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Agreement and Plan of Merger
Dated as of June 29, 2001
among
TMP Worldwide Inc.,
TMP Tower Corp.
and
XxxXxxx.xxx, Ltd.
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Table of Contents
Page
ARTICLE I THE MERGER.......................................................1
Section 1.1. The Merger...............................................1
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Section 1.2. Closing..................................................1
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Section 1.3. Effective Time...........................................2
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Section 1.4. Certificate of Incorporation and Bylaws..................2
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Section 1.5. Directors and Officers...................................2
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Section 1.6. Effects of the Merger....................................2
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ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES.....................2
Section 2.1. Effect on Capital Stock..................................3
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(a) Capital Stock of Sub........................................3
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(b) Cancellation of Treasury Stock and Parent-Owned Stock.......3
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(c) Conversion of Company Common Stock..........................3
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Section 2.2. Exchange of Certificates.................................3
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(a) Exchange Agent..............................................3
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(b) Exchange Procedures.........................................4
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(c) Distributions with Respect to Unexchanged Shares............5
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(d) No Further Ownership Rights in Company Common Stock.........5
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(e) No Fractional Shares........................................5
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(f) Withholding Rights..........................................6
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(g) Termination of Exchange Fund................................6
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(h) No Liability................................................6
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(i) Investment of Exchange Fund.................................6
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(j) Lost Certificates...........................................7
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(k) Stock Transfer Books........................................7
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ARTICLE III REPRESENTATIONS AND WARRANTIES...................................7
Section 3.1. Representations and Warranties of the Company...........7
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(a) Organization, Standing and Corporate Power..................7
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(b) Subsidiaries................................................8
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(c) Capital Structure...........................................8
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(d) Authority; Noncontravention.................................9
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(e) Company SEC Documents......................................11
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(f) Information Supplied.......................................12
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(g) Absence of Certain Changes or Events.......................12
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(h) Litigation.................................................13
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(i) Contracts..................................................13
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(j) Compliance with Laws.......................................14
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(k) Absence of Changes in Benefit Plans........................15
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(l) ERISA Compliance...........................................15
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(m) Labor Relations............................................18
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(n) Taxes......................................................19
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(o) No Excess Parachute Payments; No Section 162(m)
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Payments..................................................20
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(p) Title to Properties........................................20
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(q) Intellectual Property......................................20
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(r) Voting Requirements........................................21
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(s) Brokers....................................................22
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(t) Opinion of Financial Advisor...............................22
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(u) Accounting Matters.........................................22
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(v) Certain Business Practices.................................22
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Section 3.2. Representations and Warranties of Parent and Sub........22
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(a) Organization, Standing and Corporate Power.................22
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(b) Subsidiaries...............................................23
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(c) Capital Structure..........................................23
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(d) Authority; Noncontravention................................24
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(e) Parent SEC Documents.......................................26
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(f) Information Supplied.......................................27
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(g) Absence of Certain Changes or Events.......................27
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(h) Litigation.................................................27
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(i) Compliance with Laws.......................................27
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(j) Accounting Matters.........................................28
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(k) Tax Matters................................................29
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(l) Brokers....................................................29
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(m) Labor Relations............................................29
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(n) No Stockholder Vote........................................29
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(o) Ownership of Company Capital Stock.........................29
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(p) Intellectual Property.......................................30
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ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS.......................31
Section 4.1. Conduct of Business....................................31
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(a) Conduct of Business by the Company.........................31
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(b) Conduct of Business by Parent..............................34
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Section 4.2. No Solicitation.........................................35
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ARTICLE V ADDITIONAL AGREEMENTS...........................................36
Section 5.1. Preparation of the Form S-4 and the Proxy
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Statement; Stockholders Meetings..............................36
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Section 5.2. Letters of the Company's Accountants....................38
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Section 5.3. Letters of Parent's Accountants.........................38
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Section 5.4. Access to Information; Confidentiality..................39
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Section 5.5. Reasonable Best Efforts.................................40
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Section 5.6. Stock Options; Employee Benefits........................41
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Section 5.7. Indemnification, Exculpation and Insurance..............43
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Section 5.8. Fees and Expenses......................................45
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Section 5.9. Public Announcements...................................46
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Section 5.10. Affiliates.............................................46
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Section 5.11. Nasdaq Listing.........................................47
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Section 5.12. Pooling of Interests...................................47
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Section 5.14 Publication of Combined Financial Results..............47
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Section 5.13. Tax Treatment..........................................47
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Section 5.15. Notices of Certain Events..............................48
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Section 5.16. Conveyance Taxes.......................................48
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Section 5.17. [RESERVED].............................................48
Section 5.18. Voting Agreements......................................48
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Section 5.19. Section 16 Matters.....................................49
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ARTICLE VI CONDITIONS PRECEDENT............................................49
Section 6.1. Conditions to Each Party's Obligation to Effect the
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Merger..........................................................49
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(a) Stockholder Approval.......................................49
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(b) Nasdaq Listing.............................................49
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(c) HSR Act....................................................49
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(d) No Injunctions or Restraints...............................49
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(e) Form S-4...................................................49
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(f) Pooling Letters............................................49
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(g) No Governmental Litigation.................................49
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(h) Governmental and Regulatory Approvals......................50
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Section 6.2. Conditions to Obligations of Parent and Sub............50
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(a) Representations and Warranties.............................50
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(b) Performance of Obligations of the Company..................50
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(c) Letters from Company Affiliates............................51
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(d) Consents...................................................51
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(e) Tax Opinion................................................51
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Section 6.3. Conditions to Obligation of the Company................51
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(a) Representations and Warranties.............................51
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(b) Performance of Obligations of Parent and Sub...............51
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(c) Tax Opinion................................................52
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Section 6.4. Frustration of Closing Conditions......................52
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ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.........................52
Section 7.1. Termination.............................................52
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Section 7.2. Effect of Termination...................................54
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Section 7.3. Amendment...............................................54
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Section 7.4. Extension; Waiver.......................................54
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ARTICLE VIII GENERAL PROVISIONS........................................55
Section 8.1. Nonsurvival of Representations and Warranties...........55
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Section 8.2. Notices.................................................55
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Section 8.3. Definitions.............................................56
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Section 8.4. Interpretation..........................................57
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Section 8.5. Counterparts............................................58
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Section 8.6. Entire Agreement; Third-Party Beneficiaries.............58
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Section 8.7. Governing Law...........................................58
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Section 8.8. Assignment..............................................59
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Section 8.9. Enforcement.............................................59
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Section 8.10. Severability............................................59
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Exhibit 5.10(a) Form of Company Affiliate Letter
Exhibit 5.10(b) Form of Parent Affiliate Letter
Exhibit 5.18 Form of Company Voting Agreement
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INDEX OF DEFINED TERMS
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DEFINED TERM SECTION
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Adjusted Option 5.6(a)
Affiliate 8.3(a)
Agreement Preamble
Benefit Plans 3.1(l)(i)
Business Day 8.3(b)
Certificate of Merger 1.3
Certificates 2.2(b)
Closing 1.2
Closing Date 1.2
Code Preamble
Commonly Controlled Entity 3.1(l)(i)
Company Preamble
Company Common Stock Preamble
Company Disclosure Memorandum 3.1
Company Preferred Stock 3.1(c)
Company Recommendation 5.1(b)
Company SEC Documents 3.1(e)
Company Stock Plans 5.6(a)
Company Stockholder Approval 3.1(r)
Company Stockholders Meeting 5.1(b)
Company Voting Agreement 5.18
Confidentiality Agreement 5.4
DGCL 1.1
DOJ 5.5(c)
Dow Xxxxx News Release 3.1(e)
Effective Time 1.3
Employees 5.6(f)
Environmental Laws 3.1(j)(ii)
ERISA 3.1(l)(i)
Exchange Act 3.1(d)
Exchange Agent 2.2(a)
Exchange Fund 2.2(a)
Exchange Ratio 2.1(c)
Expenses 5.8(b)
Filed Company SEC Document 3.1(e)
Filed Parent SEC Document 3.2(e)
Form S-4 3.1(f)
FTC 5.5(c)
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DEFINED TERM SECTION
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GAAP Preamble
Governmental Entity 3.1(d)
Hazardous Materials 3.1(j)(ii)
HSR Act 3.1(d)
Indemnified Party 5.7(a)
Intellectual Property Rights 3.1(q)
IRS 3.1(l)(i)
Knowledge 8.3(c)
Legal Provisions 3.1(j)(i)
Liens 3.1(d)
Material Adverse Effect 8.3(d)
Material Contracts 3.1(i)
Merger Preamble
Merger Consideration 2.1(c)
Parent Preamble
Parent Common Stock Preamble
Parent Disclosure Memorandum 3.2
Parent Preferred Stock 3.2(c)
Parent SEC Documents 3.2(e)
Parent Stock Issuance 3.2(p)
Parent Stock Plans 3.2(c)
Pension Plans 3.1(l)(i)
Permits 3.1(j)(i)
Person 8.3(e)
Proxy Statement 3.1(d)
Regulatory Law 5.5(b)
Release 3.1(j)(ii)
Restraints 6.1(d)
SEC 3.1(d)
Significant Subsidiary 8.3(f)
Securities Act 3.1(e)
Stock Option 5.6(a)
Sub Preamble
Subsidiary 8.3(g)
Superior Proposal 8.3(h)
Surviving Corporation 1.1
Takeover Proposal 4.2(a)
Tax Returns 3.1(n)
Taxes 3.1(n)
Termination Fee 5.8(b)
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DEFINED TERM SECTION
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Welfare Plans 3.1(l)(i)
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AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of June 29,
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2001, among TMP Worldwide Inc., a Delaware corporation ("PARENT"), TMP Tower
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Corp., a Delaware corporation and a newly formed, direct, wholly-owned
subsidiary of Parent ("SUB"), and XxxXxxx.xxx, Ltd., a Delaware corporation (the
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"COMPANY").
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WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved and declared advisable this Agreement and the merger of Sub with
and into the Company (the "MERGER"), upon the terms and subject to the
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conditions set forth in this Agreement, whereby each issued and outstanding
share of common stock, par value $0.01 per share, of the Company ("COMPANY
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COMMON STOCK"), other than Company Common Stock owned by Parent, Sub or the
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Company, will be converted into the right to receive common stock, par value
$0.001 per share, of Parent ("PARENT COMMON STOCK") as set forth herein;
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WHEREAS, for U.S. Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "CODE"), and that this Agreement shall be, and is
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hereby, adopted as a plan of reorganization for purposes of Sections 354 and 361
of the Code; and
WHEREAS, for financial accounting purposes, it is intended that the Merger
will be accounted for as a pooling of interests transaction under generally
accepted accounting principles ("GAAP").
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NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement and intending to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the conditions set
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forth in this Agreement, and in accordance with the Delaware General Corporation
Law (the "DGCL"), Sub shall be merged with and into the Company at the Effective
Time. Following the Effective Time, the separate corporate existence of Sub
shall cease and the Company shall continue as the surviving corporation (the
"SURVIVING CORPORATION") and shall succeed to and assume all the rights and
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obligations of Sub in accordance with the DGCL.
Section 1.2. Closing. The closing of the Merger (the "CLOSING") will take
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place at 10:00 a.m. on a date to be specified by the parties (the "CLOSING
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DATE"), which shall be no later than the second Business Day after satisfaction
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or waiver (subject to applicable law) of the conditions set forth in ARTICLE VI
(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of those conditions), at the
offices of Fulbright &
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Xxxxxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another date
or place is agreed to by the parties hereto.
Section 1.3. Effective Time. Subject to the provisions of this Agreement,
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as soon as practicable on the Closing Date, the parties shall file a certificate
of merger (the "CERTIFICATE OF MERGER") executed in accordance with the relevant
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provisions of the DGCL and shall make all other filings or recordings required
under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware, or at such other time as Parent and the Company shall agree and
specify in the Certificate of Merger (the time the Merger becomes effective
being the "EFFECTIVE TIME").
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Section 1.4. Certificate of Incorporation and Bylaws.
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(a) The Certificate of Incorporation of the Surviving Corporation shall be
amended in the Merger to read substantially as the Certificate of Incorporation
of Sub until thereafter amended as provided therein or by applicable law.
(b) The Bylaws of Sub, as in effect immediately prior to the Effective
Time, shall be the Bylaws of the Surviving Corporation until thereafter amended
as provided therein or by applicable law.
Section 1.5. Directors and Officers.
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(a) The directors of Sub immediately prior to the Effective Time shall be
the directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
(b) The officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
Section 1.6. Effects of the Merger. At and after the Effective Time, the
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Merger shall have the effects set forth in the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall be vested in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2
Section 2.1. Effect on Capital Stock. As of the Effective Time, by virtue
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of the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Parent or Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
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capital stock of Sub shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock, par value $.01
per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each
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share of Company Common Stock that is owned by the Company, Parent or Sub
shall automatically be canceled and retired and shall cease to exist, and
no Parent Common Stock or other consideration shall be delivered in
exchange therefor.
(c) Conversion of Company Common Stock. Each share of Company Common
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Stock issued and outstanding immediately prior to the Effective Time
(other than shares to be canceled in accordance with Section 2.1(b)) shall
be converted into the right to receive a fraction of a validly issued,
fully paid and nonassessable share of Parent Common Stock equal to 0.2195
(the "EXCHANGE RATIO" and, together with any cash to be paid in lieu of
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fractional shares of Parent Common Stock to be paid pursuant to Section
2.2(e), the "MERGER CONSIDERATION").
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As of the Effective Time, all such shares of Company Common Stock
shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate which
immediately prior to the Effective Time represented any such shares of
Company Common Stock shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration upon surrender of
such certificate in accordance with Section 2.2, without interest.
Notwithstanding the foregoing, if between the date of this Agreement
and the Effective Time the outstanding shares of Parent Common Stock or
Company Common Stock shall have been changed into a different number of
shares or a different class, by reason of the occurrence or record date of
any stock dividend, subdivision, reclassification, recapitalization,
split, combination, exchange of shares or similar transaction, the
Exchange Ratio shall be appropriately adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split,
combination, exchange or similar transaction.
Section 2.2. Exchange of Certificates.
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(a) Exchange Agent. As of the Effective Time, Parent shall deposit
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with The Bank of New York or such other bank or trust company as may be
designated by Parent (the "EXCHANGE AGENT") and which shall be reasonably
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acceptable to the Company, for the benefit of the holders of shares of
Company Common Stock, for exchange in accordance with this ARTICLE II,
through the Exchange Agent, certificates representing the shares of
3
Parent Common Stock (such shares of Parent Common Stock, together with any
dividends or distributions with respect thereto with a record date after
the Effective Time and any cash payments in lieu of any fractional shares
of Parent Common Stock, being hereinafter referred to as the "EXCHANGE
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FUND") issuable pursuant to Section 2.1 in exchange for outstanding shares
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of Company Common Stock. Parent agrees to make available to the Exchange
Agent from time to time, as needed, cash sufficient to pay cash in lieu of
fractional shares pursuant to Section 2.2(e) and any dividends and other
distributions pursuant to Section 2.2(c).
(b) Exchange Procedures. As soon as reasonably practicable after the
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Effective Time, Parent shall cause the Exchange Agent to mail to each
holder of record of a certificate or certificates which immediately prior
to the Effective Time represented outstanding shares of Company Common
Stock (the "CERTIFICATES") whose shares were converted into the right to
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receive the Merger Consideration pursuant to Section 2.1(c), (i) a letter
of transmittal (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 Exchange Agent and shall be in such form and
have such other provisions as Parent may reasonably specify and shall be
reasonably acceptable to the Company) and (ii) instructions for use in
surrendering the Certificates in exchange for certificates representing
the Merger Consideration. Upon surrender of a Certificate for cancellation
to the Exchange Agent, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required by the
Exchange Agent, the holder of such Certificate shall be entitled to
receive in exchange therefor (x) a certificate representing that number of
whole shares of Parent Common Stock which such holder has the right to
receive pursuant to the provisions of this ARTICLE II after taking into
account all the shares of Company Common Stock then held by such holder
under all such Certificates so surrendered, (y) cash in lieu of fractional
shares of Parent Common Stock to which such holder is entitled pursuant to
Section 2.2(e), and (z) any dividends or other distributions to which such
holder is entitled pursuant to Section 2.2(c) (in each case after giving
effect to any required withholding taxes), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Company Common Stock which is not registered in the transfer
records of the Company, a certificate representing the proper number of
shares of Parent Common Stock may be issued to a Person other than the
Person in whose name the Certificate so surrendered is registered, if,
upon presentation to the Exchange Agent, such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the
Person requesting such issuance shall pay any transfer or other taxes
required by reason of the issuance of shares of Parent Common Stock to a
Person other than the registered holder of such Certificate or establish
to the reasonable satisfaction of Parent that such tax has been paid or is
not applicable. Notwithstanding anything to the contrary contained herein,
no certificate representing Parent Common Stock or cash in lieu of a
fractional share interest shall be delivered to a Person who is a
"affiliate" (as contemplated by Section 5.10(a) hereof) of the Company
unless such affiliate has theretofore executed and delivered to Parent the
agreement referred to in Section 5.10(a). Until surrendered as
contemplated by this Section 2.2(b), each Certificate shall be deemed at
any time after the Effective Time to represent only the right to
receive upon such surrender
4
the Merger Consideration, cash in lieu of any fractional shares of Parent
Common Stock as contemplated by Section 2.2(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.2(c).
No interest will be paid or will accrue on any cash payable to holders of
Certificates pursuant to Section 2.2(c) or Section 2.2(e).
(c) Distributions with Respect to Unexchanged Shares. No dividends
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or other distributions with respect to Parent Common Stock with a record
date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common
Stock represented thereby, and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 2.2(e) until
the holder of record of such Certificate shall surrender such Certificate
in accordance with this ARTICLE II. Subject to the effect of applicable
escheat or similar laws, following surrender of any such Certificate,
there shall be paid to the record holder of the certificate representing
whole shares of Parent Common Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 2.2(e) and the amount of dividends
or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Common Stock,
less the amount of any withholding taxes which may be required thereon,
and (ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender payable
with respect to such whole shares of Parent Common Stock, less the amount
of any withholding taxes which may be required thereon.
