(b)(i)
Shrink-Wrap Code		3.14(a)
Source Code		3.14(a)
Spreadsheet		6.23
Standard Form Agreements		3.14(i)
Statement of Expenses		6.22
Stockholder		1.6(a)
Stockholder Representative		Preamble
Stockholder Representative Expense		8.8(b)
Sub		Preamble
Subsidiaries		3.3
Subsidiary		3.3
Subsidiary Organizational Documents		3.3
Survival Date		8.1
Surviving Corporation		1.1
Tax		3.11(a)
Taxes		3.11(a)
Technology		3.14(a)
Terminated Agreements		6.12
Terrestrial Broadcast Radio		2.2
Third Party Claim		8.7
Third Party Expense Adjustment Amount		1.6(a)
Third Party Expenses		6.22
Third Party Expense Cap		1.6(a)
Total Outstanding Capitalization		1.6(a)
Unagreed Barter Transaction		2.2
Unobjected Claim		8.4(a)(iv)
Unresolved Claim		8.5(c)
WARN		3.22(a)
Warrantholder		1.6(a)
Written Consent		Recitals
Written Decision		8.4(b)(iii)
Year-End Financials		3.7

     THIS AGREEMENT AND PLAN OF MERGER (the “Agreement”) is made and entered into as of January 16, 2006 by and among Google Inc., a Delaware corporation (“Parent”), Enumclaw, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Sub”), dMarc Broadcasting, Inc., a Delaware corporation (the “Company”), and with respect to Article VIII, Article IX and Article X hereof only, H. Richard Dallas as stockholder representative (the “Stockholder Representative”), and U.S. Bank, National Association as Escrow Agent.

RECITALS

      A. The Boards of Directors of each of Parent, Sub and the Company believe it is advisable and in the best interests of each corporation and its respective stockholders that Parent acquire the Company through the statutory merger of Sub with and into the Company (the “Merger”) and, in furtherance thereof, have approved this Agreement and the Merger.

      B. Pursuant to the Merger, among other things, and subject to the terms and conditions of this Agreement, (i) all of the issued and outstanding Company Capital Stock shall be converted into the right to receive the consideration set forth herein, (ii) all of the issued and outstanding Company Options shall be cancelled in exchange for certain cash rights which shall be granted pursuant to the terms and conditions of a cash bonus plan, in substantially the form attached hereto as Exhibit A (the “Cash Bonus Plan”), and (iii) all of the issued and outstanding Company Warrants shall be converted into the right to receive the consideration set forth herein.

      C. A portion of the Initial Merger Consideration otherwise payable by Parent in connection with the Merger and a portion of the Launch Contingent Payment, if any, otherwise payable by Parent in connection with the terms and conditions described in Article II hereof shall be placed in escrow by Parent as partial security for the indemnification obligations set forth in this Agreement.

      D. The Company, on the one hand, and Parent and Sub, on the other hand, desire to make certain representations, warranties, covenants and other agreements in connection with the Merger.

      E. Immediately following the execution and delivery of this Agreement, certain Stockholders shall execute and deliver to the Company, and the Company shall thereafter deliver to Parent, a true, correct and complete copy of an Action by Written Consent, adopting this Agreement, the Merger and the transactions contemplated hereby, in the form attached hereto as Exhibit B (the “Written Consent”) and an irrevocable proxy coupled with an interest in the form attached as Exhibit C (the “Proxy”). In addition, certain Stockholders shall execute and deliver to Parent a stockholder agreement, in substantially the form attached hereto as Exhibit D (the “Securityholder Agreement”).

      NOW, THEREFORE, in consideration of the mutual agreements, covenants and other premises set forth herein, the mutual benefits to be gained by the performance thereof, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, the parties hereby agree as follows:

 

ARTICLE I
THE MERGER

      1.1 The Merger. At the Effective Time and subject to and upon the terms and conditions of this Agreement and the applicable provisions of the General Corporation Law of the State of Delaware (“Delaware Law”), Sub shall be merged with and into the Company, the separate corporate existence of Sub shall cease, and the Company shall continue as the surviving corporation and as a wholly-owned subsidiary of Parent. The surviving corporation after the Merger is sometimes referred to hereinafter as the “Surviving Corporation.”
     
      1.2 Effective Time. Unless this Agreement is earlier terminated pursuant to Section 9.1 hereof, the closing of the Merger (the “Closing”) will take place on a Business Day as promptly as practicable after the execution and delivery hereof by the parties hereto, and following the satisfaction or waiver of the conditions set forth in Article VII hereof, at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto, California, unless another time or place is mutually agreed upon in writing by Parent and the Company. The date upon which the Closing actually occurs shall be referred to herein as the “Closing Date.” On the Closing Date, the parties hereto shall cause the Merger to be consummated by filing a Certificate of Merger in substantially the form attached hereto as Exhibit E with the Secretary of State of the State of Delaware (the “Certificate of Merger”), in accordance with the applicable provisions of Delaware Law (the time of such filing shall be referred to herein as the “Effective Time”).
     
