EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
THE INTERPUBLIC GROUP OF COMPANIES, INC.
VERITAS ACQUISITION CORP.
AND
TRUE NORTH COMMUNICATIONS INC.
Dated as of March 18, 2001
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
Section 1.1 The Merger............................................................................1
Section 1.2 Effective Time........................................................................2
Section 1.3 Effects of the Merger; Directors and Officers.........................................2
Section 1.4 Charter and Bylaws; Directors and Officers............................................2
Section 1.5 Conversion of Securities..............................................................2
Section 1.6 Parent to Make Certificates Available.................................................3
Section 1.7 Dividends; Transfer Taxes; Withholding................................................4
Section 1.8 No Fractional Securities..............................................................5
Section 1.9 Return of Exchange Fund...............................................................5
Section 1.10 Adjustment of Exchange Ratio..........................................................5
Section 1.11 No Further Ownership Rights in Company Common Stock...................................5
Section 1.12 Closing of Company Transfer Books.....................................................6
Section 1.13 Lost Certificates.....................................................................6
Section 1.14 Further Assurances....................................................................6
Section 1.15 Closing...............................................................................6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 2.1 Organization, Standing and Power......................................................7
Section 2.2 Capital Structure.....................................................................7
Section 2.3 Authority.............................................................................8
Section 2.4 Consents and Approvals; No Violation..................................................9
Section 2.5 SEC Documents and Other Reports......................................................10
Section 2.6 Registration Statement and Proxy Statement...........................................10
Section 2.7 Absence of Certain Changes or Events.................................................11
Section 2.8 Permits and Compliance...............................................................11
Section 2.9 Actions and Proceedings..............................................................12
Section 2.10 Opinion of Financial Advisor.........................................................12
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TABLE OF CONTENTS
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Section 2.11 No Required Vote of Parent Stockholders..............................................12
Section 2.12 Pooling of Interests; Reorganization.................................................12
Section 2.13 Brokers..............................................................................12
Section 2.14 Operations of Sub....................................................................13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Standing and Power.....................................................13
Section 3.2 Capital Structure....................................................................13
Section 3.3 Authority............................................................................15
Section 3.4 Consents and Approvals; No Violation.................................................15
Section 3.5 SEC Documents and Other Reports......................................................16
Section 3.6 Registration Statement and Proxy Statement...........................................16
Section 3.7 Absence of Certain Changes or Events.................................................17
Section 3.8 Permits and Compliance...............................................................17
Section 3.9 Tax Matters..........................................................................18
Section 3.10 Actions and Proceedings..............................................................19
Section 3.11 Employee Benefits....................................................................19
Section 3.12 Labor Matters........................................................................21
Section 3.13 Opinion of Financial Advisor.........................................................21
Section 3.14 Required Vote of Company Stockholders................................................21
Section 3.15 Pooling of Interests; Reorganization.................................................21
Section 3.16 Brokers..............................................................................21
Section 3.17 Amendment to the Rights Agreement....................................................21
Section 3.18 Takeover Statutes....................................................................22
Section 3.19 Accuracy of Earn-Out Schedule........................................................22
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger...............................................22
Section 4.2 No Solicitation by the Company.......................................................25
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(CONTINUED)
Page
Section 4.3 Pooling of Interests; Reorganization.................................................27
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Stockholder Meeting..................................................................27
Section 5.2 Preparation of the Registration Statement and the Proxy Statement....................28
Section 5.3 Access to Information................................................................29
Section 5.4 Compliance with the Securities Act...................................................29
Section 5.5 Current NYSE Listing.................................................................30
Section 5.6 Fees and Expenses....................................................................30
Section 5.7 Company Stock Plans..................................................................31
Section 5.8 Reasonable Best Efforts; Pooling of Interests........................................32
Section 5.9 Public Announcements.................................................................33
Section 5.10 Real Estate Transfer and Gains Tax...................................................33
Section 5.11 State Takeover Laws..................................................................33
Section 5.12 Indemnification; Directors and Officers Insurance....................................34
Section 5.13 Notification of Certain Matters......................................................34
Section 5.14 Employee Benefit Plans and Agreements................................................35
Section 5.15 Section 16(b)........................................................................36
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger...........................36
Section 6.2 Conditions to Obligation of the Company to Effect the Merger.........................37
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the Merger.....................38
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination..........................................................................39
Section 7.2 Effect of Termination................................................................40
Section 7.3 Amendment............................................................................41
Section 7.4 Waiver...............................................................................41
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TABLE OF CONTENTS
(CONTINUED)
Page
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties.......................................41
Section 8.2 Notices..............................................................................41
Section 8.3 Interpretation.......................................................................42
Section 8.4 Counterparts.........................................................................42
Section 8.5 Entire Agreement; No Third-Party Beneficiaries.......................................42
Section 8.6 Governing Law........................................................................43
Section 8.7 Assignment...........................................................................43
Section 8.8 Severability.........................................................................43
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TABLE OF DEFINED TERMS
Defined Term Section
------------ --------
Agreement............................................................................. Forepart
Blue Sky Laws......................................................................... 2.4