(d) No Further Ownership Rights in Company Common Stock. All shares
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of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this ARTICLE II (including
any cash paid pursuant to Section 2.2(c) or Section 2.2(e)) shall be
deemed to have been issued (and paid) in full satisfaction of all rights
pertaining to the shares of Company Common Stock previously represented by
such Certificates, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a
record date prior to the Effective Time which may have been declared or
made by the Company on such shares of Company Common Stock in accordance
with the terms of this Agreement or prior to the date of this Agreement
and which remain unpaid at the Effective Time.
(e) No Fractional Shares.
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(i) No certificates or scrip representing fractional shares of
Parent Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution of Parent shall relate to such
fractional share interests and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a stockholder of
Parent.
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(ii) Notwithstanding any other provision of this Agreement, each
holder of shares of Company Common Stock exchanged pursuant to the Merger
who would otherwise have been entitled to receive a fraction of a share of
Parent Common Stock (after taking into account all Certificates delivered
by such holder) shall receive, in lieu thereof, cash (without interest) in
an amount, less the amount of any withholding taxes, as contemplated by
Section 2.2(f) below, which may be required thereon, equal to such
fractional part of a share of Parent Common Stock multiplied by the per
share closing price of Parent Common Stock on the Nasdaq National Market
on the Closing Date, as such price is reported by THE WALL STREET JOURNAL
(or, if not reported thereby, any other authoritative source).
(f) Withholding Rights. Each of the Surviving Corporation and Parent
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shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company
Common Stock such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Code and the rules and
regulations promulgated thereunder, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by the
Surviving Corporation or Parent, as the case may be, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to
the holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made by the Surviving Corporation or Parent,
as the case may be.
(g) Termination of Exchange Fund. Any portion of the Exchange Fund
----------------------------
which remains undistributed to the holders of the Certificates for six
months after the Effective Time shall be delivered to Parent, upon demand,
and any holders of the Certificates who have not theretofore complied with
this ARTICLE II shall thereafter look only to Parent for, and Parent shall
remain liable for, payment of their claim for Merger Consideration, any
cash in lieu of fractional shares of Parent Common Stock and any dividends
or distributions with respect to Parent Common Stock. Any such portion of
the Exchange Fund remaining unclaimed by holders of shares of Company
Common Stock immediately prior to such time as such amounts would
otherwise escheat to or become property of any Governmental Entity shall,
to the extent permitted by law, become the property of the Surviving
Corporation free and clear of any claims or interest of any Person
previously entitled thereto.
(h) No Liability. None of Parent, Sub, the Company or the Exchange
------------
Agent shall be liable to any Person in respect of any shares of Parent
Common Stock (or dividends or distributions with respect thereto) or cash
in lieu of fractional shares of Parent Common Stock or cash from the
Exchange Fund, in each case delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(i) Investment of Exchange Fund. The Exchange Agent shall invest any
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cash included in the Exchange Fund, as directed by Parent, on a daily
basis, provided that no such investment or loss thereon shall affect the
amounts payable or the timing of the amounts
6
payable pursuant to the provisions of this Article II. Any interest and
other income resulting from such investments shall be paid to Parent.
(j) Lost Certificates. If any Certificate shall have been lost,
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stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a
bond in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to
such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration and any cash in
lieu of fractional shares, and unpaid dividends and distributions on
shares of Parent Common Stock deliverable in respect thereof, in each case
pursuant to this Agreement.
(k) Stock Transfer Books. The stock transfer books of the Company
--------------------
shall be closed immediately upon the Effective Time and there shall be no
further registration of transfers of shares of Company Common Stock
thereafter on the records of the Company. On or after the Effective Time,
any Certificates presented to the Exchange Agent or the Surviving
Corporation for any reason shall be converted into the Merger
Consideration with respect to the shares of Company Common Stock formerly
represented thereby (including any cash in lieu of fractional shares of
Parent Common Stock to which the holders thereof are entitled pursuant to
Section 2.2(e)) and any dividends or other distributions to which the
holders thereof are entitled pursuant to Section 2.2(c).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of the Company. Except as
---------------------------------------------
expressly set forth in the Filed Company SEC Documents filed since December 31,
2000 or on the disclosure memorandum delivered by the Company to Parent
immediately prior to the execution of this Agreement and initialed on behalf of
Parent and the Company, which disclosure memorandum specifies the section or
subsection of this Agreement to which the exception relates (the "COMPANY
-------
DISCLOSURE MEMORANDUM"), the Company represents and warrants to Parent and Sub
---------------------
as follows:
(a) Organization, Standing and Corporate Power. Each of the Company
------------------------------------------
and each of its Significant Subsidiaries is a corporation duly organized,
validly existing and, to the extent applicable, in good standing under the
laws of the jurisdiction in which it is organized and has all requisite
corporate power and authority to own, lease and operate its properties and
to carry on its business as now being conducted. Each of the Company and
each of its Significant Subsidiaries is duly qualified or licensed to do
business and, to the extent applicable, is in good standing in each
jurisdiction in which the nature of its business or the ownership, leasing
or operation of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed
7
individually or in the aggregate would not reasonably be expected to have
a Material Adverse Effect on the Company. The Company has made available
to Parent prior to the execution of this Agreement complete and correct
copies of its Certificate of Incorporation and Bylaws, and the comparable
organizational documents of each of its Significant Subsidiaries, in each
case as amended to the date hereof.
(b) Subsidiaries. All the outstanding shares of capital stock of, or
------------
other equity interests in, each Subsidiary have been validly issued and
are fully paid and nonassessable and are owned directly or indirectly by
the Company free and clear of all Liens, and free of any restriction on
the right to vote, sell or otherwise dispose of such capital stock or
other ownership interests. Other than such Subsidiaries of the Company,
neither the Company nor any Subsidiary owns a greater than 20% equity
interest or similar interest in, or any interest convertible into or
exchangeable or exercisable for a greater than 20% equity or similar
interest in, any Person. Neither the Company nor any of its Subsidiaries
is subject to any obligation or requirement to make any material loan,
capital contribution investment or similar expenditure to or in any Person
in excess of $500,000 individually or $1,000,000 to all Persons, except
for loans, capital contributions, investments or similar expenditures by
the Company or any Company Subsidiary to any Company Subsidiary. Except as
provided by applicable law, there are no restrictions of any kind which
prevent the payment of dividends by any Subsidiary.
(c) Capital Structure. The authorized capital stock of the Company
-----------------
consists of 100,000,000 shares of Company Common Stock and 10,000,000
shares of preferred stock, par value $.01 per share ("COMPANY PREFERRED
-----------------
STOCK"). At the close of business on June 25, 2001, (i) 37,653,461 shares
-----
of Company Common Stock were issued and outstanding, none of which shares
are subject to restrictions (other than with respect to Rule 144 of the
Securities Act) or forfeiture risks, (ii) no shares of Company Common
Stock were held by the Company in its treasury, (iii) 7,080,696 shares of
Company Common Stock were issuable pursuant to outstanding Company Stock
Options, and (iv) no shares of Company Preferred Stock were issued or
outstanding. Since June 25, 2001, except as permitted by Section
4.1(a)(ii) of this Agreement, (i) there have been no issuances of capital
stock of the Company (or securities convertible into or exchangeable or
exercisable for such capital stock) other than issuances of Company Common
Stock pursuant to the exercise of options outstanding on June 25, 2001
under Company Stock Plans, and (ii) no options, warrants, securities
convertible into, or commitments with respect to the issuance of shares of
Company Common Stock have been issued, granted or made. All outstanding
shares of capital stock of the Company are, and all shares which may be
issued pursuant to the Company Stock Plans will be, when issued in
accordance with the terms thereof, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights. There are no
bonds, debentures, notes or other indebtedness of the Company having the
right to vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which stockholders of the Company may
vote. Except (i) as set forth above in this Section 3.1(c), and (ii) for
shares of Company Common Stock reserved for issuance
8
under any plan or arrangement providing for the grant of options to
purchase shares of Company Common Stock to current or former officers,
directors, employees or consultants of the Company or its Subsidiaries or
resulting from the issuance of shares of Company Common Stock pursuant to
Stock Options outstanding as of the close of business on June 25, 2001,
(x) there are not issued, issuable, reserved for issuance or outstanding
(A) any shares of capital stock or other voting securities of the Company,
(B) any securities of the Company convertible into or exchangeable or
exercisable for shares of capital stock or voting securities of the
Company, (C) any warrants, calls, options or other rights to acquire from
the Company or any Subsidiary of the Company, and no obligation of the
Company or any Subsidiary of the Company to issue, any capital stock,
voting securities or securities convertible into or exchangeable or
exercisable for capital stock or voting securities of the Company or (D)
stock appreciation rights or rights to receive shares of Company Common
Stock on a deferred basis granted under the Company Stock Plans or
otherwise; and (y) there are not any outstanding obligations of the
Company or any Subsidiary of the Company to repurchase, redeem or
otherwise acquire any such securities or to issue, deliver or sell, or
cause to be issued, delivered or sold, any such securities. Neither the
Company nor any Subsidiary is a party to any voting agreement with respect
to the voting of any such securities. Except as set forth in this Section
3.1(c), there are no issued, issuable, reserved for issuance or
outstanding (A) securities of the Company or any Subsidiary of the Company
convertible into or exchangeable or exercisable for shares of capital
stock or other voting securities or ownership interests in any Subsidiary
of the Company, (B) warrants, calls, options or other rights to acquire
from the Company or any Subsidiary of the Company, and no obligation of
the Company or any Subsidiary of the Company to issue, any capital stock,
voting securities or other ownership interests in, or any securities
convertible into or exchangeable or exercisable for any capital stock,
voting securities or ownership interests in, any Subsidiary of the Company
or (C) obligations of the Company or any Subsidiary of the Company to
repurchase, redeem or otherwise acquire any such outstanding securities of
Subsidiaries of the Company or to issue, deliver or sell, or cause to be
issued, delivered or sold, any such securities. Except as set forth above
in this Section 3.1(c), neither the Company nor any Subsidiary is a party
to or bound by any agreement regarding any securities of the Company or
any Subsidiary of the Company.
(d) Authority; Noncontravention. The Company has the requisite
---------------------------
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Company
and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby, subject, in the case of the Merger, to receipt of the
Company Stockholder Approval and the filing of the Certificate of Merger.
The Board of Directors of the Company has unanimously approved this
Agreement, determined that this Agreement and the transactions
contemplated hereby are fair to and in the best interests of the Company
and its stockholders and declared that the Merger is
9
advisable, provided that after the date hereof, the Board of Directors
of the Company may withdraw its recommendation as provided in
Section 4.2 hereof. Assuming that the representation of Parent contained
in Section 3.2(n) is correct, the Board of Directors of the Company has
taken all action necessary to render inapplicable, as it relates to the
execution, delivery and performance of this Agreement and the Company
Voting Agreements and the consummation of the Merger and the other
transactions contemplated hereby and thereby, Section 203 of the DGCL. To
the Company's Knowledge, except for Section 203 of the DGCL (the
restrictions of which have been rendered inapplicable), no state takeover
statute is applicable to this Agreement, the Merger, or the other
transactions contemplated hereby or thereby. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by each of the other parties thereto, constitutes
legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with its terms (except insofar as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally or
by principles governing availability of equitable remedies).
The execution and delivery of this Agreement does not, and the
consummation of the Merger and the other transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of
a benefit under, or result in the creation of any pledge, claim, lien,
charge, encumbrance or security interest of any kind or nature whatsoever
(collectively, "LIENS") in or upon any of the properties or assets of the
-----
Company or any Subsidiary of the Company under, (i) the Company's
Certificate of Incorporation or Bylaws or the comparable organizational
documents of any of its Subsidiaries, (ii) any loan or credit agreement,
bond, note, mortgage, indenture, lease or other contract, agreement,
obligation, commitment, arrangement, understanding, instrument, permit or
license applicable to the Company or any of its Subsidiaries or their
respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following paragraph, any (A)
statute, law, ordinance, rule or regulation or (B) judgment, order or
decree, in each case applicable to the Company or any of its Subsidiaries
or their respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, violations, defaults, rights,
cancellations, accelerations, losses or Liens that individually or in the
aggregate would not reasonably be expected to have a Material Adverse
Effect on the Company or to prevent or materially delay the consummation
of the transactions contemplated by this Agreement.
No consent, approval, order or authorization of, action by or in
respect 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 authority thereof, or any quasi-governmental or
private body exercising any regulatory, taxing, importing or other
governmental or quasi-governmental authority (each, a "GOVERNMENTAL
------------
ENTITY") is required by or with respect to the Company or any of
10
its Subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the Merger
or the other transactions contemplated by this Agreement, except for (1)
the filing of a premerger notification and report form by the Company
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR ACT") and any applicable filings and approvals under similar
-------
foreign antitrust laws and regulations, (2) the filing with the Securities
and Exchange Commission (the "SEC") of (A) a proxy statement relating to
---
the meeting of the Company's stockholders to be held in connection with
the Merger (as amended or supplemented from time to time, the "PROXY
-----
STATEMENT") and (B) such reports under Section 13(a), 13(d), 15(d) or
---------
16(a) of the Securities Exchange Act of 1934 as amended, and the rules and
regulations promulgated thereunder (the "EXCHANGE ACT"), as may be
-------------
required in connection with this Agreement and the transactions
contemplated by this Agreement, (3) 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 the Company is qualified to do business, (4) such filings with
Governmental Entities to satisfy the applicable requirements of state
securities or "blue sky" law and (5) such other consents, approvals,
orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect on the
Company or to prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
(e) Company SEC Documents. The Company has timely filed all reports,
---------------------
schedules, forms, statements and other documents (including exhibits and
other information incorporated therein) with the SEC required to be filed
by the Company since January 1, 1999 (the "COMPANY SEC DOCUMENTS"). No
---------------------
Company Subsidiary is required to file any form, report, registration
statement, prospectus or other document with the SEC. As of their
respective dates (and, if amended or superseded by a filing prior to the
date of this Agreement or the Closing Date, then on the date of such
filing), (i) the Company SEC Documents complied in all material respects
with the requirements of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the "SECURITIES ACT") or the
--------------
Exchange Act, as the case may be, applicable to such Company SEC
Documents, and none of the Company SEC Documents contained any untrue
statement of a material fact or omitted to state a 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.
The Company SEC Documents filed since December 31, 2000, together with any
public announcements in a news release issued by the Dow Xxxxx news
service, PR Newswire or any equivalent service (collectively, a "DOW XXXXX
---------
NEWS RELEASE") made by the Company after the date hereof taken as a whole,
------------
as of the Effective Time will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances existing as of the Effective Time, not misleading. The
financial statements (including the related notes) of the Company included
in the Company SEC Documents, as of their respective dates, complied in
all material respects with applicable accounting requirements
11
and the published rules and regulations of the SEC with respect thereto,
were prepared in accordance with GAAP, applied on a consistent basis
during the periods involved (except as may be indicated in the notes
thereto) and (except as amended or superseded by a filing prior to the
date of this Agreement) fairly presented the financial position of the
Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments not material in amount). Except (i) as set
forth in the Filed Company SEC Documents filed since December 31, 2000 or
(ii) for the transactions contemplated by this Agreement, neither the
Company nor any of its Subsidiaries has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company. For purposes of this Agreement, a
"FILED COMPANY SEC DOCUMENT" shall mean a Company SEC Document filed by
---------------------------
the Company and publicly available prior to the date of this Agreement.
(f) Information Supplied. None of the information to be supplied by
--------------------
the Company specifically for inclusion or incorporation by reference in
the registration statement on Form S-4 to be filed with the SEC by Parent
in connection with the issuance of Parent Common Stock in the Merger (the
"Form S-4") will, at the time the Form S-4 is filed with the SEC, at any
--------
time it is supplemented or amended or at the time it becomes effective
under the Securities Act, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading and the Proxy Statement will
not, on the date it is first mailed to the Company's stockholders and at
the time of the Company Stockholders Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading,
except that no representation or warranty is made by the Company with
respect to statements made or incorporated by reference therein based on
information supplied by Parent or Sub specifically for inclusion or
incorporation by reference in the Proxy Statement. The Proxy Statement
will comply in all material respects with the requirements of the Exchange
Act, as applicable to the Company, except that no representation or
warranty is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied by Parent
or Sub specifically for inclusion or incorporation by reference in the
Proxy Statement.
(g) Absence of Certain Changes or Events. Except as set forth in the
------------------------------------
Filed Company SEC Documents filed after December 31, 2000 and for
transactions expressly contemplated or permitted by this Agreement, since
December 31, 2000 (i) the Company and its Subsidiaries have conducted
their businesses in the ordinary course consistent with past practice and
(ii) there has not been a Material Adverse Effect on the Company. Except
as set forth in the Filed Company SEC Documents and for actions in the
ordinary course of business, since December 31, 2000, neither the Company
nor any Company Subsidiary has
12
taken any action, or failed to take any action, which if such action or
failure occurred during the period from the date of this Agreement to the
Effective Time would constitute a breach or violation of Section 4.1(a)
(i), (ii), (iv), (vi), (viii), (ix), (xi), (xii), (xiii) or (xiv), and
neither the Company nor any Company Subsidiary has authorized, or
committed or agreed, to take any of such actions.
(h) Litigation. There is no suit, action or proceeding pending or,
----------
to the Knowledge of the Company, overtly threatened against or affecting
the Company or any of its Subsidiaries or any of their respective
properties that individually or in the aggregate would reasonably be
expected to have a Material Adverse Effect on the Company, nor is there
any judgment, decree, injunction, rule, order, action, demand or
requirement of any Governmental Entity or arbitrator outstanding against,
or, to the Knowledge of the Company, any investigation by any Governmental
Entity involving, the Company or any of its Subsidiaries that individually
or in the aggregate would reasonably be expected to have a Material
Adverse Effect on the Company.