      1.3 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of Delaware Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, except as otherwise agreed to pursuant to the terms of this Agreement, all of the property, rights, privileges, powers and franchises of the Company and Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Sub shall become the debts, liabilities and duties of the Surviving Corporation.
     
      1.4 Certificate of Incorporation and Bylaws.

            (a) Unless otherwise determined by Parent prior to the Effective Time, the certificate of incorporation of the Surviving Corporation shall be amended and restated as of the Effective Time to be identical to the certificate of incorporation of Sub 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 dMarc Broadcasting, Inc.”; provided further, however, that the provisions of the certificate of incorporation of Sub relating to the incorporator of Sub shall be omitted from the certificate of incorporation of the Surviving Corporation.

            (b) Unless otherwise determined by Parent prior to the Effective Time, the bylaws of Sub, as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Corporation at the Effective Time until thereafter amended in accordance with Delaware Law and as provided in the certificate of incorporation of the Surviving Corporation and such bylaws.
     
      1.5 Directors and Officers.

            (a) Directors of Surviving Corporation. Unless otherwise determined by Parent prior to the Effective Time, the directors of Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation immediately after the Effective Time, each to hold the office of a director of the Surviving Corporation in accordance with the provisions of Delaware Law and the certificate of incorporation and bylaws of the Surviving Corporation until their successors are duly elected and qualified.

            (b) Officers of Surviving Corporation. Unless otherwise determined by Parent prior to the Effective Time, the officers of Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation immediately after the Effective Time, each to hold office in accordance with the provisions of the bylaws of the Surviving Corporation.

            (c) Directors of Subsidiaries of Surviving Corporation. Unless otherwise determined by Parent prior to the Effective Time, Parent, the Company and the Surviving Corporation shall cause the directors of Sub immediately prior to the Effective Time to be the directors of any Subsidiaries immediately after the Effective Time, each to hold office as a director of each such Subsidiary in accordance with the provisions of the laws of the respective jurisdiction of organization and the respective bylaws or equivalent organizational documents of each such Subsidiary.

            (d) Officers of Subsidiaries of Surviving Corporation. Unless otherwise determined by Parent prior to the Effective Time, Parent, the Company and the Surviving Corporation shall cause the officers of Sub immediately prior to the Effective Time to be the officers of any Subsidiaries immediately after the Effective Time, each to hold office as an officer of each such Subsidiary in accordance with the provisions of the laws of the respective jurisdiction of organization and the bylaws or equivalent organizational documents of each such Subsidiary.
     
      1.6 Effect of Merger on the Capital Stock of the Constituent Corporations.

            (a) Definitions. For all purposes of this Agreement, the following terms shall have the following respective meanings:

            “Additional Escrow Amount” shall mean a dollar amount equal to ten percent (8%) of the Launch Contingent Payment, if any, which amount shall be deducted from the distribution of such Launch Contingent Payment.

            “Business” shall mean the business conducted by Parent following the Closing of inserting audio advertisements into audio radio programming broadcasts.

            “Business Day(s)” shall mean each day that is not a Saturday, Sunday or other day on which Parent is closed for business or banking institutions located in San Francisco, California are authorized or obligated by law or executive order to close.

            “Closing Stockholder Consent” shall mean the approval by written consent of the holders of at least 95% of the outstanding shares of Company Capital Stock.

            “Code” shall mean the Internal Revenue Code of 1986, as amended.

            “Company Capital Stock” shall mean the Company Common Stock, the Company Preferred Stock and any other shares of capital stock, if any, of the Company. For the avoidance of doubt, Company Capital Stock excludes Company Warrants and Company Options.

            “Company Common Stock” shall mean the Company Series A Common Stock and Company Series B Common Stock, collectively.

            “Company Options” shall mean all issued and outstanding options (including commitments to grant options, but excluding Company Warrants) to purchase or otherwise acquire Company Capital Stock (whether or not vested) held by any Person.

            “Company Preferred Stock” shall mean the Company Series A Preferred Stock, Company Series B-1 Preferred Stock and Company Series B-2 Preferred Stock, collectively.

            “Company Series A Common Stock” shall mean the Series A Common Stock, par value $0.001 per share, of the Company.

            “Company Series A Preferred Stock” shall mean the Series A Preferred Stock, par value $0.001 per share, of the Company ...