Certificate of Merger................................................................. 1.2
Certificates.......................................................................... 1.6(b)
Closing............................................................................... 1.15
Code.................................................................................. Recitals
Company............................................................................... Forepart
Company Affiliate Letter.............................................................. 5.4(a)
Company Bylaws........................................................................ 1.4(a)
Company Charter....................................................................... 1.4(a)
Company Common Stock.................................................................. Recitals
Company Confidentiality Agreement..................................................... 5.3(a)
Company Employees..................................................................... 5.14(a)
Company Letter........................................................................ 3.2(a)
Company Multiemployer Plan............................................................ 3.11 (c)
Company Permits....................................................................... 3.8(a)
Company Plan.......................................................................... 3.11(c)
Company Preferred Stock............................................................... 3.2(a)
Company SEC Documents................................................................. 3.5
Company Stock Option Plans............................................................ 3.2(a)
Company Stock Options................................................................. 3.2(a)
Confidentiality Agreements............................................................ 5.3(b)
Constituent Corporations.............................................................. Forepart
D&O Insurance......................................................................... 5.12(b)
DGCL.................................................................................. 1.1
Effective Time........................................................................ 1.2
ERISA................................................................................. 3.1(a)
ERISA Affiliates...................................................................... 3.11(c)
Exchange Act.......................................................................... 2.4
Exchange Agent........................................................................ 1.6(a)
Exchange Fund......................................................................... 1.6(a)
Exchange Ratio........................................................................ 1.5(c)
GAAP.................................................................................. 6.3(d)
Gains Taxes........................................................................... 5.10
Governmental Entity................................................................... 2.4
HSR Act............................................................................... 2.4
Knowledge of Parent................................................................... 2.9
Knowledge of the Company.............................................................. 3.10
Liens................................................................................. 2.2(b)
Material Adverse Effect............................................................... 2.1
Merger................................................................................ Recitals
New Plans............................................................................. 5.14(a)
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NYSE.................................................................................. 1.8
Old Plans............................................................................. 5.14(a)
Parent................................................................................ Forepart
Parent Affiliate Letter............................................................... 5.4(b)
Parent Annual Report.................................................................. 2.2(b)
Parent Bylaws......................................................................... 2.4
Parent Charter........................................................................ 2.4
Parent Common Stock................................................................... Recitals
Parent Letter......................................................................... 2.4
Parent Permits........................................................................ 2.8(a)
Parent Preferred Stock................................................................ 2.2(a)
Parent SEC Documents.................................................................. 2.5
Parent Stock Plans.................................................................... 2.2(a)
Proxy Statement....................................................................... 2.6
Rabbi Trust........................................................................... 5.14(c)
Registration Statement................................................................ 2.3
Rights................................................................................ Recitals
Rights Agreement...................................................................... Recitals
Rule 145 Affiliates................................................................... 5.4(a)
SEC................................................................................... 2.2(a)
Securities Act........................................................................ 2.3
Significant Subsidiary................................................................ 2.2(a)
State Takeover Approvals.............................................................. 2.4
State Takeover Statutes............................................................... 3.18
Stockholder Meeting................................................................... 5.1
Sub................................................................................... Forepart
Subsidiary............................................................................ 2.1
Substitute Option..................................................................... 5.7
Superior Proposal..................................................................... 4.2(a)
Surviving Corporation................................................................. 1.1
Takeover Proposal..................................................................... 4.2(a)
Taxes................................................................................. 3.9(a)
Tax Returns........................................................................... 3.9(a)
Third Party........................................................................... 5.6(d)
Third Party Acquisition Event......................................................... 5.6(d)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 18, 2001 (this
"Agreement"), among The Interpublic Group of Companies, Inc., a Delaware
corporation ("Parent"), Veritas Acquisition Corp., a Delaware corporation and a
direct wholly owned subsidiary of Parent ("Sub"), and True North Communications
Inc., a Delaware corporation (the "Company") (Sub and the Company being
hereinafter collectively referred to as the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have each approved and declared advisable the merger of Sub with and
into the Company (the "Merger"), upon the terms and subject to the conditions
set forth herein, whereby each issued and outstanding share of common stock, par
value $.33 1/3 per share, of the Company ("Company Common Stock") together with
the associated right to purchase one two-thousandth of a share of Series B
Junior Participating Preferred Stock of the Company (the "Rights") under the
Rights Agreement dated November 4, 1998 , as amended, between the Company and
First Chicago Trust Company of New York, a division of Equiserve (the "Rights
Agreement"), not owned directly or indirectly by Parent or the Company will be
converted into shares of Common Stock, par value $.10 per share, of Parent
("Parent Common Stock");
WHEREAS, the respective Boards of Directors of Parent and the
Company have each determined that the Merger is in furtherance of and consistent
with their respective long-term business strategies and is in the best interest
of their respective stockholders;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section 368
of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a pooling of interests.
NOW, THEREFORE, in consideration of the premises,
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the
conditions hereof, and in accordance with the Delaware General Corporation Law
(the "DGCL"), Sub shall be merged with and into the Company at the Effective
Time (as hereinafter defined). Following the Merger, 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 obligations of Sub in accordance with the DGCL.