(i) Contracts. Except as set forth in Section 3.1(i) of the Company
---------
Disclosure Memorandum or listed as an exhibit to the Company's Annual
Report on Form 10-K for the year ended December 31, 2000, neither the
Company nor any Company Subsidiary is a party to, and none of their
respective properties or assets are bound by, any "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) (the
contracts listed in Section 3.1(i) of the Company Disclosure Memorandum
being referred to as the "MATERIAL CONTRACTS"). Each such Material
------------------
Contract is a valid, binding and enforceable obligation of the Company or
its Subsidiaries and, to the Company's Knowledge, of the other party or
parties thereto, in accordance with its terms, and in full force and
effect, except where the failure to be valid, binding, enforceable and in
full force and effect would not reasonably be expected to have a Material
Adverse Effect on the Company and to the extent as may be limited by
applicable bankruptcy, insolvency, moratorium or other laws affecting the
enforcement of creditors' rights generally or by general principles of
equity. The Company has not received any notice from any other party to
any such Material Contract, and otherwise has no Knowledge that such third
party intends to terminate, or not renew, any such Material Contract. As
of the date hereof, the Company has made available to Parent true and
correct copies of all such contracts. Neither the Company nor any of its
Subsidiaries, and, to the Knowledge of the Company, no other party
thereto, is in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice or both
would cause such a violation of or default under) any loan or credit
agreement, bond, note, mortgage, indenture, lease or other contract,
agreement, obligation, commitment, arrangement, understanding, instrument,
permit or license to which it is a party or by which it or any of its
properties or assets is bound, except for violations or defaults that
individually or in the aggregate would not reasonably be expected to have
a Material Adverse Effect on the Company. Neither the Company nor any of
its Subsidiaries is a party to or otherwise bound by any agreement or
covenant not to compete or by any agreement or covenant restricting the
development, marketing or distribution of the
13
Company's or its Subsidiaries' products or services or the conduct of
their businesses in a manner that would be materially adverse to the
business of the Company and its Subsidiaries taken as a whole.
(j) Compliance with Laws.
--------------------
(i) Each of the Company and its Subsidiaries is in compliance with
all statutes, laws, ordinances, rules, regulations, judgments, orders and
decrees of any Governmental Entity (other than Environmental Laws)
(collectively, "LEGAL PROVISIONS") applicable to its business or
----------------
operations, except for instances of noncompliance that individually or in
the aggregate would not reasonably be expected to have a Material Adverse
Effect on the Company. Since January 1, 1998, neither the Company nor any
of its Subsidiaries has received any written notice from any Governmental
Entity regarding any actual or possible violation of, or failure to comply
with, any Legal Provisions, except for such violations or failures to
comply that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the Company. Each of the
Company and its Subsidiaries has in effect all approvals, authorizations,
certificates, filings, franchises, licenses, notices, permits and rights
of or with all Governmental Entities, including all authorizations under
Environmental Laws ("PERMITS"), necessary for it to own, lease or operate
-------
its properties and assets and to carry on its business and operations as
now conducted, except for the failure to have such Permits that
individually or in the aggregate would not reasonably be expected to have
a Material Adverse Effect on the Company. There has occurred no default
under, or violation of, any such Permit, except for defaults under, or
violations of, Permits that individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect on the Company.
The Merger, in and of itself, would not cause the revocation or
cancellation of any such Permit that individually or in the aggregate is
reasonably likely to have a Material Adverse Effect on the Company.
(ii) Except for those matters that individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect on the
Company: (A) each of the Company and its Subsidiaries is, and has been, in
compliance with all applicable Environmental Laws; (B) during the period
of ownership or operation by the Company or its Subsidiaries of any of its
currently or previously owned, leased or operated properties, no Hazardous
Material has been treated or disposed of, and there have been no Releases
or threatened Releases of Hazardous Material at, in, on, under or
affecting such properties or any contiguous site; (C) prior to the period
of ownership or operation by the Company or its Subsidiaries of any of its
currently or previously owned, leased or operated properties, to the
Knowledge of the Company, no Hazardous Material was treated, stored or
disposed of, and there were no Releases of Hazardous Material at, in, on,
under or affecting any such property or any contiguous site; and (D)
neither the Company nor its Subsidiaries have received any written notice
of, or entered into or assumed by contract, judicial or administrative
settlement, or operation of law any indemnification obligation, order,
settlement or decree relating to: (1) any violation of any Environmental
Laws or the institution or pendency of
14
any suit, action, claim, proceeding or investigation by any Governmental
Entity or any third party in connection with any alleged violation of
Environmental Laws or any Release of Hazardous Materials, (2) the response
to or remediation of Hazardous Material at or arising from any of the
Company's or its Subsidiaries' activities or properties or any other
properties or (3) payment for any response action relating to or
remediation of Hazardous Material at or arising from any of the Company's
or its Subsidiaries' properties, activities, or any other properties. The
term "ENVIRONMENTAL LAWS" means all applicable U.S., state, local and
-------------------
foreign laws, statutes, treaties, rules, codes, ordinances, regulations,
certificates, orders, directives, interpretations, licenses, permits and
other authorizations of any Governmental Entity and judgments, decrees,
injunctions, writs, orders or like action of any court, arbitrator or
other administrative, judicial or quasi-judicial tribunal or agency of
competent jurisdiction, including any thereof of the European Community or
the European Union having the force of law and being applicable to the
Company or any of its Subsidiaries, dealing with the protection of health,
welfare or the environment, including, without limitation, flood,
pollution or disaster laws and health and environmental protection laws
and regulations, and all other rules and regulations promulgated
thereunder and any provincial, municipal, water board or other local
statute, law, rule, regulation or ordinance relating to public or employee
health, safety or the environment; including all laws relating to Releases
to air, water, land or groundwater, relating to the withdrawal or use of
groundwater, and relating to the use, handling, transportation,
manufacturing, introduction into the stream of commerce or disposal of
Hazardous Materials.
The term "Hazardous Materials" means any chemical, material, liquid,
-------------------
gas, substance or waste, whether naturally occurring or man-made, that is
prohibited, limited or regulated by or pursuant to an Environmental Law
applicable to the Company, any Company Subsidiary or their respective
properties.
The term "Release" means the spilling, leaking, discharging,
-------
injecting, emitting and/or disposing and placement of a Hazardous Material
in any location that poses a threat thereof.
(k) Absence of Changes in Benefit Plans. There has not been, since
-----------------------------------
December 31, 2000, any adoption or amendment in any material respect by
the Company or any of its Subsidiaries of any collective bargaining
agreement or any Benefit Plan, or any material change in any actuarial or
other assumption used to calculate funding obligations with respect to any
Pension Plans, or any change in the manner in which contributions to any
Pension Plans are made or the basis on which such contributions are
determined.
(l) ERISA Compliance.
----------------
(i) Section 3.1(l)(i) of the Company Disclosure Memorandum contains
a list of each pension, retirement, savings, profit sharing, medical,
dental, health, disability, life, death benefit, group insurance, deferred
compensation, fringe, change in control, retiree, stock
15
option, stock purchase, restricted stock, bonus or incentive, vacation,
sick leave, severance pay, employment or termination, and other material
employee benefit or compensation plan, arrangement, contract, agreement
(including pursuant to any collective bargaining agreement), policy,
practice or commitment, whether formal or informal, written or oral, in
each case that are binding commitments of the Company and its Subsidiaries
(but, for purposes hereof, excluding any non-material plan or program
maintained by the Company or its Subsidiaries for the benefit of non-U.S.
employees), under which (1) current or former employees, officers,
directors or independent contractors of the Company or any of its
Subsidiaries (or their beneficiaries) participate or are entitled to
participate by reason of their relationship with the Company or any of its
Subsidiaries, (2) to which the Company or any of its Subsidiaries is a
party or a sponsor or a fiduciary thereof or by which the Company or any
of its Subsidiaries (or any of their rights, properties or assets) is
currently bound or (3) with respect to which the Company or any of its
Subsidiaries has any obligation to make payments or contributions,
including, without limitation, all "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (sometimes referred to herein as "PENSION
----- -------
PLANS"), "employee welfare benefit plans" (as defined in Section 3(1) of
-----
ERISA) (sometimes referred to herein as "WELFARE PLANS") (all of the
--------------
foregoing referred to collectively herein as "BENEFIT PLANS"), and all
--------------
other Benefit Plans maintained, or contributed to, by the Company, its
Subsidiaries or any Person or entity that, together with the Company, is
treated as a single employer under Section 414(b), (c), (m) or (o) of the
Code (a "COMMONLY CONTROLLED ENTITY") for the benefit of any current or
----------------------------
former officers, directors, employees or independent contractors of the
Company and its Subsidiaries (or their beneficiaries) (including any such
plans maintained for current or former foreign employees). The Company has
made available to Parent true, complete and correct copies of (1) each
Benefit Plan (or, in the case of any unwritten Benefit Plans, descriptions
thereof), (2) the most recent annual report on Form 5500 required to be
filed with the Internal Revenue Service (the "IRS") with respect to each
---
Benefit Plan, (3) the most recent summary plan description for each
Benefit Plan for which such summary plan description is required and (4)
each trust agreement and group annuity contract relating to any Benefit
Plan. Each Benefit Plan has been administered in all material respects in
accordance with its terms. The Company, its Subsidiaries and all the
Benefit Plans are all in compliance in all material respects with the
applicable provisions of ERISA, the Code and all other applicable Legal
Provisions. Notwithstanding anything contained herein to the contrary,
with respect to any Benefit Plan maintained, sponsored or contributed to
primarily for the benefit of persons residing and providing services to
the Company or its Subsidiaries outside of the United States, the term
"Benefit Plan" as used herein shall only include such non-United States
Benefit Plans that are material Benefit Plans of the Company or its
Subsidiaries.
(ii) All Pension Plans are the subject of a determination letter
from the IRS to the effect that such Pension Plans are qualified (or has
time remaining to apply under applicable regulations or IRS pronouncements
to make any amendment necessary to obtain a favorable determination or
opinion letter) and exempt from United States Federal income taxes under
16
Sections 401(a) and 501(a), respectively, of the Code, and no such
determination letter has been revoked nor to the Company's Knowledge, has
any event occurred since the date of its most recent determination letter
or application therefor that would adversely affect its qualification.
(iii) Neither the Company nor any Commonly Controlled Entity has (1)
at any time in the six years prior to the Closing Date maintained or
contributed to any Benefit Plan that is subject to Title IV of ERISA,
Section 302 of ERISA or Section 412 of the Code or (2) has any unsatisfied
liability under Title IV of ERISA, Section 302 of ERISA, Section 412 of
the Code or Section 4980B of the Code. None of the Company, its
Subsidiaries, or any Commonly Controlled Entity contributes to a
"multiemployer plan" as defined in Section 3(37) of ERISA.
(iv) With respect to any Benefit Plan (other than employment
agreements or any other individual contract), there are no understandings,
agreements or undertakings, written or oral, that would prevent any such
Benefit Plan (including any such plan covering retirees or other former
employees, other than agreements with individuals) from being amended or
terminated without material liability to the Company on or at any time
after the Effective Time.
(v) No pending or, to the Knowledge of the Company, overtly
threatened disputes, lawsuits, claims (other than routine claims for
benefits), investigations, audits or complaints to, or by, any Person or
Governmental Entity have been filed or are pending with respect to any
Benefit Plans of the Company or any of its Subsidiaries in connection with
any Benefit Plan or the fiduciaries or administrators thereof that could
reasonably be expected to give rise to a material liability. With respect
to each Benefit Plan, there has not occurred, and neither the Company, any
Subsidiary of the Company, the plan sponsor nor, to the Company's
Knowledge, a plan fiduciary that the Company has an obligation to
indemnify or is contractually bound to enter into, any nonexempt
"prohibited transaction" within the meaning of Section 4975 of the Code or
Section 406 of ERISA, nor any transaction that would result in a material
civil penalty being imposed under Section 409 or 502(i) of ERISA.
(vi) There are no unfunded liabilities with respect to any Benefit
Plan other than those that would not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect on the Company.
(vii) Except as would not reasonably be expected to have a Material
Adverse Effect on the Company, all contributions to and payments with
respect to or under the Benefit Plans that are required to be made with
respect to periods ending on or before the Effective Time have been made
or accrued before the Effective Time by the Company in accordance with the
appropriate plan documents, financial statements, actuarial report,
collective bargaining agreements or insurance contracts or arrangements.
17
(viii) No Welfare Plan providing medical or death benefits (whether
or not insured) with respect to current or former employees of the Company
or any Subsidiary continues such coverage or provides such benefits beyond
their date of retirement or other termination of service (except as
required by Code Section 4908B or applicable state healthcare continuation
law(s)).
(ix) The execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any plan, policy, arrangement or agreement (including under any
collective bargaining agreement) or any trust or loan that will or would
reasonably be expected to result in any payment (whether of severance pay
or otherwise), acceleration of, forgiveness of indebtedness owing from,
vesting of, distribution of, or increase in or obligation to fund, any
benefits with respect to any current or former employee, director or
consultant of the Company.
(m) Labor Relations. Neither the Company nor any of its Subsidiaries
---------------
is a party to, or bound by, any collective bargaining agreement, contract
or other agreement or understanding with a labor union or labor
organization. There is no pending or, to the Knowledge of the Company,
overtly threatened (i) union organizational campaign effort, collective
bargaining negotiations, bargaining impasse, implementation of final
offer, work-to-rule or intermittent strike or (ii) labor dispute,
grievance or arbitration matter, economic or unfair labor practice strike,
boycott, work stoppage or slowdown involving, in each case of this clause
(ii), a material number of employees of the Company and its Subsidiaries,
against the Company or any of its Subsidiaries, no lockout is in effect
and no permanent or temporary strike replacements are currently employed
at any Company facility. Neither the Company nor any of its Subsidiaries,
nor their respective representatives or employees, has committed any
unfair labor practices in connection with the operation of the respective
businesses of the Company or any of its Subsidiaries, and there is no
pending or, to the Knowledge of the Company, threatened charge, complaint,
decision, order, notice-posting requirement, settlement agreement or
injunctive action or order against the Company or any of its Subsidiaries
by the National Labor Relations Board or any similar governmental or
adjudicatory agency or court, except in each case as would not reasonably
be expected to have a Material Adverse Effect on the Company. The Company
and its Subsidiaries have in the past been and are in compliance in all
respects with all applicable collective bargaining agreements and Legal
Provisions respecting employment, employment practices, employee
classification, labor relations, safety and health, wages, hours and terms
and conditions of employment, except where the failure to be in compliance
would not reasonably be expected to have a Material Adverse Effect on the
Company. The Company has complied in all material respects with its
payment obligations to all employees of the Company and its Subsidiaries
in respect of all wages, salaries, commissions, bonuses, benefits and
other compensation due and payable to such employees under any Company or
Company Subsidiary policy, practice, agreement, plan, program or any
statute or other law. Neither the Company nor any of its Subsidiaries has
experienced within the past 12 months
18
a "plant closing" or "mass layoff" within the meaning of the Worker
Adjustment and Retraining Notification Act, 29 U.S.C. xx.xx. 2101 et seq.
(n) Taxes. Each of the Company and its Subsidiaries has timely filed
-----
all Tax Returns required to be filed by it, or requests for extensions to
file such Tax Returns have been timely filed and granted and have not
expired, and all such filed Tax Returns are complete and accurate in all
respects, except for such failures to (i) file, (ii) have extensions
granted that remain in effect or (iii) be complete and accurate in all
respects, as applicable, as would not individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.
The Company and each of its Subsidiaries has paid (or the Company has paid
on its behalf) all Taxes required to be paid by it, except for such
failures to pay as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on the Company. The most
recent financial statements contained in the Filed Company SEC Documents
reflect an adequate reserve for all Taxes payable by the Company and its
Subsidiaries for all taxable periods and portions thereof accrued through
the date of such financial statements, except for such failures to reflect
such reserves as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on the Company. No
deficiencies for any Taxes have been proposed, asserted or assessed
against the Company or any of its Subsidiaries that are not adequately
reserved for on the Company's financial statements in accordance with GAAP
except for such failures to so reserve as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company. Except as set forth in Section 3.1(n) of the Company
Disclosure Memorandum, no Company income or franchise Tax Return has ever
been examined or audited by any Governmental Entity. No requests for
waivers of the time to assess any Taxes against the Company or any of its
Subsidiaries have been granted that remain in effect. No claim has ever
been made in writing by a Governmental Entity in a jurisdiction where the
Company or any of its Subsidiaries does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction. There are no Liens for
Taxes upon any of the assets of the Company or its Subsidiaries except
Liens for current Taxes not yet due and payable or for Taxes that are
being disputed in good faith by appropriate proceedings and for which
appropriate reserves under GAAP exist on the books of the Company. Neither
the Company nor any of its Affiliates has taken or agreed to take any
action or has Knowledge of any fact or circumstance that is reasonably
likely to prevent the Merger from qualifying as a reorganization within
the meaning of Section 368(a) of the Code. As used in this Agreement,
"TAXES" shall include all U.S. Federal, state and local, domestic and
-----
foreign, income, franchise, property, sales, use, excise and other taxes,
of any nature whatsoever, tariffs or similar governmental charges,
including any obligations for withholding taxes from payments due or made
to any other person, together with all interest, penalties or additions to
tax imposed with respect to such amounts and "TAX RETURNS" shall include
-----------
any return, report or similar statement (including attached schedules)
required to be filed with respect to any Tax, including, without
limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
19
(o) No Excess Parachute Payments; No Section 162(m) Payments. There
--------------------------------------------------------
will be no payments or benefits to any "disqualified individual" (within
the meaning of Section 280G of the Code) that would constitute or result
in an "excess parachute payment" under Section 280G of the Code as a
direct or indirect consequence of the transactions contemplated by this
Agreement, including, without limitation, as a result of the acceleration
of vesting or exercisability of any options to purchase Company Common
Stock held by "disqualified individuals" as a direct or indirect
consequence of the transactions contemplated by this Agreement. No such
Person is entitled to receive any additional payment from the Company, the
Surviving Corporation or any other Person in the event that the excise tax
of Section 4999(a) of the Code is imposed on such Person. The Benefit
Plans and other Company employee compensation arrangements in effect as of
the date of this Agreement have been designed so that the disallowance of
a deduction under Section 162(m) of the Code for employee remuneration
will not apply to any amounts paid or payable by the Company or any of its
Subsidiaries under any such plan or arrangement.
(p) Title to Properties. (i) Each of the Company and its
-------------------
Subsidiaries has good and marketable title to, or valid leasehold
interests in, all its properties and assets except for such as are no
longer used or useful in the conduct of its businesses or as have been
disposed of in the ordinary course of business and except for failures to
have, or defects in title or interests, easements, restrictive covenants
and similar encumbrances that individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect on the Company.
All such material assets and properties, other than assets and properties
in which the Company or any of its Subsidiaries has a leasehold interest,
are free and clear of all Liens, except for Liens that individually or in
the aggregate would not reasonably be expected to have a Material Adverse
Effect on the Company.
(ii) Each of the Company and its Subsidiaries has complied in all
respects with the terms of all leases to which it is a party and under
which it is in occupancy, and all such leases are in full force and
effect, except for such noncompliance or failure to be in full force and
effect that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the Company. Each of the
Company and its Subsidiaries enjoys peaceful and undisturbed possession
under all such leases, except for failures to do so that individually or
in the aggregate are not reasonably likely to have a Material Adverse
Effect on the Company.
(q) Intellectual Property.
---------------------
(i) Each of the Company and its Subsidiaries owns, or is validly
licensed or otherwise has the right to use (in each case free and clear of
all Liens) all patents, patent applications, trademarks, trademark rights,
trade names, trade name rights, service marks, service xxxx rights,
copyrights and other proprietary intellectual property rights and computer
programs (collectively, "INTELLECTUAL PROPERTY RIGHTS") which if the
----------------------------
Company or its Subsidiaries did not own or validly license or otherwise
have the right to use would
20
reasonably be expected to have a Material Adverse Effect on the Company.
Section 3.1(q) of the Company Disclosure Memorandum sets forth, as of the
date hereof, a list of all granted patents, pending patent applications,
trademarks and applications therefor owned by the Company or any of its
Subsidiaries. Except as, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company, (i) the use of
any Intellectual Property Rights by the Company and its Subsidiaries does
not infringe on or otherwise violate the rights of any Person and is in
accordance with any applicable license pursuant to which the Company or
any Subsidiary of the Company acquired the right to use any Intellectual
Property Rights; (ii) no Person is challenging or, to the Knowledge of the
Company, infringing on or otherwise violating any right of the Company or
any of its Subsidiaries with respect to any Intellectual Property Right
owned by and/or licensed to the Company or its Subsidiaries; and (iii)
neither the Company nor any of its Subsidiaries has received any written
notice or otherwise has Knowledge of any pending claim, order or
proceeding with respect to any Intellectual Property Right used by the
Company and its Subsidiaries and to its Knowledge no Intellectual Property
Right owned and/or licensed by the Company or its Subsidiaries is being
used or enforced in a manner that would reasonably be expected to result
in the abandonment, cancellation or unenforceability of such Intellectual
Property Right. The Company has no Knowledge that the use of its material
Intellectual Property Rights in the business of the Company and its
Subsidiaries as presently conducted or as presently contemplated does or
will infringe (i) any granted patent or existing trademark or (ii) any
patent granted from a pending patent application.
(ii) The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions
contemplated hereby will not (A) constitute a breach by the Company or its
Subsidiaries of any instrument or agreement governing any Company
Intellectual Property Rights, (B) pursuant to the terms of any license or
agreement relating to any Company Intellectual Property Rights, cause the
modification of any terms of any such license or agreement, including but
not limited to the modification of the effective rate of any royalties or
other payments provided for in any such license or agreement, (C) cause
the forfeiture or termination of any Company Intellectual Property Rights
under the terms thereof, (D) give rise to a right of forfeiture or
termination of any Company Intellectual Property Rights under the terms
thereof or (E) impair the right of the Company, its Subsidiaries, the
Surviving Corporation or Parent to make, have made, offer for sale, use,
sell, export or license any Company Intellectual Property Rights or
portion thereof pursuant to the terms thereof, except in each case for
those matters that individually or in the aggregate would not reasonably
be expected to have a Material Adverse Effect on the Company.
(r) Voting Requirements. The affirmative vote of a majority of the
-------------------
outstanding shares of Company Common Stock to adopt this Agreement (the
"COMPANY STOCKHOLDER APPROVAL") is the only vote of the holders of any
----------------------------
class or series of the Company's capital stock necessary to adopt this
Agreement and approve the transactions contemplated hereby.
21
(s) Brokers. No broker, investment banker, financial advisor or
-------
other Person, other than Lazard Freres & Co., LLC, the fees and expenses
of which will be paid by the Company, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company.
(t) Opinion of Financial Advisor. The Company has received the
----------------------------
opinion of Lazard Freres & Co., LLC, dated the date hereof, to the effect
that, as of such date, the Exchange Ratio is fair from a financial point
of view to the holders of shares of Company Common Stock.
(u) Accounting Matters. Neither the Company nor any of its
------------------
Affiliates has taken or agreed to take any action or has Knowledge of any
fact or circumstance that is reasonably likely to prevent Parent from
accounting for the business combination to be effected by the Merger as a
pooling of interests. The Company's management has consulted with and has
made representations to its advisors regarding the Company's management's
conclusion that the Merger will qualify as a pooling of interests business
combination. Based upon the Company's management's consultations with its
advisors, nothing has come to the Company's management's attention that
would preclude the Merger from qualifying as a pooling of interests
business combination, subject to the occurrence of any events between (i)
the initiation and the consummation of the Merger and (ii) for a period of
two years subsequent to the consummation of the Merger that would preclude
Parent from accounting for the Merger as a pooling of interests business
combination.
(v) Certain Business Practices. Neither the Company nor any of its
--------------------------
Subsidiaries nor (to the Knowledge of the Company) any director, officer,
agent or employee of the Company or any of its Subsidiaries has, in
connection with the conduct of the business of the Company and its
Subsidiaries, (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity,
(ii) made any unlawful payment to foreign or domestic government officials
or employees or to foreign or domestic political parties or campaigns or
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended, or (iii) made any other unlawful payment.
Section 3.2. Representations and Warranties of Parent and Sub. Except as
------------------------------------------------
expressly set forth in the Filed Parent SEC Documents filed since December 31,
2000 or on the disclosure memorandum delivered by Parent to the Company
immediately prior to the execution of this Agreement and initialed on behalf of
the Company and Parent, which disclosure memorandum specifies the section or
subsection of this Agreement to which the exception relates (the "PARENT
------
DISCLOSURE MEMORANDUM"), Parent and Sub represent and warrant to the Company as
---------------------
follows:
(a) Organization, Standing and Corporate Power. Each of Parent and
------------------------------------------
each of its Subsidiaries is a corporation duly organized, validly existing
and, to the extent applicable, in good standing under the laws of the
jurisdiction in which it is organized and has all
22
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Each of
Parent and each of its Significant Subsidiaries is duly qualified or
licensed to do business and, to the extent applicable, is in good standing
in each jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to
be so qualified or licensed individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect on Parent. Parent
has made available to the Company prior to the execution of this Agreement
complete and correct copies of its Certificate of Incorporation and
Bylaws, and the comparable organizational documents of each of its
Significant Subsidiaries, in each case as amended to the date hereof.
(b) Subsidiaries. All the outstanding shares of capital stock of, or
------------
other equity interests in, each Subsidiary have been validly issued and
are fully paid and nonassessable and are owned directly or indirectly by
Parent free and clear of all Liens, and free of any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other
ownership interests. Other than such Subsidiaries of Parent, neither
Parent nor any Subsidiary owns a greater than 20% equity interest or
similar interest in, or any interest convertible into or exchangeable or
exercisable for a greater than 20% equity or similar interest in, any
Person. Neither the Parent nor any of its Subsidiaries is subject to any
obligation or requirement to make any material loan, capital contribution
investment or similar expenditure to or in any Person, except for loans,
capital contributions, investments or similar expenditures by Parent or
any Parent Subsidiary to any Parent Subsidiary. Except as provided by
applicable law, there are no restrictions of any kind which prevent the
payment of dividends by any Subsidiary.
Parent owns all the outstanding capital stock of Sub. Sub was formed
solely for the purpose of effecting the Merger and, since the date of its
incorporation, Sub has not engaged in any activities and has not incurred
any liabilities or obligations other than in connection with its formation
and in connection with or as contemplated by this Agreement.
(c) Capital Structure. The authorized capital stock of Parent
-----------------
consists of 1,500,000,000 shares of Parent Common Stock 39,000,000 shares
of Parent Class B Common Stock and 1,000,000 shares of Preferred Stock,
par value $.001 per share ("PARENT PREFERRED STOCK"). At the close of
----------------------
business on June 25, 2001, (i) 103,820,962 shares of Parent Common Stock
were issued and outstanding, (ii) 4,762,000 shares of Parent Class B
Common Stock were issued and outstanding, (iii) no shares of Parent Common
Stock were held by Parent in its treasury, (iv) 16,536,718 shares of
Parent Common Stock were issuable pursuant to outstanding Parent Stock
Options, (v) no shares of Preferred Stock were issued or outstanding, and
(vi) no shares of 10.5% cumulative preferred stock, par value $10.00 per
share, were issued and outstanding. All outstanding shares of capital
stock of Parent Common Stock are, and all shares of Parent Common Stock
which may be issued pursuant
23
to this Agreement will be, when issued in accordance with the terms
hereof, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. As of the date hereof there are no
bonds, debentures, notes or other indebtedness of Parent having the right
to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which stockholders of Parent may vote.
Except (i) as set forth above in this Section 3.2(c), and (ii) for shares
of Parent Common Stock reserved for issuance under any plan or arrangement
providing for the grant of options to purchase shares of Parent Common
Stock to current or former officers, directors, employees or consultants
of Parent or its Subsidiaries (the "PARENT STOCK PLANS") or resulting from
------------------
the issuance of shares of Parent Common Stock pursuant to options or other
benefits issued or granted pursuant to the Parent Stock Plans outstanding
as of the close of business on June 25, 2001, as of the date hereof (x)
there are not issued, issuable, reserved for issuance or outstanding (A)
any shares of capital stock or other voting securities of Parent, (B) any
securities of Parent convertible into or exchangeable or exercisable for
shares of capital stock or voting securities of Parent, (C) any warrants,
calls, options or other rights to acquire from Parent or any Parent
Subsidiary, and no obligation of Parent or any Parent Subsidiary to issue,
any capital stock, voting securities or securities convertible into or
exchangeable or exercisable for capital stock or voting securities of
Parent, or (D) any stock appreciation rights or rights to receive shares
of Parent Common Stock on a deferred basis granted under the Parent Stock
Purchase Plans or otherwise; and (y) there are not any outstanding
obligations of Parent or any Parent Subsidiary to repurchase, redeem or
otherwise acquire any such securities or to issue, deliver or sell, or
cause to be issued, delivered or sold, any such securities. Neither Parent
nor any Significant Subsidiary is a party to any voting agreement with
respect to the voting of any such securities. Except as set forth in this
Section 3.2(c) and in the Joint Venture Agreement among Parent, TMP
Worldwide Pty Limited, Xxxxxxx.xxx A&NZ Pty Limited, ninemsn Pty Limited,
Turustar Pty Limited and Clycal Pty Limited, there are no issued,
issuable, reserved for issuance or outstanding (A) securities of Parent or
any Parent Significant Subsidiary convertible into or exchangeable or
exercisable for shares of capital stock or other voting securities or
ownership interests in any Parent Significant Subsidiary, (B) warrants,
calls, options or other rights to acquire from Parent or any Significant
Subsidiary of Parent, and no obligation of Parent or any Significant
Subsidiary of Parent to issue, any capital stock, voting securities or
other ownership interests in, or any securities convertible into or
exchangeable or exercisable for any capital stock, voting securities or
ownership interests in, any Significant Subsidiary of Parent or (C)
obligations of Parent or any Significant Subsidiary of Parent to
repurchase, redeem or otherwise acquire any such outstanding securities of
the Significant Subsidiaries of Parent or to issue, deliver or sell, or
cause to be issued, delivered or sold, any such securities.
(d) Authority; Noncontravention. Each of Parent and Sub has all
---------------------------
requisite corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly authorized by
all necessary corporate action on the part of Parent and Sub and no other
24
corporate proceedings on the part of Parent or Sub are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby, subject, in the case of the Merger, to the filing of the
Certificate of Merger. The Board of Directors of each of Parent and Sub
have unanimously approved this Agreement, determined that this Agreement
and the transactions contemplated hereby are fair to and in the best
interests of Parent and Sub and their respective stockholders and declared
that the Merger is advisable. This Agreement has been duly executed and
delivered by Parent and Sub, as applicable, and, assuming the due
authorization, execution and delivery by each of the other parties
thereto, constitute legal, valid and binding obligations of Parent and
Sub, as applicable, enforceable against Parent and Sub, as applicable, in
accordance with its terms (except insofar as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally or by principles
governing availability of equitable remedies).
The execution and delivery of this Agreement does not, and the
consummation of the Merger and the other transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of
a benefit under, or result in the creation of any Lien in or upon any of
the properties or assets of Parent or any of its Subsidiaries under (i)
the Certificate of Incorporation or Bylaws of Parent or the comparable
organizational documents of any of its Subsidiaries, (ii) any loan or
credit agreement, bond, note, mortgage, indenture, lease or other
contract, agreement, obligation, commitment, arrangement, understanding,
instrument, permit or license applicable to Parent or any of its
Subsidiaries or their respective properties or assets or (iii) subject to
the governmental filings and other matters referred to in the following
paragraph, any (A) statute, law, ordinance, rule or regulation or (B)
judgment, order or decree, in each case applicable to Parent or any of its
Subsidiaries or their respective properties or assets, other than, in the
case of clauses (ii) and (iii), any such conflicts, violations, defaults,
rights, cancellations, accelerations, losses or Liens that individually or
in the aggregate would not reasonably be expected to have a Material
Adverse Effect on Parent or to prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
No consent, approval, order or authorization of, action by or in
respect of, or registration, declaration or filings with, any Governmental
Entity is required by or with respect to Parent or any of its Subsidiaries
in connection with the execution and delivery of this Agreement by Parent
and Sub or the consummation by Parent and Sub of the Merger or the other
transactions contemplated by this Agreement, except for (1) the filing of
a premerger notification and report form under the HSR Act and any
applicable filings and approvals under similar foreign antitrust laws and
regulations, (2) the filing with the SEC of (A) the Form S-4 and (B) such
reports under Section 13(a), 13(d), 15(d) or 16(a) of the Exchange Act as
may be required in connection with this Agreement or the Company Voting
Agreements and the transactions contemplated by this Agreement or the
Company Voting
25
Agreements, (3) 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 the Parent is qualified to
do business, (4) such filings with Governmental Entities to satisfy the
applicable requirements of state securities or "blue sky" laws, (5) such
filings with and approvals of Nasdaq to permit the shares of Parent Common
Stock that are to be issued pursuant to the Merger to be traded on the
Nasdaq National Market and (6) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of
which to be obtained or made individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Parent or to
prevent or materially delay the consummation of the transactions
contemplated by this Agreement.
(e) Parent SEC Documents. Except as listed in Section 3.2(c) of the
--------------------
Parent Disclosure Memorandum, Parent has timely filed all reports,
schedules, forms, statements and other documents (including exhibits and
other information incorporated therein) with the SEC required to be filed
by the Parent since January 1, 1999 (the "PARENT SEC DOCUMENTS"). No
--------------------
Parent Subsidiary is required to file any form, report, registration
statement, prospectus or other document with the SEC. As of their
respective dates (and, if amended or superseded by a filing prior to the
date of this Agreement or the Closing Date, then on the date of such
filing), the Parent SEC Documents complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case
may be and none of the Parent SEC Documents contained any untrue statement
of a material fact or omitted to state a 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. The
Parent SEC Documents filed since December 31, 2000, together with any
public announcements in a Dow Xxxxx News Release made by Parent after the
date hereof taken as a whole, as of the Effective Time will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances existing as of the Effective Time, not
misleading. The financial statements (including the related notes) of
Parent included in the Parent SEC Documents, as of their respective dates,
complied in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto,
were prepared in accordance with GAAP applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
(except as amended or superseded by a filing prior to the date of this
Agreement) fairly presented the financial position of Parent and its
consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments not material in amount). Except (i) as set forth in the Parent
SEC Documents filed since December 31, 2000 and (ii) for liabilities set
forth in this Agreement, neither Parent nor any of its Subsidiaries has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on Parent. For
purposes of this Agreement, a "FILED PARENT SEC
----------------
26
DOCUMENT" shall mean a Parent SEC Document filed by Parent and publicly
--------
available prior to the date of this Agreement.
(f) Information Supplied. None of the information supplied or to be
--------------------
supplied by Parent or Sub specifically for inclusion or incorporation by
reference in the Form S-4 will, at the time the Form S-4 is filed with the
SEC, at any time it is supplemented or amended or at the time it becomes
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Form S-4 will
comply in all material respects with the requirements of the Securities
Act and the Exchange Act, respectively, in each case as applicable to
Parent and Sub, except that no representation or warranty is made by
Parent or Sub with respect to statements made or incorporated by reference
therein based on information supplied by the Company specifically for
inclusion or incorporation by reference in the Form S-4.
(g) Absence of Certain Changes or Events. Except as set forth in the
------------------------------------
Filed Parent SEC Documents filed after December 31, 2000 and for
transactions contemplated or permitted by this Agreement, since December
31, 2000 (i) Parent and its Subsidiaries have conducted their businesses
in the ordinary course consistent with past practice and (ii) there has
not been a Material Adverse Effect on Parent. Except as set forth in the
Filed Parent SEC Documents and for actions in the ordinary course of
business, since December 31, 2000, neither Parent nor any Parent
Subsidiary has taken any action, or failed to take any action, which if
such action or failure occurred during the period from the date of this
Agreement to the Effective Time would constitute a breach or violation of
Section 4.1(b), and neither Parent nor any Parent Subsidiary has
authorized, or committed or agreed, to take any of such actions.
(h) Litigation. There is no suit, action or proceeding pending or,
----------
to the Knowledge of Parent, overtly threatened against or affecting Parent
or any of its Subsidiaries or any of their respective properties that
individually or in the aggregate would reasonably be expected to have a
Material Adverse Effect on Parent, nor is there any judgment, decree,
injunction, rule, order, action, demand or requirement of any Governmental
Entity or arbitrator outstanding against, or, to the Knowledge of Parent,
any investigation by any Governmental Entity involving, Parent or any of
its Subsidiaries that individually or in the aggregate would reasonably be
expected to have a Material Adverse Effect on Parent.