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Section 1.2 EFFECTIVE TIME. The Merger shall become effective
when a Certificate of Merger (the "Certificate of Merger"), executed in
accordance with the relevant provisions of the DGCL, is filed with the Secretary
of State of the State of Delaware; PROVIDED, HOWEVER, that, upon mutual consent
of the Constituent Corporations, the Certificate of Merger may provide for a
later date of effectiveness of the Merger not more than 30 days after the date
the Certificate of Merger is filed. When used in this Agreement, the term
"Effective Time" shall mean the date and time at which the Certificate of Merger
is accepted for recording or such later time established by the Certificate of
Merger. The filing of the Certificate of Merger shall be made on the date of the
Closing (as hereinafter defined).
Section 1.3 EFFECTS OF THE MERGER; DIRECTORS AND OFFICERS. The
Merger shall have the effects set forth in this Agreement and in Section 259 of
the DGCL.
Section 1.4 CHARTER AND BYLAWS; DIRECTORS AND OFFICERS.
(a) At the Effective Time, the Amended and Restated
Certificate of Incorporation, as amended, of the Company (the "Company
Charter"), as in effect immediately prior to the Effective Time, shall be
amended so that Article FOURTH of the Company Charter reads in its entirety as
follows: "The total number of shares of all classes of capital stock which the
Corporation shall have authority to issue is 1,000 shares of Common Stock, par
value $.01 per share." As so amended, the Company Charter shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law. At the Effective
Time, the By-laws of the Company, as amended (the "Company Bylaws"), as in
effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation until thereafter changed or amended as provided therein or
by the Company Charter and the DGCL.
(b) The directors of Sub at the Effective Time of the
Merger 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. The officers of the Company at the
Effective Time of the Merger 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.
(c) As of the Effective Time, Parent's board of directors
shall elect Xxxxx X. Xxxx and J. Xxxxxxx Xxxx as members of the board of
directors of Parent, to hold such office until the earlier of resignation or
removal or until their respective successors are duly elected and qualified.
(d) As of the Effective Time, Parent's board of directors
shall elect Xxxxx X. Xxxx to become the Vice-Chairman of Parent, to hold such
office until the earlier of resignation or removal or until his successor is
duly elected and qualified.
Section 1.5 CONVERSION OF SECURITIES. As of the Effective
Time, by virtue of the Merger and without any action on the part of Sub, the
Company, Parent or the holders of any securities of the Constituent
Corporations:
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(a) Each issued and outstanding share of common stock,
par value $.01 per share, of Sub shall be converted into one validly issued,
fully paid and nonassessable share of common stock of the Surviving Corporation.
(b) All shares of Company Common Stock, together with the
associated Rights, that are held in the treasury of the Company or by any wholly
owned Subsidiary of the Company and any shares of Company Common Stock, together
with the associated Rights, owned by Parent (other than shares, if any, in trust
accounts, managed accounts, custodial accounts and the like that are
beneficially owned by third parties) shall be canceled and no capital stock of
Parent or other consideration shall be delivered in exchange therefor.
(c) Subject to the provisions of Sections 1.8 and 1.10
hereof, each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time, together with the associated Rights, (other than
shares to be canceled in accordance with Section 1.5(b)) shall be converted into
1.14 (such number being the "Exchange Ratio") validly issued, fully paid and
nonassessable shares of Parent Common Stock. All such shares of Company Common
Stock and the associated Rights, when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and each holder of a
certificate representing any such shares shall cease to have any rights with
respect thereto, except the right to receive any dividends and other
distributions in accordance with Section 1.7, certificates representing the
shares of Parent Common Stock into which such shares are converted and any cash,
without interest, in lieu of fractional shares to be issued or paid in
consideration therefor upon the surrender of such certificate in accordance with
Section 1.6.
Section 1.6 PARENT TO MAKE CERTIFICATES AVAILABLE.
(a) EXCHANGE OF CERTIFICATES. Parent shall authorize
Equiserve (or such other person or persons as shall be reasonably acceptable to
Parent and the Company) to act as Exchange Agent hereunder (the "Exchange
Agent"). At or prior to the Effective Time, Parent shall deposit with the
Exchange Agent certificates representing the shares of Parent Common Stock
issuable pursuant to Section 1.5(c) for exchange with outstanding shares of
Company Common Stock, together with the associated Rights, and cash, as required
to make payments in lieu of any fractional shares pursuant to Section 1.8 (such
cash and shares of Parent Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund"). The Exchange Agent shall deliver the Parent Common Stock
contemplated to be issued pursuant to Section 1.5(c) out of the Exchange Fund.
The Exchange Agent shall invest any cash included in the Exchange Fund as
directed by Parent on a daily basis and promptly pay to Parent or its designee
any interest or other income resulting therefrom. Parent shall bear the risk of
any investment losses arising from such investment.
(b) EXCHANGE PROCEDURES. Parent shall instruct the
Exchange Agent, as soon as practicable after the Effective Time, to mail to each
record holder of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock, together
with the associated Rights, converted in the Merger (the "Certificates") 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 actual delivery
of the Certificates to the Exchange Agent, and shall contain instructions for
use in effecting the surrender of
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the Certificates in exchange for certificates representing shares of Parent
Common Stock and cash in lieu of fractional shares). Upon surrender for
cancellation to the Exchange Agent of one or more Certificates held by any
record holder of a Certificate, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor (after taking into account all shares of Company Common
Stock then held and surrendered by such holder) a certificate representing
that number of whole shares of Parent Common Stock into which the shares
represented by the surrendered Certificate shall have been converted at the
Effective Time pursuant to this Article I, cash in lieu of any fractional
share in accordance with Section 1.8 and certain dividends and other
distributions in accordance with Section 1.7, and any Certificate so
surrendered shall forthwith be canceled.