(i) Compliance with Laws. (i) Each of Parent and its Subsidiaries is
--------------------
in compliance with all Legal Provisions applicable to its business or
operations, except for instances of noncompliance that individually or in
the aggregate would not reasonably be expected to have a Material Adverse
Effect on Parent. Since January 1, 1998, neither Parent nor any of its
Subsidiaries has received any written notice from any Governmental Entity
regarding any actual or possible violation of, or failure to comply with,
any Legal Provisions, except for such violations or failures to comply
that individually or in the aggregate would not
27
reasonably be expected to have a Material Adverse Effect on Parent. Each
of Parent and its Subsidiaries has in effect all Permits necessary for it
to own, lease or operate its properties and assets and to carry on its
business and operations as now conducted, except for the failure to have
such Permits that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on Parent. There has occurred
no default under, or violation of, any such Permit, except for defaults
under, or violations of, Permits that individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect on
Parent. The Merger, in and of itself, would not cause the revocation or
cancellation of any such Permit that individually or in the aggregate is
reasonably likely to have a Material Adverse Effect on Parent.
(ii) Except for those matters that individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect on
Parent: (A) each of Parent and its Subsidiaries is, and has been, in
compliance with all applicable Environmental Laws; (B) during the period
of ownership or operation by Parent or its Subsidiaries of any of its
currently or previously owned, leased or operated properties, no Hazardous
Material has been treated or disposed of, and there have been no Releases
or threatened Releases of Hazardous Material at, in, on, under or
affecting such properties or any contiguous site; (C) prior to the period
of ownership or operation by Parent or its Subsidiaries of any of its
currently or previously owned, leased or operated properties, to the
Knowledge of Parent, no Hazardous Material was treated, stored or disposed
of, and there were no Releases of Hazardous Material at, in, on, under or
affecting any such property or any contiguous site; and (D) neither Parent
nor its Subsidiaries have received any written notice of, or entered into
or assumed by contract, judicial or administrative settlement, or
operation of law any indemnification obligation, order, settlement or
decree relating to: (1) any violation of any Environmental Laws or the
institution or pendency of any suit, action, claim, proceeding or
investigation by any Governmental Entity or any third party in connection
with any alleged violation of Environmental Laws or any Release of
Hazardous Materials, (2) the response to or remediation of Hazardous
Material at or arising from any of Parent's or its Subsidiaries'
activities or properties or any other properties or (3) payment for any
response action relating to or remediation of Hazardous Material at or
arising from any of Parent's or its Subsidiaries' properties, activities,
or any other properties.
(j) Accounting Matters. Neither Parent nor any of its Affiliates has
------------------
taken or agreed to take any action that would prevent Parent from
accounting for the business combination to be effected by the Merger as a
pooling of interests. Parent's management has consulted with and has made
representations to its advisors regarding Parent's management's conclusion
that the Merger will qualify as a pooling of interests business
combination. Based upon Parent's management's consultations with its
advisors, nothing has come to Parent's management's attention that would
preclude the Merger from qualifying as a pooling of interests business
combination, subject to the occurrence of any events between (i) the
initiation and the consummation of the Merger and (ii) for a period of two
years subsequent
28
to the consummation of the Merger that would preclude Parent from
accounting for the Merger as a pooling of interests business combination.
(k) Tax Matters. Each of Parent and its Subsidiaries has timely
-----------
filed all Tax Returns required to be filed by it, or requests for
extensions to file such Tax Returns have been timely filed and granted and
have not expired, and all such filed Tax Returns are complete and accurate
in all respects, except for such failures to (i) file, (ii) have
extensions granted that remain in effect or (iii) be complete and accurate
in all respects, as applicable, as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on
Parent. Parent and each of its Subsidiaries has paid (or Parent has paid
on its behalf) all Taxes required to be paid by it, except for such
failures to pay as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Parent. The most recent
financial statements contained in the Filed Parent SEC Documents reflect
an adequate reserve for all Taxes payable by Parent and its Subsidiaries
for all taxable periods and portions thereof accrued through the date of
such financial statements, except for such failures to reflect such
reserves as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent. Neither Parent nor
any of its Affiliates have taken or agreed to take any action or has
Knowledge of any fact or circumstance that is reasonably likely to prevent
the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(l) Brokers. No broker, investment banker, financial advisor or
-------
other Person, other than Deutsche Banc Alex. Xxxxx, the fees and expenses
of which will be paid by Parent, is entitled to any broker's, finder's,
financial advisors or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent.
(m) Labor Relations. There is no pending or, to the knowledge of
---------------
Parent, overtly threatened union organizational campaign effort,
collective bargaining negotiations, bargaining impasse, implementation of
final offer, boycott, work stoppage, slowdown, work-to-rule or
intermittent strike against Parent or any of its Subsidiaries, no lockout
is in effect and no permanent or temporary strike replacements are
currently employed at any Parent facility, in each case except as would
not be reasonably expected to have a Material Adverse Effect on Parent.
(n) No Stockholder Vote. No vote of the stockholders of Parent
---------------------
is necessary to approve the issuance of Parent Common Stock in
connection with the Merger.
(o) Ownership of Company Capital Stock. Neither Parent nor Sub is,
----------------------------------
nor at any time during the last three years has it been, an "interested
stockholder" of the Company as defined in Section 203 of the DGCL (other
than as contemplated by this Agreement). Neither Parent nor Sub owns
(directly or indirectly, beneficially or of record) or is a party to any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or
29
disposing of, in each case, any shares of capital stock of the Company
(other than as contemplated by this Agreement).
(p) Intellectual Property.
---------------------
(i) Each of the Parent and its Subsidiaries owns, or is validly
licensed or otherwise has the right to use (in each case free and clear of
all Liens) all Intellectual Property Rights which if the Parent or its
Subsidiaries did not own or validly license or otherwise have the right to
use would reasonably be expected to have a Material Adverse Effect on the
Parent. Except as, in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Parent, (i) the use of any
Intellectual Property Rights by the Parent and its Subsidiaries does not
infringe on or otherwise violate the rights of any Person and is in
accordance with any applicable license pursuant to which the Parent or any
Subsidiary of the Parent acquired the right to use any Intellectual
Property Rights; (ii) no Person is challenging or, to the Knowledge of the
Parent, infringing on or otherwise violating any right of the Parent or
any of its Subsidiaries with respect to any Intellectual Property Right
owned by and/or licensed to the Parent or its Subsidiaries; and (iii)
neither the Parent nor any of its Subsidiaries has received any written
notice or otherwise has Knowledge of any pending claim, order or
proceeding with respect to any Intellectual Property Right used by the
Parent and its Subsidiaries and to its Knowledge no Intellectual Property
Right owned and/or licensed by the Parent or its Subsidiaries is being
used or enforced in a manner that would reasonably be expected to result
in the abandonment, cancellation or unenforceability of such Intellectual
Property Right. The Parent has no Knowledge that the use of its material
Intellectual Property Rights in the business of the Parent and its
Subsidiaries as presently conducted or as presently contemplated does or
will infringe (i) any granted patent or existing trademark or (ii) any
patent granted from a pending patent application.
(ii) The execution, delivery and performance of this Agreement by
the Parent and the consummation by the Parent of the transactions
contemplated hereby will not (A) constitute a breach by the Parent or its
Subsidiaries of any instrument or agreement governing any Parent
Intellectual Property Rights, (B) pursuant to the terms of any license or
agreement relating to any Parent Intellectual Property Rights, cause the
modification of any terms of any such license or agreement, including but
not limited to the modification of the effective rate of any royalties or
other payments provided for in any such license or agreement, (C) cause
the forfeiture or termination of any Parent Intellectual Property Rights
under the terms thereof, (D) give rise to a right of forfeiture or
termination of any Parent Intellectual Property Rights under the terms
thereof or (E) impair the right of the Parent or its Subsidiaries to make,
have made, offer for sale, use, sell, export or license any Parent
Intellectual Property Rights or portion thereof pursuant to the terms
thereof, except in each case for those matters that individually or in the
aggregate would not reasonably be expected to have a Material Adverse
Effect on the Parent.
30
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1. Conduct of Business.
-------------------
(a) Conduct of Business by the Company. During the period from the date of
----------------------------------
this Agreement to the Effective Time, or the date, if any, on which this
Agreement is earlier terminated pursuant to Section 7.1, and except as may be
agreed in writing by Parent, as may be expressly permitted pursuant to this
Agreement or as set forth in Section 4.1 of the Company Disclosure Memorandum,
the Company shall, and shall cause its Subsidiaries to, carry on their
respective businesses in the ordinary course consistent with past practice and
in compliance in all material respects with all applicable Legal Provisions and,
to the extent consistent therewith, use all commercially reasonable efforts to
preserve intact its current business organizations, keep available the services
of its current officers and key employees and preserve its relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with them with the intention that its goodwill and ongoing
business shall be preserved. Without limiting the generality of the foregoing,
during the period from the date of this Agreement to the Effective Time, or the
date, if any, on which this Agreement is earlier terminated pursuant to Section
7.1, and except as may be agreed in writing by Parent, as may be expressly
permitted pursuant to this Agreement or as set forth in Section 4.1 of the
Company Disclosure Memorandum, the Company shall not, and shall not permit any
of its Subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property), in respect of,
any of its capital stock, other than dividends or distributions by a
direct or indirect wholly owned Subsidiary of the Company to its parent,
(B) split, combine or reclassify any of its capital stock or amend the
terms of any outstanding securities (including Stock Options) or (C)
purchase, redeem or otherwise acquire any shares of its capital stock or
any other securities;
(ii) issue, deliver, sell, grant, pledge or otherwise encumber or
subject to any Lien any shares of its capital stock, any other securities
convertible into or exercisable or exchangeable for, or any rights,
warrants or options to acquire, any such shares or securities (other than
the issuance of shares of Company Common Stock upon the exercise of Stock
Options outstanding on the date hereof or permitted to be granted after
the date hereof as set forth in Section 4.1 of the Company's Disclosure
Memorandum and in accordance with their terms on the date hereof) or any
"phantom" stock, "phantom" stock rights, stock appreciation rights or
stock based performance units;
(iii) amend its Certificate of Incorporation or Bylaws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire by merging or consolidating with,
or by purchasing assets of, or by any other manner, any Person or
division, business or equity interest of any
31
Person except for purchases of assets in the ordinary course of business
which do not constitute the purchase of a Person's business;
(v) except in the ordinary course of business, sell, lease, license,
mortgage or otherwise encumber or subject to any Lien or otherwise dispose
of any of its properties or assets (including securitizations);
(vi) (A) except for borrowings under the Company's existing credit
facilities, incur any indebtedness for borrowed money or guarantee any
such indebtedness of another Person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its Subsidiaries, guarantee any debt securities of another Person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another Person or enter into any arrangement having
the economic effect of any of the foregoing or (B) make any loans,
advances or capital contributions to, or investments in, any other Person,
other than in the ordinary course of business or to or in any direct or
indirect wholly-owned Subsidiary of the Company (or any foreign
Subsidiary of the Company with nominal non-Company ownership);
(vii) make or agree to make any new capital expenditure (including
leases) or enter into any agreement or agreements providing for payments
which are in excess of $100,000 individually or $500,000 in the aggregate,
excluding capital expenditures or agreements provided for or contemplated
by the capital budgets approved by the Company's Board of the Directors
prior to the date hereof (copies of which have been provided to Parent);
(viii) (A) pay, discharge, settle or satisfy any claims,
liabilities, obligations or litigation (absolute, accrued, asserted or
unasserted, contingent or otherwise) in excess of $100,000 individually
and $250,000 in the aggregate, other than the payment, discharge,
settlement or satisfaction in the ordinary course of business or in
accordance with their terms, of liabilities disclosed, reflected or
reserved against in the most recent consolidated financial statements (or
the notes thereto) of the Company included in the Filed Company SEC
Documents or incurred since the date of such financial statements in the
ordinary course of business, or (B) cancel any indebtedness in excess of
$10,000 individually and $50,000 in the aggregate, other than in the
ordinary course of business;
(ix) modify, amend or terminate any Material Contract to which the
Company or any of its Subsidiaries is a party in a manner that would
reasonably be expected to have a Material Adverse Effect on the Company;
(x) enter into any contract, agreement, binding arrangement or
understanding that would be a Material Contract, other than pursuant to
any such contracts, agreements, arrangements or understandings currently
in place (that have been disclosed in writing to Parent prior to the date
hereof) in accordance with their terms as of the date hereof;
32
(xi) except as otherwise set forth in this Agreement or as required
to comply with applicable Legal Provisions or contractual commitments
existing as of the date hereof, (A) adopt, enter into, terminate or amend
in any material respect (I) any collective bargaining agreement or Benefit
Plan or (II) any other agreement, plan or policy involving the Company or
its Subsidiaries, and one or more of its current or former directors,
officers, or other executive employees, (B) increase in any manner the
compensation, bonus or fringe or other benefits of, or pay any bonus to,
any current or former officer, director or employee, other than in the
case of employees who are neither current nor former officers or
directors, increases made in connection with normal periodic reviews and
related compensation and benefit increases which are consistent with past
practice, (C) pay any benefit or amount not required under any Benefit
Plan, (D) increase in any manner the severance or termination pay of any
current or former director, officer or other executive employee, (E) enter
into or amend any employment, deferred compensation, consulting,
severance, termination or indemnification agreement, arrangement or
understanding with any current or former officer, director or other
executive employee, (F) grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or Benefit Plan
(including the grant of stock options, stock appreciation rights,
performance units, restricted stock, "phantom" stock or other stock
related awards), or remove any existing restrictions in any Benefit Plans
or agreements or awards made thereunder, (G) amend or modify any Stock
Option, (H) take any action to fund or in any other way secure the payment
of compensation or benefits under any employee plan, agreement, contract
or arrangement or Benefit Plan, or (I) take any action to accelerate the
vesting of payment of any compensation or benefit under any Benefit Plan;
(xii) except as required by GAAP, make any change in accounting
methods, principles or practices;
(xiii) transfer or license to any Person or otherwise extend, amend
or modify any rights to the Intellectual Property Rights of the Company
and its Subsidiaries, other than in the ordinary course of business or
pursuant to any contracts, agreements, arrangements or understandings
currently in place (that have been disclosed in writing to Parent prior to
the date of this Agreement);
(xiv) take any action (including any action otherwise permitted by
this Section 4.1(a)) that would reasonably be expected to prevent the
Merger from qualifying as a "pooling of interests" for accounting purposes
or as a "reorganization" under Section 368(a) of the Code;
(xv) enter into any hedging, option, derivative or other similar
transaction of any foreign exchange position or contract for the exchange
of currency other than in the ordinary course of business and consistent
with past practice;
(xvi) [RESERVED];
33
(xvii) take any action that would reasonably be expected to prevent,
impair or materially delay the ability of the Company, Parent or Sub to
consummate the transactions contemplated by this Agreement;
(xviii) (A) change any material tax election; (B) change any annual
tax accounting period or method of tax accounting in any material respect;
(C) file any amended Tax Return; (D) enter into any closing agreement
relating to any material Tax; (E) settle any material Tax claim or
assessment or (F) surrender any right to claim a material Tax refund or to
any extension or waiver of the limitations period applicable to any
material Tax claim or assessment; or
(xix) authorize, or commit or agree to take, any of the
foregoing actions.
(b) Conduct of Business by Parent. During the period from the date of this
-----------------------------
Agreement to the Effective Time or the date, if any, on which this Agreement is
earlier terminated pursuant to Section 7.1, and except as may be agreed in
writing by the Company, or as may be contemplated by this Agreement or Section
4.1(b) of the Parent Disclosure Memorandum, (i) Parent shall and shall cause its
Subsidiaries to carry on their respective businesses in the ordinary course
consistent with past practice and in compliance in all material respects with
all applicable Legal Provisions and, to the extent consistent therewith, use all
commercially reasonable efforts to preserve intact its current business
organizations, keep available the services of its current officers and key
employees and preserve its relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with them with the
intention that its goodwill and ongoing business shall be preserved. Parent
shall not, and shall not permit any of its Subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property), in respect of,
any of its capital stock, other than dividends or distributions by a
direct or indirect wholly owned Subsidiary of Parent to its parent, or (B)
split, combine or reclassify any of its capital stock;
(ii) amend its Certificate of Incorporation or other comparable
charter or organizational documents;
(iii) except as required by GAAP, make any changes in accounting
methods, principles or practices;
(iv) take any action that would reasonably be expected to prevent,
impair or materially delay the ability of the Company, Parent or Sub to
consummate the transactions contemplated by this Agreement;
(v) take any action (including any action otherwise permitted by
this Section 4.1(b)) that would reasonably be expected to prevent the
Merger from qualifying as a "pooling of interests" for accounting purposes
or as a "reorganization" under Section 368(a) of the Code;
34
(vi) cause Sub to engage in any activities or incur any liabilities
or obligations other than in connection with or as contemplated by this
Agreement; or
(vii) authorize, or commit or agree to take, any of the
foregoing actions.
Section 4.2. No Solicitation.
---------------
(a) The Company agrees that neither it nor any of its Subsidiaries nor any
of the officers and directors of the Company or its Subsidiaries shall, and that
it shall use its reasonable best efforts to cause its and its Subsidiaries'
employees, agents and representatives (including any investment banker, attorney
or accountant retained by the Company or any of its Subsidiaries) not to,
directly or indirectly, (i) initiate, solicit, encourage or knowingly facilitate
any inquiries or the making of any proposal or offer with respect to, or a
transaction to effect, a merger, reorganization, share exchange, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving it or any of its Significant Subsidiaries (or any group of
Subsidiaries which taken together could constitute a Significant Subsidiary), or
any purchase or sale of 15% or more of the consolidated assets (including stock
of its Subsidiaries) of the Company and its Subsidiaries, taken as a whole, or
any purchase or sale of, or tender or exchange offer for, its equity securities
that, if consummated, would result in any Person (or the stockholders of such
Person) beneficially owning securities representing 15% or more of its total
voting power (or of the surviving parent entity in such transaction) or the
voting power of any of its Significant Subsidiaries (any such proposal, offer or
transaction (other than a proposal or offer made by Parent or an Affiliate
thereof) a "TAKEOVER PROPOSAL"), (ii) have any discussion with or provide any
-----------------
confidential information or data to any Person relating to a Takeover Proposal,
or engage in any negotiations concerning a Takeover Proposal, or knowingly
facilitate any effort or attempt to make or implement a Takeover Proposal, (iii)
approve or recommend, or propose publicly to approve or recommend, any Takeover
Proposal or (iv) approve or recommend, or propose to approve or recommend, or
execute or enter into, any letter of intent, agreement in principle, merger
agreement, acquisition agreement, option agreement or other similar agreement or
propose publicly or agree to do any of the foregoing related to any Takeover
Proposal.