Section 1.7 DIVIDENDS; TRANSFER TAXES; WITHHOLDING. No
dividends or other distributions that are declared on or after the Effective
Time on Parent Common Stock, or are payable to the holders of record thereof on
or after the Effective Time, will be paid to any person entitled by reason of
the Merger to receive a certificate representing Parent Common Stock until such
person surrenders the related Certificate or Certificates, as provided in
Section 1.6, and no cash payment in lieu of fractional shares will be paid to
any such person pursuant to Section 1.8 until such person shall so surrender the
related Certificate or Certificates. Subject to the effect of applicable law,
there shall be paid to each record holder of a new certificate representing such
Parent Common Stock: (i) at the time of such surrender or as promptly as
practicable thereafter, the amount of any dividends or other distributions
theretofore paid with respect to the shares of Parent Common Stock represented
by such new certificate and having a record date on or after the Effective Time
and a payment date prior to such surrender; (ii) at the appropriate payment date
or as promptly as practicable thereafter, the amount of any dividends or other
distributions payable with respect to such shares of Parent Common Stock and
having a record date on or after the Effective Time but prior to such surrender
and a payment date on or subsequent to such surrender; and (iii) at the time of
such surrender or as promptly as practicable thereafter, the amount of any cash
payable with respect to a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 1.8. In no event shall the person
entitled to receive such dividends or other distributions or cash in lieu of
fractional shares be entitled to receive interest on such dividends or other
distributions or cash in lieu of fractional shares. If any cash or certificate
representing shares of Parent Common Stock is to be paid to or issued in a name
other than that in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed and otherwise in proper form for transfer
and that the person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of certificates for
such shares of Parent Common Stock in a name other than that of the registered
holder of the Certificate surrendered, or shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable. Parent or
the Exchange Agent 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 Parent or the Exchange Agent is
required to deduct and withhold with respect to the making of such payment under
the Code or under any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by Parent or the Exchange Agent, 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 Parent or the Exchange Agent.
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Section 1.8 NO FRACTIONAL SECURITIES. No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates pursuant to this Article I, and no Parent
dividend or other distribution or stock split shall relate to any fractional
share, and no fractional share shall entitle the owner thereof to vote or to any
other rights of a security holder of Parent. In lieu of any such fractional
share, each holder of Company Common Stock who would otherwise have been
entitled to a fraction of a share of Parent Common Stock upon surrender of
Certificates for exchange pursuant to this Article I will be paid an amount in
cash (without interest), rounded to the nearest cent, determined by multiplying
(i) the last reported sale price per share of Parent Common Stock on The New
York Stock Exchange (the "NYSE") on the date of the Effective Time (or, if the
shares of Parent Common Stock do not trade on the NYSE on such date, the first
date of trading of shares of Parent Common Stock on the NYSE after the Effective
Time) by (ii) the fractional interest to which such holder would otherwise be
entitled. As promptly as practicable after the determination of the amount of
cash, if any, to be paid to holders of fractional share interests, the Exchange
Agent shall so notify Parent, and Parent shall deposit such amount with the
Exchange Agent and shall cause the Exchange Agent to forward payments to such
holders of fractional share interests subject to and in accordance with the
terms of Section 1.7 and this Section 1.8.
Section 1.9 RETURN OF EXCHANGE FUND. Any portion of the
Exchange Fund (including any income or proceeds thereon or any investments
thereof) which remains undistributed to the former stockholders of the Company
for twelve months after the Effective Time shall be delivered to Parent or its
designee, upon demand of Parent, and any such former stockholders who have not
theretofore complied with this Article I shall thereafter look only to Parent
(subject to abandoned property, escheat and similar laws) for payment of their
claim for Parent Common Stock, 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 who are entitled thereto pursuant to Sections 1.7
and 1.8 on the third anniversary of the date of the Effective Time (or such
earlier date as shall be immediately before such date upon which such securities
or amounts would otherwise escheat to or become property of any public official
or Governmental Entity (as hereinafter defined)) shall, to the extent permitted
by law, become the property of Parent, free and clear of claims or interests of
any person previously entitled thereto. Neither Parent nor the Surviving
Corporation shall be liable to any former holder of Company Common Stock for any
such shares of Parent Common Stock, cash, dividends and distributions which are
delivered to a public official or Governmental Entity pursuant to any applicable
abandoned property, escheat or similar law.
Section 1.10 ADJUSTMENT OF EXCHANGE RATIO. In the event of any
reclassification, stock split or stock dividend with respect to Parent Common
Stock or any change or conversion of Parent Common Stock into other securities
(or if a record date with respect to any of the foregoing should occur) prior to
the Effective Time, appropriate and proportionate adjustments, if any, shall be
made to the Exchange Ratio, and all references to the Exchange Ratio in this
Agreement shall be deemed to be to the Exchange Ratio as so adjusted.
Section 1.11 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON
STOCK. All shares of Parent Common Stock issued upon the surrender for exchange
of Certificates in accordance with the terms hereof (including any cash paid
pursuant to Section 1.8) shall be
5
deemed to have been issued in full satisfaction of all rights pertaining
to the shares of Company Common Stock, together with the associated Rights,
represented by such Certificates.
Section 1.12 CLOSING OF COMPANY TRANSFER BOOKS. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of shares of Company Common Stock shall thereafter be made on the
records of the Company. If, after the Effective Time, Certificates are presented
to the Surviving Corporation, the Exchange Agent or the Parent, such
Certificates shall be canceled and exchanged as provided in this Article I.
Section 1.13 LOST CERTIFICATES. If any Certificate shall have
been lost, 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 Parent or the Exchange Agent, the posting by such person of a bond,
in such reasonable amount as Parent or the Exchange Agent may direct as
indemnity against any claim that may be made against them with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the shares of Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock to which the holders thereof are
entitled pursuant to Section 1.8 and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 1.7.
Section 1.14 FURTHER ASSURANCES. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and to do, in the name and on
behalf of either Constituent Corporation, all such other acts and things as may
be necessary, desirable or proper to vest, perfect or confirm the Surviving
Corporation's right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of such Constituent
Corporation and otherwise to carry out the purposes of this Agreement.
Section 1.15 CLOSING. The closing of the transactions
contemplated by this Agreement (the "Closing") and all actions specified in this
Agreement to occur at the Closing shall take place at the offices of Cleary,
Gottlieb, Xxxxx & Xxxxxxxx, Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at
10:00 a.m. local time no later than the sixth business day following the day on
which the last of the conditions set forth in Article VI shall have been
fulfilled or waived (if permissible) (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or
waiver (if permissible) of such conditions) or at such other time and place as
Parent and the Company shall agree.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as
follows:
Section 2.1 ORGANIZATION, STANDING AND POWER. Each of Parent
and Sub is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is organized and has the
requisite corporate power and authority to carry on its business as now being
conducted. Each Subsidiary (as hereinafter defined) of Parent is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized and has the requisite corporate power to carry on its
business as now being conducted, except where the failure to be so organized,
existing or in good standing or to have such power or authority would not,
individually or in the aggregate, have a Material Adverse Effect (as hereinafter
defined) on Parent. Parent and each of its Subsidiaries are duly qualified to do
business, and are in good standing, in each jurisdiction where the character of
their properties owned or held under lease or the nature of their activities
makes such qualification necessary, except where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect on
Parent. For purposes of this Agreement (a) "Material Adverse Effect" means, when
used with respect to Parent or the Company, as the case may be, any event,
change or effect that individually or when taken together with all other such
events, changes or effects is, or would be, materially adverse to the business,
financial condition or results of operations of Parent and its subsidiaries,
taken as a whole, or the Company and its subsidiaries, taken as a whole, as the
case may be, except to the extent resulting from or relating to (i) any changes
or events affecting the economy of any country or the advertising industry
generally (other than to the extent such changes or events adversely affect
Parent or the Company, as the case may be, in a materially disproportionate
manner in relation to the industry generally) or (ii) the loss of those clients
that have been previously discussed by the parties; and (b) "Subsidiary" means
any corporation, partnership, limited liability company, joint venture or other
legal entity of which Parent or the Company, as the case may be (either alone or
through or together with any other Subsidiary), (i) 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, partnership, limited liability
company, joint venture or other legal entity or otherwise (through contract or
other means) holds or controls 50% or more of the ordinary voting power in
respect of the election or appointment of the board of directors or other
governing body or (ii) of which such party or any of its Subsidiaries is a
general or managing partner.
Section 2.2 CAPITAL STRUCTURE.
(a) As of the date hereof, the authorized capital stock
of Parent consists of 550 million shares of Parent Common Stock and 20 million
shares of preferred stock, no par value ("Parent Preferred Stock"). At the close
of business on February 28, 2001, (i) 315,527,074 shares of Parent Common Stock
were issued and outstanding, all of which were validly issued, fully paid and
nonassessable and free of preemptive rights and (ii) 5,461,525 shares of Parent
Common Stock were held in treasury of Parent or by Subsidiaries of Parent. As of
December 31, 2000, approximately 27,516,000 shares of Parent Common Stock were
reserved for issuance
7
pursuant to outstanding options to purchase shares of Parent Common Stock
under Parent's 1986, 1988, 1996 and 1997 Stock Option Plans (collectively,
the "Parent Stock Plans"). As of the date hereof, the Parent Stock Plans are
the only benefit plans of Parent or its Subsidiaries under which any
securities of Parent are issuable. As of the date of this Agreement, except
as set forth above and except for the issuance of shares of Parent Common
Stock upon exercise of options issued pursuant to the Parent Stock Plans, no
shares of capital stock or other voting securities of Parent were issued,
reserved for issuance or outstanding. All of the shares of Parent Common
Stock issuable in exchange for Company Common Stock at the Effective Time in
accordance with this Agreement will be, when so issued, duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights.