(b) Notwithstanding anything in this Agreement to the contrary, the
Company (and its Board of Directors) shall be permitted to (i) comply with
applicable law (including Rule 14d-9 and Rule 14e-2 promulgated under the
Exchange Act) with regard to a Takeover Proposal or make any other disclosure to
the Company's stockholders if, in the good faith judgment of the Company, after
taking into account the advice of outside counsel, failure to so disclose would
be inconsistent with applicable law (and any such disclosure shall not be deemed
a change, amendment or modification in the Company's (or its Board of
Directors') recommendation to the stockholders of the Company), (ii) change its
recommendation to its stockholders or (iii) engage in discussions or
negotiations with, or provide any information to any Person in response to, an
unsolicited bona fide written Takeover Proposal by such Person that did not
result from a breach of Section 4.1(a) if and only to the extent
35
that, in any such case referred to in clause (ii) or (iii), (A) the Company
Stockholders Meeting shall not have occurred, (B) (I) in the case of clause (ii)
above, it has received an unsolicited bona fide written Takeover Proposal from a
third party that did not result from a breach of Section 4.1(a) and its Board of
Directors concludes in good faith that such Takeover Proposal constitutes a
Superior Proposal and such withdrawal is in connection with the termination of
this Agreement in accordance with the provisions of Section 7.1(f) and (II) in
the case of clause (iii) above, its Board of Directors concludes in good faith
that there is a reasonable likelihood that such Takeover Proposal could
constitute a Superior Proposal and (C) prior to providing any information or
data to any Person or entering into discussions or negotiations with any Person,
it notifies Parent promptly of such inquiries, proposals or offers received by,
any such information requested from, or any such discussions or negotiations
sought to be initiated or continued with, any of its representatives indicating,
in connection with such notice, the name of such Person and the material terms
and conditions of any inquiries, proposals or offers and enters into a customary
and reasonable confidentiality agreement no less favorable to the Company than
the Confidentiality Agreement. The Company agrees that it will promptly keep
Parent reasonably informed of the status and terms of any inquiries, proposals
or offers and the status and terms of any discussions or negotiations, including
the identity of the Person making such inquiry, proposal or offer and will
deliver to Parent the information delivered to such Person to the extent not
previously provided to Parent. The Company agrees that it will, and will cause
its officers, directors and representatives to, immediately cease and cause to
be terminated any activities, discussions or negotiations existing as of the
date of this Agreement with any Person (other than the parties hereto) conducted
heretofore with respect to any Takeover Proposal, and Parent agrees that no such
prior activity shall be considered solicitation of a Takeover Proposal
hereunder. The Company agrees that it will use reasonable best efforts to
promptly inform its directors, officers, key employees, agents and
representatives of the obligations undertaken in this Section 4.2. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in this Section 4.2 by any officer or director of the Company or any
of its Subsidiaries or any investment banker, attorney or other advisor or
representative of the Company or any of its Subsidiaries, whether or not such
Person is purporting to act on behalf of the Company or any of its Subsidiaries
or otherwise, shall be deemed to be a breach of this Section 4.2 by the Company.
Nothing in this Section 4.2 shall (i) permit Parent or the Company to terminate
this Agreement (except as specifically provided in Article VII) or (ii) affect
or limit any other obligation of Parent or the Company under this Agreement
except as explicitly provided herein. Notwithstanding anything to the contrary
in this Agreement, if requested by a third party, the Company may waive any
"standstill" or similar provisions in favor of the Company in any agreement with
such third party if the Board of Directors reasonably believes that there is a
reasonable likelihood that third party will submit a bona fide Takeover Proposal
that could constitute a Superior Proposal, and any such waiver shall not be
construed as a breach of this Section 4.2.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1. Preparation of the Form S-4 and the Proxy Statement;
-------------------------------------------------------
Stockholders Meetings
---------------------
36
(a) As soon as practicable following the date of this Agreement, the
Company and Parent shall prepare and file with the SEC the Proxy Statement and
Parent shall prepare and file with the SEC the Form S-4, in which the Proxy
Statement will be included as a prospectus. Subject to Section 4.2, each of the
Company and Parent shall use its reasonable best efforts to (i) have the Form
S-4 declared effective under the Securities Act as promptly as practicable after
such filing and (ii) cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable after the Form S-4 is declared effective
under the Securities Act. Parent shall also take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process) required to be
taken under any applicable state securities laws in connection with the issuance
of Parent Common Stock in the Merger and upon the exercise of Adjusted Options,
and the Company shall furnish all information concerning the Company and the
holders of Company Common Stock as may be reasonably requested in connection
with any such action. The Form S-4 and the Proxy Statement shall comply as to
form in all material respects with the applicable provisions of the Securities
Act and the Exchange Act. The Company and Parent shall, as promptly as
practicable after receipt thereof, provide the other party copies of any written
comments and advise the other party of any oral comments, with respect to the
Proxy Statement received from the SEC. Parent shall provide the Company with a
reasonable opportunity to review and comment on any amendment or supplement to
the Form S-4 prior to filing such with the SEC, and shall provide the Company
with a copy of all such filings made with the SEC. Notwithstanding any other
provision herein to the contrary, no amendment or supplement (including by
incorporation by reference) to the Proxy Statement or the Form S-4 shall be made
without the approval of both parties, which approval shall not be unreasonably
withheld or delayed; PROVIDED, that with respect to documents filed by a party
which are incorporated by reference in the Form S-4 or Proxy Statement, this
right of approval shall apply only with respect to information relating to the
other party or its business, financial condition or results of operations or the
transactions contemplated by this Agreement. No filing of, or amendment or
supplement to, the Form S-4 shall be made by Parent, or to the Proxy Statement
shall be made by the Company, without providing the other party the opportunity
to review and comment thereon. Parent shall advise the Company, promptly after
it receives notice thereof, of the time when the Form S-4 has become effective,
the issuance of any stop order, the suspension of the qualification of Parent
Common Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Form S-4 or
comments thereon and responses thereto or requests by the SEC for additional
information. Each party shall advise the other party, promptly after it receives
notice thereof, of any request by the SEC for amendment of the Proxy Statement
or the Form S-4 or comments thereon and responses thereto or requests by the SEC
for additional information. If at any time prior to the Effective Time any
information relating to the Company or Parent, or any of their respective
Affiliates, officers or directors, should be discovered by the Company or Parent
which should be set forth in an amendment or supplement to any of the Form S-4
or the Proxy Statement, so that any of such 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 parties hereto and an appropriate amendment or supplement
describing such information shall be
37
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of the Company and Parent.
(b) The Company shall, as soon as reasonably practicable, consistent with
the process of clearing the Proxy Statement with the SEC and having the SEC
declare the Form S-4 effective, all as provided in Section 5.1(a), establish a
record date for, duly call, give notice of, convene and hold a meeting of its
stockholders (the "COMPANY STOCKHOLDERS MEETING") for the purpose of obtaining
----------------------------
the Company Stockholder Approval and shall take all lawful action to solicit
adoption of this Agreement by the required Company Stockholder Approval. Unless
the Company has terminated this Agreement pursuant to Section 7.1(f) hereof, the
Company shall, through its Board of Directors, recommend to its stockholders
adoption of this Agreement (the "COMPANY RECOMMENDATION"), and except as
----------------------
expressly permitted by this Agreement, shall not withdraw, amend or modify in a
manner adverse to Parent its recommendation. The Company shall ensure that the
Company Stockholders Meeting is called, noticed, convened, held and conducted,
and that all proxies solicited in connection with the Company Stockholders
Meeting are solicited, in compliance with all applicable Legal Provisions.
Without limiting the generality of the foregoing, (i) the Company agrees that
its obligation to duly call, give notice of, convene and hold a meeting of the
holders of Company Common Stock, as required by this Section 5.1(b), shall not
be affected by the withdrawal, amendment or modification of the Company
Recommendation and (ii) the Company agrees that its obligations pursuant to this
Section 5.1(b) shall not be affected by the commencement, public proposal,
public disclosure or communication to the Company of any Takeover Proposal.
Section 5.2. Letters of the Company's Accountants.
------------------------------------
(a) The Company shall use its reasonable best efforts to cause to be
delivered to Parent two letters from KPMG LLP, the Company's independent public
accountants, one dated a date within two Business Days before the date on which
the Form S-4 shall become effective and one dated a date within two Business
Days before the Closing Date, each addressed to Parent and the Company, in form
and substance reasonably satisfactory to Parent and customary in scope and
substance for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
(b) The Company shall use its reasonable best efforts to cause to be
delivered to Parent a letter from KPMG LLP, addressed to Parent and the Company,
dated as of the Closing Date, stating that (i) KPMG LLP concurs with the Company
management's conclusion that, subject to customary qualifications, the Company
meets the requirements to be a party to a pooling of interests transaction for
financial reporting purposes under Opinion 16 of the Accounting Principles Board
and applicable SEC rules and regulations and (ii) the basis for such a
concurrence is KPMG LLP's belief that the criteria for such accounting treatment
have been met.
Section 5.3. Letters of Parent's Accountants.
-------------------------------
38
(a) Parent shall use its reasonable best efforts to cause to be delivered
to the Company two letters from BDO Xxxxxxx LLP, Parent's independent public
accountants, one dated a date within two Business Days before the date on which
the Form S-4 shall become effective and one dated a date within two Business
Days before the Closing Date, each addressed to the Company and Parent, in form
and substance reasonably satisfactory to the Company and customary in scope and
substance for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
(b) Parent shall use its reasonable best efforts to cause to be delivered
to the Company a letter from BDO Xxxxxxx LLP, addressed to the Company and
Parent, dated as of the Closing Date, stating that (i) BDO Xxxxxxx LLP concurs
with Parent's management's conclusion that, subject to customary qualifications,
the Merger qualifies for pooling of interests treatment for financial reporting
purposes under Opinion 16 of the Accounting Principles Board and applicable SEC
rules and regulations and (ii) the basis for such a concurrence is BDO Xxxxxxx
LLP's belief that the criteria for such accounting treatment have been met.
Section 5.4. Access to Information; Confidentiality. Upon reasonable
--------------------------------------
notice, each party shall (and shall cause its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financial advisors and other
representatives of the other party reasonable access during normal business
hours, during the period prior to the Effective Time, to such of its properties,
books, contracts, commitments, records, officers and employees as the other
party may reasonably request and, during such period, such party shall (and
shall cause its Subsidiaries to) furnish promptly to the other party (a) a copy
of each report, schedule, registration statement and other document filed,
published, announced or received by it during such period pursuant to the
requirements of Federal or state securities laws, as applicable (other than
documents which such party is not permitted to disclose under applicable law),
and (b) consistent with its legal obligations, all other information concerning
it and its business, properties and personnel as such other party may reasonably
request; PROVIDED, HOWEVER, that either party may restrict the foregoing access
to the extent that it reasonably concludes, after consultation with outside
counsel, that (i) any Legal Provision of any Governmental Entity applicable to
such party requires such party or its Subsidiaries to restrict access to any
properties or information, (ii) providing such access would result in the loss
of the attorney-client privilege, (iii) such document discusses the pricing or
dollar value of the transactions contemplated by this Agreement or (iv) the
documents contain competitively sensitive information, the sharing of which
could constitute a violation of any applicable antitrust laws. The parties shall
hold any such information in confidence to the extent required by, and in
accordance with, the provisions of the Confidentiality Agreement dated as of
June 18, 2001, between Parent and the Company (as it may be amended from time to
time, the "CONFIDENTIALITY AGREEMENT"). Each party shall make all reasonable
-------------------------
best efforts to minimize disruption to the business of the other party and its
Subsidiaries which may result from the requests for data and information
hereunder. All requests for access and information shall be coordinated through
senior executives of the parties to be designated. Any investigation by Parent
or the Company shall not affect the representations and warranties of Parent or
the Company, as the case may be.
39
Section 5.5. Reasonable Best Efforts.
-----------------------
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use its reasonable best 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 Merger and the other transactions contemplated by this
Agreement, including using reasonable best efforts to accomplish the following:
(i) the taking of all reasonable acts necessary to cause the conditions to
Closing to be satisfied, (ii) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by any Governmental Entity, (iii) the obtaining of all necessary
consents, approvals or waivers from third parties other than Governmental
Entities (provided that if obtaining any such consent, approval or waiver would
require any action other than the payment of a nominal amount, such action shall
be subject to the consent of Parent, not to be unreasonably withheld), (iv) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby or thereby, including seeking to have any stay
or temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (v) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. In connection with and without
limiting the foregoing Parent, Sub and the Company and their respective Boards
of Directors shall, if any state takeover statute or similar statute becomes
applicable to this Agreement, the Merger or any other transactions contemplated
by this Agreement, take all action necessary, with the reasonable cooperation of
the other parties hereto if reasonably requested, to ensure that the Merger and
the other transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on this
Agreement, the Merger and the other transactions contemplated by this Agreement.
The Company shall give Parent the opportunity to participate, on an advisory
basis, in the defense of any stockholder litigation against the Company and/or
its directors relating to the transactions contemplated by this Agreement.
(b) In furtherance and not in limitation of the foregoing, each party
hereto agrees to make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act and any other Regulatory Law with respect to the
transactions contemplated hereby as promptly as practicable after the date
hereof and to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act and any other
Regulatory Law and to take all other actions necessary to cause the expiration
or termination of the applicable waiting periods under the HSR Act as soon as
practicable. "REGULATORY LAW" means the Xxxxxxx Act, as amended, the Xxxxxxx
--------------
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and
all other applicable federal, state and foreign, if any, statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other
laws that are designed or intended to prohibit, restrict
40
or regulate (i) foreign investment or (ii) actions having the purpose or effect
of monopolization or restraint of trade or lessening of competition.
(c) Each of Parent and the Company shall, in connection with the efforts
referenced in Section 5.5(b) to obtain all requisite approvals and
authorizations for the transactions contemplated by this Agreement under the HSR
Act or any other Regulatory Law, use its reasonable best efforts to (i)
cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry, including
any proceeding initiated by a private party, (ii) promptly inform the other
party of any communication received by such party from, or given by such party
to, the Antitrust Division of the Department of Justice (the "DOJ"), the Federal
---
Trade Commission (the "FTC") or any other Governmental Entity and of any
---
material communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby, and (iii) subject to Section 5.4 and unless prohibited from doing so by
applicable law, permit the other party to review any communication given by it
to, and consult with each other in advance of any meeting or conference with,
the DOJ, the FTC or any such other Governmental Entity or, in connection with
any proceeding by a private party, with any other Person, and to the extent
appropriate or permitted by the DOJ, the FTC or such other applicable
Governmental Entity or other Person, give the other party the opportunity to
attend and participate in such meetings and conferences.
(d) Nothing in this Agreement shall require any of Parent and its
Subsidiaries or the Company and its Subsidiaries to sell, hold separate or
otherwise dispose of or conduct any portion of their business in a specified
manner, or agree to sell, hold separate or otherwise dispose of or conduct any
portion of their business in a specified manner, or permit the sale, holding
separate or other disposition of, any assets of Parent, the Company or their
respective Subsidiaries or the conduct of their business in a specified manner,
whether as a condition to obtaining any approval from a Governmental Entity by
March 31, 2002 or any other Person or for any other reason, if such sale,
holding separate or other disposition or the conduct of their business in a
specified manner would reasonably be expected to have a Material Adverse Effect
on Parent and its Subsidiaries (including the Surviving Corporation and its
Subsidiaries), taken together, after giving effect to the Merger.
Section 5.6. Stock Options; Employee Benefits.
--------------------------------
(a) As of the Effective Time, (i) each outstanding option to purchase
shares of Company Common Stock (a "STOCK OPTION") granted under any plan or
------------
arrangement providing for the grant of options to purchase shares of Company
Common Stock to current or former officers, directors, employees or consultants
of the Company or its Subsidiaries (the "COMPANY STOCK PLANS"), whether vested
-------------------
or unvested, shall be assumed by Parent and converted into an option to acquire,
on the same terms and conditions as were applicable under the Stock Option, the
number of shares of Parent Common Stock (rounded up to the nearest whole share)
determined by multiplying the number of shares of Company Common Stock subject
to such Stock Option by the Exchange Ratio, at a price per share of Parent
Common Stock equal to (A) the aggregate exercise price for the shares of
41
Company Common Stock otherwise purchasable pursuant to such Stock Option
(assuming all conditions to the exercise of such Stock Option had then been met)
divided by (B) the aggregate number of shares of Parent Common Stock deemed
purchasable pursuant to such Stock Option (each, as so adjusted, an "ADJUSTED
--------
OPTION"); PROVIDED that such exercise price shall be rounded up to the nearest
------
whole cent and (ii) any and all repurchase rights under any Company Stock Plan
held by the Company on the shares of Company Common Stock shall, to the extent
permitted by law, be assigned to Parent and shall be converted into repurchase
rights held by Parent as the corresponding shares of Parent Common Stock.
(b) The adjustments provided herein with respect to any Stock Options that
are "incentive stock options" as defined in Section 422 of the Code shall be and
are intended to be effected in a manner which is consistent with Section 424(a)
of the Code.
(c) Parent shall, prior to the Effective Time, take all action necessary
so that, at the Effective Time, by virtue of the Merger and without the need of
any further corporate action, Parent shall assume the Company Stock Plans with
the result that all obligations of the Company under the Company Stock Plans
with respect to Stock Options outstanding at the Effective Time, shall be
obligations of Parent, and all Adjusted Options shall be exercisable, on the
same terms as were applicable under the Stock Options, for shares of Parent
Common Stock following the Effective Time.