As of the date of this Agreement, except for (i) this Agreement and (ii) as
set forth above, and except as disclosed in the Parent SEC Documents (as
hereinafter defined), there are no options, warrants, calls, rights, puts or
agreements to which Parent or any of its Significant Subsidiaries (as
hereinafter defined) is a party or by which any of them is bound obligating
Parent or any of its Significant Subsidiaries to issue, deliver, sell or
redeem, or cause to be issued, delivered, sold or redeemed, any additional
shares of capital stock (or other voting securities or equity equivalents) or
convertible or exchangeable securities of Parent or any of its Significant
Subsidiaries or obligating Parent or any of its Significant Subsidiaries to
grant, extend or enter into any such option, warrant, call, right, put or
agreement. True, complete and correct copies of the Certificate of
Incorporation and Bylaws of each of Parent and Sub have been delivered to the
Company. For purposes of this Agreement, "Significant Subsidiary" means any
Subsidiary that constitutes a significant subsidiary within the meaning of
Rule 1-02 of Regulation S-X of the Securities and Exchange Commission (the
"SEC").
(b) Each outstanding share of capital stock (or other
voting security or equity equivalent) of each Significant Subsidiary of Parent
is duly authorized, validly issued, fully paid and nonassessable and each such
share (or other voting security or equity equivalent) is owned by Parent or
another Subsidiary of Parent, free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
voting rights, charges and other encumbrances of any nature whatsoever
(collectively, "Liens") other than such Liens which (individually or in the
aggregate) would not have a Material Adverse Effect on Parent. Except as
disclosed in the Parent SEC Documents, Parent does not have any outstanding
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote) with the stockholders of Parent on any matter. Exhibit 21 to
Parent's Annual Report on Form 10-K for the year ended December 31, 1999, as
filed with the SEC (the "Parent Annual Report"), was, at the time so filed, a
true, accurate and correct statement in all material respects of all of the
information required to be set forth therein by the regulations of the SEC.
Section 2.3 AUTHORITY. On or prior to the date of this
Agreement, the Boards of Directors of Parent and Sub have unanimously (i)
declared the agreement of merger (within the meaning of Section 251 of the DGCL)
contained in this Agreement advisable and fair to and in the best interest of
Parent and Sub, respectively, and their respective stockholders, and (ii)
approved and adopted this Agreement in accordance with the DGCL. Each of Parent
and Sub has all requisite corporate power to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Sub and the consummation by Parent and Sub of the
transactions contemplated hereby have been
8
duly authorized by all necessary corporate action on the part of Parent and
Sub, subject to the filing of appropriate Merger documents as required by the
DGCL. This Agreement and the consummation of the transactions contemplated
hereby have been approved by Parent as the sole stockholder of Sub. This
Agreement has been duly executed and delivered by Parent and Sub and
(assuming the valid authorization, execution and delivery of this Agreement
by the Company and the validity and binding effect hereof on the Company)
this Agreement constitutes the valid and binding obligation of Parent and Sub
enforceable against each of them in accordance with its terms. The issuance
of Parent Common Stock in connection with the Merger and the filing of a
registration statement on Form S-4 with the SEC by Parent under the
Securities Act of 1933, as amended (together with the rules and regulations
promulgated thereunder, the "Securities Act"), for the purpose of registering
the shares of Parent Common Stock to be issued in the Merger (together with
any amendments or supplements thereto, whether prior to or after the
effective date thereof, the "Registration Statement") have been duly
authorized by Parent's Board of Directors.
Section 2.4 CONSENTS AND APPROVALS; NO VIOLATION. Assuming
that all consents, approvals, authorizations and other actions described in this
Section 2.4 and in Section 5.7 have been obtained and all filings and
obligations described in this Section 2.4 have been made, and except as set
forth in Section 2.4 of the letter dated the date hereof and delivered on the
date hereof by Parent to the Company, which letter relates to this Agreement and
is designated the Parent Letter (the "Parent Letter"), the execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give to others a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Parent or any of its Subsidiaries under,
any provision of (i) the Restated Certificate of Incorporation of Parent (the
"Parent Charter") or the By-laws of Parent (the "Parent Bylaws") or the
Certificate of Incorporation or By-laws of Sub, (ii) any provision of the
comparable charter or organization documents of any of Parent's Subsidiaries,
(iii) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise or license applicable
to Parent or any of its Subsidiaries or any of their respective properties or
assets or (iv) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent or any of its Subsidiaries or any of their
respective properties or assets, other than, in the case of clauses (ii), (iii)
or (iv), any such violations, defaults, rights, liens, security interests,
charges or encumbrances that, individually or in the aggregate, would not have a
Material Adverse Effect on Parent, materially impair the ability of Parent or
Sub to perform their respective obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby. No filing or
registration with, or authorization, consent or approval of, any domestic
(federal and state), foreign or supranational court, commission, governmental
body, regulatory agency, authority or tribunal or stock exchange (a
"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 or Sub or is necessary for the consummation of the Merger and the other
transactions contemplated by this Agreement, except for (i) in connection, or in
compliance, with the provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), the Securities Act and the Securities
Exchange Act of 1934, as amended, (together with the rules and regulations
promulgated thereunder, the "Exchange Act"),
9
(ii) 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 or any of its Subsidiaries is qualified
to do business, (iii) such filings, authorizations, orders and approvals as
may be required by state takeover laws (the "State Takeover Approvals"), (iv)
such filings as may be required in connection with the taxes described in
Section 5.10, (v) applicable requirements, if any, of state securities or
"blue sky" laws ("Blue Sky Laws") and the NYSE, (vi) as may be required under
applicable non-U.S. laws of general applicability and (vii) such other
consents, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on Parent, materially impair the
ability of Parent or Sub to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
Section 2.5 SEC DOCUMENTS AND OTHER REPORTS. Parent has timely
filed all required documents with the SEC since December 31, 1999 (including,
without limitation, financial statements, exhibits and schedules included or
incorporated by reference therein and all other documents incorporated by
reference therein, the "Parent SEC Documents"). As of their respective dates,
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, at the
respective times they were filed, 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 to make the statements therein, in light of
the circumstances under which they were made, not misleading. The consolidated
financial statements (including, in each case, any notes thereto) of Parent
included in the Parent SEC Documents complied as to form 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
generally accepted accounting principles (except, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated therein or in the notes
thereto) and fairly presented in all material respects the consolidated
financial position of Parent and its consolidated Subsidiaries as at the
respective dates thereof and the consolidated results of their operations and
their consolidated cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein that, in either case, have not been and will not
be material in amount). Except as disclosed in the Parent SEC Documents or as
required by generally accepted accounting principles, Parent has not, between
December 31, 1999 and the date hereof, made any material change in the
accounting practices or policies applied in the preparation of any of such
financial statements.