(d) At or prior to the Effective Time, Parent shall take all corporate
action necessary to reserve for issue a sufficient number of shares of Parent
Common Stock for delivery upon exercise of Adjusted Options. As soon as
practicable after the Effective Time, Parent shall file a Registration Statement
on Form X-0, Xxxx X-0 or Form S-8 as the case may be (or any successor or other
appropriate forms), with respect to the shares of Parent Common Stock subject to
such Adjusted Options, and shall maintain the effectiveness of such registration
statement and the current status of the prospectus or prospectuses contained
therein, for so long as such Adjusted Options remain outstanding. Following the
Effective Time, Parent shall use its reasonable best efforts to provide that
holders of Adjusted Options do not experience delays in exercising and settling
their Adjusted Options.
(e) [Reserved]
(f) Parent shall take, and shall cause the Surviving Corporation and its
Subsidiaries to take, the following actions: (i) waive any limitations regarding
pre-existing conditions and eligibility waiting periods under any health benefit
plan maintained by any of them for the benefit of individuals who are employees
of the Company and its Subsidiaries immediately prior to the Effective Time (the
"EMPLOYEES") to the extent such pre-existing condition or waiting period did not
---------
apply to the Employee under a comparable plan of the Company or its Subsidiary
immediately prior to the Effective Time (or the date the Employees become
eligible to receive benefits under Parent's plans following the Continuation
Period), (ii) provide each Employee with credit for any co-payments and
deductibles paid prior to the Effective Time for the calendar year in which the
42
Effective Time occurs (or the date the Employees become eligible to receive
benefits under Parent's plans following the Continuation Period), in satisfying
any applicable deductible or out-of-pocket requirements under such health plans,
and (iii) for eligibility, vesting and benefit accrual purposes (but not for
purposes of benefit accruals under any defined benefit pension plan) under all
compensation and benefit plans and policies applicable to the Employees, treat
all service by the Employees with the Company or any of its Subsidiaries and
their predecessor entities before the Effective Time as service with Parent and
its Subsidiaries. Parent shall cause the Surviving Corporation to honor all
employment, retention and severance arrangements (including, without limitation,
those set forth on Section 5.6(f) of the Company Disclosure Schedule) and all
obligations to current and former employees of the Company and its Subsidiaries
thereunder. Parent shall take all actions necessary to cause the Surviving
Corporation and its Subsidiaries to satisfy the obligations listed in Section
5.6(f) of the Company Disclosure Memorandum.
(g) The Company shall terminate its Employee Stock Purchase Plan in
accordance with its terms as of or prior to the Effective Time. The Company
shall not commence a new offering under its Employee Stock Purchase Plan after
the date of this Agreement.
(h) The provisions of this Section 5.6 shall not create in any employee or
former employee of the Company or any of its Subsidiaries any rights to
employment or continued employment with Parent, the Surviving Corporation, the
Company or any of their respective Subsidiaries.
Section 5.7. Indemnification, Exculpation and Insurance.
------------------------------------------
(a) Parent shall cause all rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the Effective Time
now existing in favor of the current or former directors or employees or
officers of the Company (each such Person being an "INDEMNIFIED PARTY") as
-----------------
provided in the Company's Certificate of Incorporation, Bylaws or any
indemnification agreement between such directors or officers and the Company (in
each case, as in effect on the date hereof) to be assumed by the Surviving
Corporation in the Merger, without further action, as of the Effective Time and
such rights shall survive the Merger and shall continue in full force and effect
in accordance with their terms. Without limiting the foregoing, Parent shall
indemnify and hold harmless, and provide advancement of expenses to, all past
and present directors, officers and employees of the Company and its
Subsidiaries (in all of their capacities) to the fullest extent permitted by the
Company's Certificate of Incorporation, Bylaws or any indemnification agreement
between such directors, officers and employees for acts or omissions occurring
at or prior to the Effective Time (including for acts or omissions occurring in
connection with the approval of this Agreement and the transactions contemplated
hereby).
(b) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 5.7 shall promptly notify the Surviving Corporation, upon
learning of any such claim, action, suit, proceeding or investigation, but the
failure to so notify shall not relieve the Surviving Corporation of any
liability it may have to such Indemnified Party to the extent such failure does
not materially prejudice the Surviving Corporation. The Surviving Corporation
may, at its own expense: (i) participate in the defense of any claim, suit,
action or proceeding; or (ii) at any time during the
43
course of any such claim, suit, action or proceeding, assume the defense
thereof, unless the Indemnified Parties (or any of them) determine in good faith
(after consultation with legal counsel) that there is, under applicable
standards of professional conduct, a conflict or any significant issue between
the positions of Parent and any of such Indemnified Parties, provided that the
Surviving Corporation's counsel shall be reasonably satisfactory to the
Indemnified Parties. If the Surviving Corporation assumes such defense, the
Indemnified Parties shall have the right (but not the obligation) to participate
in the defense thereof and to employ counsel, at their own expense, separate
from the counsel employed by the Surviving Corporation. Whether or not the
Surviving Corporation chooses to assume the defense of any such claim, suit,
action or proceeding, the Surviving Corporation and Parent shall cooperate in
the defense thereof. If the Surviving Corporation fails to so assume the defense
thereof, the Indemnified Parties may retain counsel reasonably satisfactory to
the Surviving Corporation and the Surviving Corporation shall pay the reasonable
fees and expenses of such counsel promptly after statements therefor are
received; provided that the Indemnified Parties on whose behalf expenses are
advanced provide (x) a written affirmation of their good faith belief that the
standard of conduct necessary for indemnification under Section 145 of the DGCL
has been met, and (y) an undertaking to repay such advances if it is ultimately
determined that such Indemnified Party is not entitled to indemnification under
Section 145 of the DGCL. Neither Parent nor the Surviving Corporation shall be
liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld or delayed); provided that, in the event that
any claim or claims for indemnification are asserted or made within such a
period of six years after the Effective Time, all rights to indemnification in
respect of any such claim or claims (and the matters giving rise thereto) shall
continue until the disposition of any and all such claim or claims (and the
matters giving rise thereto). The Indemnified Parties as a group may retain only
one law firm (in addition to local counsel) to represent them with respect to a
single action unless any Indemnified Party determines in good faith (after
consultation with legal counsel) that there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two or more Indemnified Parties. In the event Parent or the Surviving
Corporation or any of their respective 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 or conveys all or substantially all of its properties and assets to
any Person, then, and in each such case, to the extent necessary to effectuate
the purposes of this Section 5.7, proper provision shall be made so that the
successors and assigns of Parent and the Surviving Corporation assume the
obligations set forth in this Section 5.7, and none of the actions described in
clause (i) or (ii) shall be taken until such provision is made. Nothing in this
Section 5.7(b) is intended to modify adversely any existing rights to
indemnification of an Indemnified Party from the Company.
(c) For six years after the Effective Time, Parent shall cause the
Surviving Corporation to maintain in effect the Company's current officers',
directors' and employees' liability insurance in respect of acts or omissions
occurring at or prior to the Effective Time, covering each Person currently
covered by the Company's officers' and directors' liability insurance policy (a
copy of which has been heretofore delivered to Parent), on terms with respect to
such coverage and amount no less favorable than those of such policy in effect
on the date hereof; PROVIDED that Parent may substitute therefor policies of
Parent containing terms with respect to coverage and amount no less
44
favorable to such directors and officers; provided, however, that in
satisfying its obligation under this Section 5.7(b) Parent shall not be
obligated to pay annual premiums in excess of 200% of the amount per annum paid
by the Company in its last full fiscal year; and provided further that if Parent
is not able to obtain such coverage for such 200% amount, Parent shall
nevertheless be obligated to provide such coverage as may be obtained annually
for such 200% amount and provided further that notwithstanding the foregoing,
the Surviving Corporation may satisfy its obligations under this Section 5.7(c)
by purchasing a "tail" policy under the Company's existing directors' and
officers' insurance policy that (i) has an effective term of six years from the
Effective Time, (ii) covers those Persons who are currently covered, or will be
covered on or prior to the Effective Time, by the Company's directors' and
officers' insurance policy in effect on the date hereof for actions and
omissions occurring on or prior to the Effective Time and (iii) contains terms
and conditions (including without limitation coverage amounts) that are at least
as favorable in the aggregate as the terms and conditions of the Company's
directors' and officers' insurance policy in effect on the date hereof.
(d) The Certificate of Incorporation and Bylaws of the Surviving
Corporation shall contain, and Parent shall cause the Surviving Corporation to
fulfill and honor, provisions with respect to indemnification and exculpation
that are substantially identical to those set forth in the certificate of
incorporation and bylaws of the Company as of the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would adversely affect the
rights thereunder of any of the Indemnified Parties.
(e) The obligations of Parent or the Surviving Corporation under this
Section 5.7 are subject to the conditions that each Indemnified Party shall
comply with the reasonable requests of the Surviving Corporation or Parent in
defending or settling any action hereunder and that any Indemnified Party shall
approve any proposed settlement of any such action if (i) such settlement
involves no finding or admission of any liability by any Indemnified Party, and
(ii) the sole relief provided in connection with such settlement is monetary
damages that are paid in full by the Surviving Corporation or Parent.
(f) The provisions of this Section 5.7 are (i) intended to be for the
benefit of, and will be enforceable by, each Indemnified Party, his or her heirs
and his or her representatives and (ii) in addition to, and not in substitution
for, any other rights to indemnification or contribution that any such Person
may have by contract or otherwise. Parent hereby guarantees the performance by
Surviving Corporation of its obligations under this Section 5.7.
Section 5.8. Fees and Expenses.
-----------------
(a) Except as provided below, all fees and expenses incurred in connection
with this Agreement, the Merger and the other transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses, whether or
not the Merger is consummated.
45
(b) In the event that (1) a bona fide Takeover Proposal shall have been
publicly disclosed or has been made directly to the Company's stockholders or
any Person has announced an intention (whether or not conditional) to make a
bona fide Takeover Proposal and thereafter this Agreement is terminated (x) by
Parent or the Company pursuant to Section 7.1(b)(iii), (y) by Parent pursuant to
Section 7.1(d) (provided that the breach or failure to perform giving rise to
Parent's right to terminate under Section 7.1(d) shall be willful and material)
or (z) by Parent pursuant to Section 7.1(e)(vii) and, in any case, within 12
months of termination either the Company enters into definitive agreement with
respect to a Takeover Proposal or a Takeover Proposal is consummated (provided
that for this purpose the percentage in the definition of Takeover Proposal
shall be 50% in lieu of 15%) or (2) this Agreement is terminated (x) by the
Company pursuant to Section 7.1(f) or (y) by Parent pursuant to Section 7.1(e)
(other than Section 7.1(e)(vii)), then the Company shall pay Parent a fee equal
to $15 million (the "TERMINATION FEE"), payable by wire transfer of immediately
---------------
available funds, such payment to be made (A) in the case of the termination
contemplated by clause (1), on the earlier of the date the Company enters into a
definitive agreement or a Takeover Proposal is consummated, (B) in the case of a
termination contemplated by clause (2)(x), no later than immediately prior to
such termination and (c) in the case of termination contemplated by clause 2(y),
no later than the date of such termination. Simultaneously with the payment of
the Termination Fee, the Company shall reimburse Parent for all of its
documented out-of-pocket expenses incurred in connection with this Agreement and
the transactions contemplated hereby (including documented fees and expenses of
accountants, attorneys and financial advisors) up to an aggregate of $2.0
million (the "EXPENSES"). The Company acknowledges that the agreements contained
--------
in this Section 5.8(b) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Parent would not enter into
this Agreement. If Parent shall successfully bring an action to enforce its
rights under this Section 5.8(b), the Company shall reimburse Parent for its
reasonable fees and expenses in connection therewith and shall pay Parent
interest on the Termination Fee and Expenses from the date the Termination Fee
becomes payable to the date of payment at the publicly announced prime rate of
Citibank, N.A. in effect on the date the Termination Fee became payable.
Section 5.9. Public Announcements. Parent and the Company shall consult
--------------------
with each other before issuing, and give each other the opportunity to review
and comment upon, any press release or other public statements with respect to
the transactions contemplated by this Agreement, including the Merger, and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange or national securities quotation system. In addition to the foregoing,
neither Parent nor the Company shall issue any press release or otherwise make
any public statement or disclosure concerning non-public information relating to
the other party's business, financial condition or results of operations without
the consent of the other party, which consent shall not be unreasonably withheld
or delayed. The parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement shall be in the form
prepared by Parent after consultation with the Company.
Section 5.10. Affiliates.
----------
46
(a) As soon as practicable after the date hereof, and in no event more
than 45 days prior to the date of the Company Stockholders Meeting, the Company
shall deliver to Parent a letter identifying all Persons who are, at the time
this Agreement is submitted for adoption by the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act or
for purposes of qualifying the Merger for pooling of interests accounting
treatment under Opinion 16 of the Accounting Principles Board and its related
interpretations and applicable SEC rules and regulations. The Company shall use
its reasonable best efforts to cause each such Person to deliver to Parent at
least 30 days prior to the Closing Date a written agreement substantially in the
form attached as Exhibit 5.10(a) hereto.
---------------
(b) As soon as practicable after the date hereof, and in no event more
than 45 days prior to the date of the Company Stockholders Meeting, Parent shall
deliver to the Company a letter identifying all Persons who are, at the time the
issuance of Parent Common Stock in the Merger is submitted for approval by the
stockholders of the Company, "affiliates" of the Parent for purposes of
qualifying the Merger for pooling of interests accounting treatment under
Opinion 16 of the Accounting Principles Board and its related interpretations
and applicable SEC rules and regulations. Parent shall use its reasonable best
efforts to cause each such Person to deliver to Parent at least 30 days prior to
the Closing Date a written agreement substantially in the form attached as
Exhibit 5.10(b) hereto.
---------------
Section 5.11. Nasdaq Listing. Parent shall use its reasonable best efforts
--------------
to cause the shares of Parent Common Stock to be issued in the Merger and such
other shares of Parent Common Stock to be reserved for issuance in connection
with the Merger to be approved for listing on the Nasdaq National Market,
subject to official notice of issuance, prior to the Closing Date.
Section 5.12. Pooling of Interests. Each of the Company and Parent shall
--------------------
use reasonable best efforts to cause the Merger to be accounted for as a pooling
of interests under Opinion 16 of the Accounting Principles Board and its related
interpretations and applicable SEC rules and regulations, and such accounting
treatment to be accepted by each of the Company's and Parent's independent
public accountants, and by the SEC, respectively, and each of the Company and
Parent agrees that it will voluntarily take no action that would cause such
accounting treatment not to be obtained.
Section 5.13. Tax Treatment. Parent and the Company intend that the Merger
-------------
will qualify as a reorganization within the meaning of Section 368(a) of the
Code. Parent and the Company shall each use all reasonable efforts to cause the
Merger to so qualify.
Section 5.14. Publication of Combined Financial Results. Parent shall use
-----------------------------------------
its reasonable best efforts to file with the SEC within 28 days, but in no event
later than 42 days, after the end of the first full calendar month after the
Effective Time, a Form 8-K containing financial results (including combined
sales and net income) covering at least 30 days of post-merger combined
operations of Parent and the Company. The provisions of this Section 5.14 are
intended to be for
47
the benefit of, and will be enforceable by, each affiliate of the Company
immediately preceding the Effective Time, his or her heirs and his or her
representatives.
Section 5.15. Notices of Certain Events. Each party hereto shall
---------------------------
promptly notify the other parties orally and in writing of:
(a) the receipt by such party or any of such party's Subsidiaries of
any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) subject to any applicable legal restrictions, the receipt by
such party or any of such party's Subsidiaries of any notice or other
communication from any Governmental Entity in connection with the
transactions contemplated by this Agreement;
(c) such party's obtaining Knowledge of any actions, suits, claims,
investigations or proceedings commenced or threatened against, relating to
or involving or otherwise affecting any of Parent, Sub or the Company, as
the case may be, or any of their respective Subsidiaries which relate to
the consummation of the transactions contemplated by this Agreement; and
(d) such party's obtaining Knowledge of the occurrence, or failure
to occur, of any event which occurrence or failure to occur will be likely
to cause the conditions set forth in Article VII not to be satisfied;
PROVIDED, HOWEVER, that no such notification shall affect the representations,
warranties or obligations of the parties or the conditions to the obligations of
the parties hereunder, or limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 5.16. Conveyance Taxes. The Company and the Parent shall cooperate
----------------
in the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable in connection with the transaction contemplated by this Agreement that
are required or permitted to be filed on or before the Effective Time.
Section 5.17. [RESERVED]
Section 5.18. Voting Agreements. Concurrently with the execution and
-----------------
delivery of this Agreement, each of Xxxxxxx Xxxxxxx and Xxxx X. Xxxxxxx
shall execute and deliver to Parent an agreement substantially in the form of
Exhibit 5.18 hereto (the "COMPANY VOTING AGREEMENT"), pursuant to which, among
------------ ------------------------
other things, such Person is agreeing to vote all of the shares of Company
Common Stock owned, beneficially or of record, by him or her it to approve the
Merger.
48
Section 5.19. Section 16 Matters. Prior to the Effective Time, Parent and
------------------
the Company shall take all such steps as may be required to cause any
dispositions of Company Common Stock (including derivative securities with
respect to the Company Common Stock) resulting from the transactions
contemplated by this Agreement by each individual who is subject to the
reporting requirements of Section 16(a) of the Exchange Act with respect to the
Company to be exempt under Rule 16b-3 promulgated under the Exchange Act, such
steps to be taken in accordance with the No-Action Letter, dated January 12,
1999, issued by the SEC to Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Company shall have obtained the
---------------------
Company Stockholder Approval.
(b) Nasdaq Listing. The shares of Parent Company Stock to be issued
--------------
in the Merger and such other shares of Parent Common Stock to be reserved
for issuance in connection with the Merger shall have been approved for
listing on the Nasdaq National Market, subject to official notice of
issuance.
(c) HSR Act. The waiting period (and any extension thereof)
-------
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
(d) No Injunctions or Restraints. No temporary restraining order,
----------------------------
preliminary or permanent injunction or other judgment or order issued by
any court of competent jurisdiction or other statute, law, rule, legal
restraint or prohibition (collectively, "RESTRAINTS") shall be in effect
----------
preventing the consummation of the Merger.
(e) Form S-4. The Form S-4 shall have become effective under the
--------
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(f) Pooling Letters. Parent and the Company shall have received
---------------
letters from KPMG LLP and BDO Xxxxxxx LLP, dated as of the Closing Date,
in each case addressed to Parent and the Company, stating in substance the
matters to be stated by KPMG LLP and BDO Xxxxxxx LLP, pursuant to Section
5.2(b) and Section 5.3(b), respectively.
(g) No Governmental Litigation. There shall not be pending any suit,
--------------------------
action or proceeding by any Governmental Entity, (i) challenging the
acquisition by Parent or Sub of
49
any shares of Company Common Stock, seeking to restrain or prohibit the
consummation of the Merger, or seeking to place limitations on the
ownership of shares of Company Common Stock (or shares of common stock of
the Surviving Corporation) by Parent or Sub or seeking to obtain from the
Company, Parent or Sub any damages that are material in relation to the
Company, (ii) seeking to prohibit or materially limit the ownership or
operation by the Company or its Subsidiaries, Parent or any of Parent's
Subsidiaries of any material portion of any business or of any assets of
the Company, Parent or any of Parent's Subsidiaries, or to compel the
Company, Parent or any of Parent's Subsidiaries to divest or hold separate
any material portion of any business or of any assets of the Company,
Parent or any of their respective Subsidiaries, as a result of the Merger
or (iii) seeking to prohibit Parent or any of its Subsidiaries from
effectively controlling in any material respect the business or operations
of the Company or its Subsidiaries.
(h) Governmental and Regulatory Approvals. Other than the filing
-------------------------------------
provided for under Section 1.3 and filings pursuant to the HSR Act (which
are addressed in Section 5.5(c)), all consents, approvals and actions of,
filings with and notices to any Governmental Entity required of Parent,
the Company or any of their Subsidiaries to consummate the Merger, the
issuance of Parent Common Stock in the Merger and the other transactions
contemplated hereby, the failure of which to be obtained or taken,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Parent and its Subsidiaries (including the
Surviving Corporation and its Subsidiaries), taken together after giving
effect to the Merger, shall have been obtained. No consents, approvals,
actions, filings or notices related to any antitrust requirements of any
jurisdiction, except as set forth in Section 6.1(c) hereof, shall be a
condition of closing under this Section 6.1(h).
Section 6.2. Conditions to Obligations of Parent and Sub. The obligations
-------------------------------------------
of Parent and Sub to effect the Merger are further subject to the satisfaction
or waiver on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. Each representation and warranty
------------------------------
of the Company contained in this Agreement shall be true and correct in
all respects without reference to any qualification as to materiality such
that the aggregate effect of any inaccuracies in such representations and
warranties will not have a Material Adverse Effect on the Company, in each
case as of the date of this Agreement and as of the Closing Date as though
made on the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date, in which case as of such
earlier date. Parent shall have received a certificate signed on behalf of
the Company by the chief executive officer and the chief financial officer
of the Company to such effect.
(b) Performance of Obligations of the Company. The Company (i) shall
-----------------------------------------
have performed or complied with all agreements and covenants required to
be performed by it under this Agreement at or prior to the Closing Date
that are qualified as to Material Adverse Effect and (ii) shall have
performed or complied with all agreements and covenants required
50
to be performed by it under this Agreement at or prior to the Closing Date
that are not qualified as to Material Adverse Effect except where such
non-performance or non-compliance individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect on the
Company, and Parent shall have received a certificate signed on behalf of
the Company by the chief executive officer and the chief financial officer
of the Company to such effect.
(c) Letters from Company Affiliates. Parent shall have received
-------------------------------
from each Person named in the
letter referred to in Section
5.10(a) an executed copy of
an agreement substantially in
the form of Exhibit A hereto.
(d) Consents. All consents, the absence of which, in the aggregate,
--------
would be reasonably likely to have a Material Adverse Effect on the
Company, shall have been obtained.
(e) Tax Opinion. Parent shall have received an opinion of Fulbright
-----------
& Xxxxxxxx L.L.P., counsel to Parent, dated as of the Effective Time, to
the effect that the Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Code. The issuance of such opinion shall
be conditioned upon the receipt by such counsel of customary
representation letters from each of Parent, Sub and the Company, in each
case, in form and substance reasonably satisfactory to such counsel. Each
such representation letter shall be dated on or before the date of such
opinion and shall not have been withdrawn or modified in any material
respect.
Section 6.3. Conditions to Obligation of the Company. The obligation of
---------------------------------------
the Company to effect the Merger is further subject to the satisfaction or
waiver on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. Each representation and warranty
------------------------------
of Parent and Sub contained in this Agreement shall be true and correct in
all respects without reference to any qualification as to materiality such
that the aggregate effect of any inaccuracies in such representations and
warranties will not have a Material Adverse Effect on Parent, in each case
as of the date of this Agreement and as of the Closing Date as though made
on the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date, in which case as of such
earlier date. The Company shall have received a certificate signed on
behalf of Parent by an executive officer of Parent to such effect.
(b) Performance of Obligations of Parent and Sub. Each of Parent and
--------------------------------------------
Sub (i) shall have performed or complied with all agreements and
covenants required to be performed by it under this Agreement at or
prior to the Closing Date that are qualified as to Material
Adverse Effect and (ii) shall have performed or complied in all
material respects with all agreements and covenants required to be
performed by
51
it under this Agreement at or prior to the Closing Date that are not
qualified as to Material Adverse Effect except where such
non-performance or non-compliance individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect
on Parent, and the Company shall have received a certificate signed
on behalf of Parent by an executive officer of Parent to such
effect.
(c) Tax Opinion. The Company shall have received an opinion of
-----------
Wachtell, Lipton, Xxxxx & Xxxx, counsel to the Company, dated as of the
Effective Time, to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. The
issuance of such opinion shall be conditioned upon the receipt by such
counsel of customary representation letters from each of Parent, Sub and
the Company, in each case, in form and substance reasonably satisfactory
to such counsel. Each such representation letter shall be dated on or
before the date of such opinion and shall not have been withdrawn or
modified in any material respect. The Company may not waive or amend this
condition without the express written consent of Parent.
Section 6.4. Frustration of Closing Conditions. None of the Company,
---------------------------------
Parent or Sub may rely on the failure of any condition set forth in Section 6.1,
Section 6.2 or Section 6.3, as the case may be, to be satisfied if such failure
was caused by such party's failure to use reasonable best efforts to consummate
the Merger and the other transactions contemplated by this Agreement, as
required by and subject to Section 5.5.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination. This Agreement may be terminated at any
-----------
time prior to the Effective Time, whether before or after the Stockholder
Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated by March 31,
2002 for any reason; PROVIDED, HOWEVER, that the right to terminate
this Agreement under this Section 7.1(b)(i) shall not be available
to any party whose action or failure to act has been a principal
cause of or resulted in the failure of the Merger to be consummated
on or before such date;
(ii) if any Restraint having any of the effects set forth in
Section 6.1(d) shall be in effect and shall have become final and
nonappealable; PROVIDED that the party seeking to terminate this
Agreement pursuant to this Section 7.1(b)(ii) shall have used
reasonable best efforts to prevent the entry of and to remove such
Restraint; or
52
(iii) if the Company Stockholder Approval shall not have been
obtained at the Company Stockholders Meeting duly convened therefor
or at any adjournment or postponement thereof;
(c) by the Company, if Parent shall have breached or failed to
perform any of its representations, warranties, covenants or agreements
set forth in this Agreement, which breach or failure to perform (A) would
give rise to the failure of a condition set forth in Section 6.3(a) or
Section 6.3(b), and (B) is not cured by Parent within 30 calendar days
following receipt of written notice of such breach or failure to perform
from the Company;
(d) by Parent, if the Company shall have breached or failed to
perform any of its representations, warranties, covenants or agreements
set forth in this Agreement, which breach or failure to perform (A) would
give rise to the failure of a condition set forth in Section 6.2(a) or
Section 6.2(b), and (B) is not cured by the Company within 30 calendar
days following receipt of written notice of such breach or failure to
perform from Parent;
(e) by Parent, if (i) the directors of the Company shall have failed
to include in the Proxy Statement the Company Recommendation, (ii) the
directors of the Company shall have withdrawn the Company Recommendation,
(iii) the directors of the Company shall have modified or changed the
Company Recommendation in a manner adverse to Parent or Sub (it being
agreed that any disclosure of information required by applicable law
regarding the Company's operations shall not be deemed a modification or
change of the Company Recommendation in a manner adverse to Parent or
Sub), provided that Parent shall not be entitled to terminate this
Agreement pursuant to this clause (iii) unless it has notified the Company
in writing that it intends to terminate the Agreement pursuant to this
clause (iii) and the Company has not, within two Business Days after
receipt of Parent's notice, revised the Company Recommendation in a manner
not so adverse, (iv) a tender or exchange offer relating to securities of
the Company shall have been commenced and the Company shall not have sent
to its security holders, within 15 Business Days after the commencement of
such tender or exchange offer (or such longer period as the Company
advises Parent it requires to obtain the information necessary to evaluate
such offer), a statement disclosing that the Company's Board of Directors
recommends rejection of such tender or exchange offer, (v) the directors
of the Company shall have approved or recommended to the stockholders of
the Company a Takeover Proposal, (vi) the directors of the Company shall
have approved or recommended that the stockholders of the Company tender
their shares of Company Common Stock into any tender offer or exchange
offer that is a Takeover Proposal or is related thereto, (vii) the Company
willfully breaches any of its obligations under Section 4.2 of this
Agreement that results in a Person making a Takeover Proposal, (viii) the
Company shall have materially breached its obligations under this
Agreement by reason of a failure to call the Company Stockholders Meeting
in accordance with Section 5.1(b), or (ix) the directors of the Company
shall have adopted a resolution to do any of the foregoing specified in
clauses (i), (ii), (iii), (iv), (v), (vi) or (viii); or
53
(f) by the Company, if the Board of Directors of Company has
provided written notice to Parent that the Company intends to enter into a
binding written agreement for a Superior Proposal (with such termination
becoming effective upon the Company entering into such binding written
agreement); PROVIDED, HOWEVER, that (i) the Company shall have complied
with Section 4.2 in all material respects; (ii) the Company shall have (A)
notified Parent in writing of its receipt of such Superior Proposal, (B)
further notified Parent in writing that the Company intends to enter into
a binding agreement with respect to such Superior Proposal subject to
clause (iii) below and (C) attached the most current written version of
such Superior Proposal (or a summary containing all material terms and
conditions of such Superior Proposal) to such notice referred to in clause
(B), (iii) Parent does not make, within 72 hours after receipt of the
Company's written notice pursuant to clause (ii)(B) above, an offer that
the Board of Directors of the Company shall have reasonably concluded in
good faith (following consultation with its financial advisor and outside
counsel) is as favorable to the stockholders of the Company as such
Superior Proposal and (iv) the Company pays the Termination Fee and
Expenses in accordance with Section 5.8(b) concurrently with entering into
such binding written agreement.
Section 7.2. Effect of Termination. In the event of termination of this
---------------------
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
provisions of the second sentence of Section 5.4 obligation to keep confidential
nonpublic information received from the other party and Section 5.8 fees and
expenses this Section 7.2 and ARTICLE VIII, which provisions shall survive such
termination, PROVIDED THAT, notwithstanding anything to the contrary contained
in this Agreement, neither Parent nor the Company shall be relieved or released
from any liabilities or damages arising out of its willful and material breach
of this Agreement.
Section 7.3. Amendment. This Agreement may be amended by the parties
---------
hereto at any time before or after approval of the matters presented in
connection with the Merger to the stockholders of the Company; PROVIDED,
HOWEVER, that after any such approval, there shall be made no amendment that by
law requires further approval by the stockholders of the Company without such
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
Section 7.4. Extension; Waiver. At any time prior to the Effective Time,
-----------------
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto or (c) subject to the proviso of Section 7.3, waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
54
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1. Nonsurvival of Representations and Warranties. None of the
---------------------------------------------
representations, warranties, covenants and other agreements in this Agreement or
in any instrument delivered pursuant to this Agreement, including any rights
arising out of any breach of such representations, warranties, covenants and
other agreements, shall survive the Effective Time, except for those covenants
and agreements contained herein and therein (including Sections 5.6(d), 5.7 and
5.14) that by their terms apply or are to be performed in whole or in part after
the Effective Time and this Article VIII.
Section 8.2. Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be deemed given, and
shall be effective upon receipt, if delivered personally, telecopied (which is
confirmed) or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
if to Parent or Sub, to:
TMP Worldwide inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopier: (000)000-0000
Attention: CEO
and
TMP Worldwide inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopier:(000)000-0000
Attention: General Counsel
with a copy to (which shall not constitute notice):
Fulbright & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxx Xxxxxx, Esq.
55
if to the Company, to:
XxxXxxx.xxx, Ltd.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopier:
Attention: Chief Executive Officer
and
XxxXxxx.xxx, Ltd.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: General Counsel
with a copy to (which shall not constitute notice):
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
Section 8.3. Definitions. For purposes of this Agreement:
-----------
(a) an "AFFILIATE" of any Person means another Person that directly
---------
or indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, such first Person;
(b) "BUSINESS DAY" means any day other than Saturday, Sunday or any
------------
other day on which banks are legally permitted to be closed in New York,
New York;
(c) "KNOWLEDGE" of any Person that is not an individual means, with
---------
respect to any matter in question, the actual knowledge of any of such
person's executive officers having primary responsibility for such matter;
(d) "MATERIAL ADVERSE EFFECT" with respect to the Company or Parent,
-----------------------
means any change, effect, event, occurrence or state of facts (or any
development that has had or is
56
reasonably likely to have any change or effect) that is materially adverse
to the business, financial condition or results of operations of such
entity and its Subsidiaries, taken as a whole, PROVIDED, HOWEVER, none of
the following shall be deemed in themselves, either alone or in
combination, to constitute, and none of the following shall be taken into
account in determining whether there has been a Material Adverse Effect:
(i) any change in the market price or trading volume of such entity's
capital stock after the date hereof, (ii) any adverse change, event or
effect arising from or relating to general business or economic conditions
in the United States (including prevailing interest rate and stock market
levels), (iii) any adverse change, event or effect arising from or
relating to the general state of the industries and market sectors in
which such entity operates and (iv) the loss of existing customers or
employees, a reduction in business by, or revenue from, existing
customers, or any reduction in job seekers, in each case resulting
primarily from the announcement or consummation of the Merger;
(e) "PERSON" means an individual, corporation, partnership, limited
------
liability company, joint venture, association, trust, unincorporated
organization or other entity;
(f) "SIGNIFICANT SUBSIDIARY" shall have the meaning ascribed to
-----------------------
such term in Rule 1-02 of Regulation S-X of the SEC;
(g) a "SUBSIDIARY" of any Person means, with respect to such Person,
----------
any corporation, partnership, joint venture or other legal entity of which
such person (either alone or through or together with any other
subsidiary), owns, directly or indirectly, 50% or more of the stock or
other equity interests the holders of which are generally entitled to vote
for the election of the Board of Directors or other governing body of such
corporation or other legal entity; and
(h) "SUPERIOR PROPOSAL" means a bona fide written proposal made by a
-----------------
Person other than a party hereto that is (a) for a Takeover Proposal
(except that references in the definition of "Takeover Proposal" to "15%"
shall be "50%") and (b) is on terms which the Board of Directors of the
Company in good faith concludes (following receipt of the advice of its
financial advisors and outside counsel), taking into account, among other
things, all legal, financial, regulatory and other aspects of the proposal
and the Person making the proposal, (i) would, if consummated, result in a
transaction that is more favorable to the Company's stockholders (in their
capacities as stockholders), from a financial point of view, than the
transactions contemplated by this Agreement and (ii) is reasonably capable
of being completed by March 31, 2002.
Section 8.4. Interpretation. When a reference is made in this Agreement to
--------------
an Article, a Section, Exhibit or Schedule, such reference shall be to an
Article of, a Section of, or an Exhibit or Schedule to, this Agreement unless
otherwise indicated. 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. Whenever the words "include",
"includes" or
57
"including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation". The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns.
References to this Agreement include references to the Company Disclosure
Memorandum and Parent Disclosure Memorandum. Each Section of this Agreement is
qualified by the matters set forth in the related Section of the Company
Disclosure Memorandum and of the Parent Disclosure Memorandum and by such
matters set forth any place else in this Agreement or in the Company Disclosure
Memorandum or the Parent Disclosure Memorandum where the applicability of such
qualification to the Section of this Agreement is reasonably apparent.
Section 8.5. Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 8.6. Entire Agreement; Third-Party Beneficiaries. This Agreement
-------------------------------------------
and the Confidentiality Agreement (a) constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement and the
Confidentiality Agreement and (b) except for the provisions of Sections 5.6(f)
(including the corresponding section of the Company Disclosure Memorandum), 5.7
and 5.14, are not intended to confer upon any Person other than the parties any
rights or remedies.
Section 8.7. 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
laws thereof.
Section 8.8. Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned newly-formed
United States Subsidiary of Parent, provided that no such assignment shall
adversely affect the tax-free nature of the transaction and provided further
that no such assignment shall relieve Sub of any of its obligations hereunder.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
58
Section 8.9. Enforcement. The parties agree that irreparable damage would
-----------
occur and that the parties would not have any adequate remedy at law in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in the Chancery or other Courts of
the State of Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of the Chancery or other
Courts of the State of Delaware in the event any dispute arises out of this
Agreement or the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (c) agrees that it will not bring any
action relating to this Agreement or the transactions contemplated by this
Agreement in any court other than the Chancery or other Courts of the State of
Delaware, and each of the parties irrevocably waives the right to trial by jury,
and (d) each of the parties irrevocably consents to service of process by first
class certified mail, return receipt requested, postage prepaid, to the address
at which such party is to receive notice.
Section 8.10. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
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59
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
TMP WORLDWIDE INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
----------------------------
Name:
Title:
TMP TOWER CORP.
By: /s/ Xxxxx X. Xxxxxxxxxx
----------------------------
Name:
Title:
XXXXXXX.XXX, LTD.
By: /S/ Xxxxxxx Xxxxxx
----------------------------
Name: Xxxxxxx Xxxxxx
Title: Pres & CEO