Section 2.6 REGISTRATION STATEMENT AND PROXY STATEMENT. None
of the information to be supplied in writing by Parent or Sub for inclusion or
incorporation by reference in the Registration Statement or the proxy
statement/prospectus included therein relating to the Stockholder Meeting (as
defined in Section 5.1) (together with any amendments or supplements thereto,
the "Proxy Statement") will (i) in the case of the Registration Statement, at
the time it becomes effective, 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 not misleading or (ii) in the case of the
Proxy Statement, at the time of the mailing of the Proxy Statement and at the
time of the Stockholder 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
10
the statements therein, in light of the circumstances under which they are
made, not misleading. The Registration Statement will comply (with respect to
Parent) as to form in all material respects with the provisions of the
Securities Act, and the Proxy Statement will comply (with respect to Parent)
as to form in all material respects with the provisions of the Exchange Act.
Section 2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in Parent SEC Documents filed with the SEC prior to the date of this
Agreement or as disclosed in Section 2.7 of the Parent Letter, since December
31, 1999 (A) Parent and its Subsidiaries have not incurred any liability or
obligation (indirect, direct or contingent) that would result in a Material
Adverse Effect on Parent, (B) Parent and its Subsidiaries have not sustained any
loss or interference with their business or properties from fire, flood,
windstorm, accident or other calamity (whether or not covered by insurance) that
has had a Material Adverse Effect on Parent, (C) there has been no dividend or
distribution of any kind declared, paid or made by Parent on any class of its
stock, except for regular quarterly cash dividends to shareholders of Parent
consistent with past practice and (D) there has been no Material Adverse Effect
with respect to Parent.
Section 2.8 PERMITS AND COMPLIANCE.
(a) Except as disclosed in the Parent SEC Documents
filed before the date hereof, each of Parent and its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
charters, easements, variances, exceptions, consents, certificates, approvals
and orders of any Governmental Entity necessary for Parent or any of its
Subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Parent Permits"), except where the
failure to have any of the Parent Permits would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. Except as disclosed in the
Parent SEC Documents filed before the date hereof, neither Parent nor any of its
Subsidiaries is in violation of (A) its charter, by-laws or other organizational
documents, (B) any applicable law, ordinance, administrative or governmental
rule or regulation or (C) any order, decree or judgment of any Governmental
Entity having jurisdiction over Parent or any of its Subsidiaries, except, in
the case of clauses (B) and (C), for any violations that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent.
(b) Except as disclosed in the Parent SEC Documents filed
prior to the date of this Agreement or as disclosed in Section 2.8 of the Parent
Letter, as of the date hereof there is no contract or agreement that is or was
required to be filed by Parent as a material contract pursuant to Item 601 of
Regulation S-K under the Securities Act. Except as set forth in the Parent SEC
Documents filed prior to the date of this Agreement or Section 2.8 of the Parent
Letter, no event of default or event that, but for the giving of notice or the
lapse of time or both, would constitute an event of default exists or, upon the
consummation by Parent or Sub of the transactions contemplated by this
Agreement, will exist under any indenture, mortgage, loan agreement, note or
other agreement or instrument for borrowed money, any guarantee of any agreement
or instrument for borrowed money or any lease, contractual license or other
agreement or instrument to which Parent or any of its Subsidiaries is a party or
by which Parent or any such Subsidiary is bound or to which any of the
properties, assets or operations of Parent or any such Subsidiary is subject,
other than any defaults that, individually or in the aggregate, would not have a
Material Adverse Effect on Parent.
11
Section 2.9 ACTIONS AND PROCEEDINGS. Except as set forth in
the Parent SEC Documents filed prior to the date of this Agreement and except as
set forth in Section 2.9 of the Parent Letter, there are no outstanding orders,
judgments, injunctions, awards or decrees of any Governmental Entity against or
involving Parent or any of its Subsidiaries, or against or involving any of the
present or former directors, officers, employees of Parent or any of its
Subsidiaries, as such, or any of its or their properties, assets or business
that, individually or in the aggregate, would have a Material Adverse Effect on
Parent or, as of the date hereof, materially impair the ability of Parent to
perform its obligations hereunder. Except as set forth in Section 2.9 of the
Parent Letter or in the Parent SEC Documents filed prior to the date hereof,
there are no actions, suits or claims or legal, administrative or arbitration
proceedings or investigations pending or, to the Knowledge of Parent (as
hereinafter defined), threatened against or involving Parent or any of its
Subsidiaries or any of its or their present or former directors, officers,
employees as such, or any of its or their properties, assets or business that,
individually or in the aggregate, would have a Material Adverse Effect on Parent
or, as of the date hereof, materially impair the ability of Parent to perform
its obligations hereunder. As of the date hereof, there are no actions, suits,
or other litigation, legal or administrative proceedings or governmental
investigations pending or, to the Knowledge of Parent, threatened against Parent
or any of its Subsidiaries or any of its or their present or former officers,
directors, employees, as such, or any of its or their properties, assets or
business, in each case relating to the transactions contemplated by this
Agreement. For purposes of this Agreement, "Knowledge of Parent" means the
actual knowledge of the Chief Executive Officer, Chief Financial Officer or
General Counsel of Parent.
Section 2.10 OPINION OF FINANCIAL ADVISOR. Parent has received
the opinion of Xxxxxxx, Xxxxx & Co. to the effect that, as of the date thereof,
the Exchange Ratio is fair to Parent from a financial point of view.
Section 2.11 NO REQUIRED VOTE OF PARENT STOCKHOLDERS. No vote
of the securityholders of Parent is required by law, the Parent Charter or the
Parent Bylaws or otherwise in order for Parent to consummate the Merger and the
transactions contemplated hereby.
Section 2.12 POOLING OF INTERESTS; REORGANIZATION. To the
Knowledge of Parent after due inquiry and consultation with
PriceWaterhouseCoopers, its independent auditors, neither Parent nor any of its
Subsidiaries has (i) taken any action or failed to take any action which action
or failure (or has become aware of any fact or circumstance that) would, or
would be reasonably expected to, jeopardize the treatment of the Merger as a
pooling of interests for accounting purposes under applicable accounting rules
and the applicable rules and regulations of the SEC or (ii) taken any action or
failed to take any action which action or failure (or has become aware of any
fact or circumstance that) would, or would be reasonably expected to, jeopardize
the qualification of the Merger as a reorganization within the meaning of
Section 368 of the Code.
Section 2.13 BROKERS. No broker, investment banker or other
person, other than Xxxxxxx, Sachs & Co., the fees and expenses of which will be
paid by Parent (as reflected in the agreement between Xxxxxxx, Xxxxx & Co. and
Parent), is entitled to any broker's, finder's or
12
other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf
of Parent.
Section 2.14 OPERATIONS OF SUB. Sub is a direct, wholly owned
subsidiary of Parent, was formed solely for the purpose of engaging in the
transactions contemplated hereby, has engaged in no other business activities
and has conducted its operations only as contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
Section 3.1 ORGANIZATION, STANDING AND POWER. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
carry on its business as now being conducted. Each Subsidiary of the Company is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate power and
authority to carry on its business as now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power
or authority would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. The Company and each of its Subsidiaries are duly
qualified to do business, and are in good standing, in each jurisdiction where
the character of their properties owned or held under lease or the nature of
their activities makes such qualification necessary, except where the failure to
be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
Section 3.2 CAPITAL STRUCTURE.
(a) As of the date hereof, the authorized capital stock
of the Company consists of 90,100,000 shares of capital stock of which
90,000,000 are shares of Company Common Stock, and 100,000 are shares of
preferred stock, par value $1 per share, of the Company ("Company Preferred
Stock"). At the close of business on March 15, 2001, (i) 50,413,400 shares of
Company Common Stock (including associated Rights) were issued and outstanding,
all of which were validly issued, fully paid and nonassessable and free of
preemptive rights, (ii) 1,092 shares of Company Common Stock were held in the
treasury or by Subsidiaries of the Company; (iii) 8,013,681 shares of Company
Common Stock were reserved for issuance pursuant to options to purchase shares
of Company Common Stock ("Company Stock Options") issued and outstanding
pursuant to (A) the Company's Stock Option Plan, (B) the Company's Outside
Director Stock Option Plan and (C) the Bozell, Jacobs, Xxxxxx & Xxxxxxxx, Inc.
Stock Option Plan (collectively, the "Company Stock Option Plans") (with a
weighted average exercise price between $28 and $29); (iv) an additional 868,912
shares of Company Common Stock were authorized (excluding shares subject to
stockholder approval) for awards, but not yet issued; and (v) no shares of
Company Preferred Stock were issued or outstanding. Set forth in Section 3.2 of
the letter dated the date hereof and delivered on the date hereof by the Company
to Parent, which letter relates to this Agreement and is designated the Company
Letter (the "Company Letter"), is a list of each benefit plan of the Company or
its Subsidiaries under which any securities of the
13
Company are issuable or reserved for issuance. All the outstanding shares of
Company Common Stock are duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights. As of the date of this
Agreement, except for shares reserved or issuable in connection with the
Rights Agreement, except as set forth above, except for the issuance of
shares of Company Common Stock upon the exercise of Company Stock Options and
except as set forth in Section 3.2 of the Company Letter, no shares of
capital stock or other voting securities of the Company were issued, reserved
for issuance or outstanding. As of the date hereof, except (i) as set forth
above, (ii) for options, warrants, calls, rights, puts and agreements that
relate to securities of Subsidiaries other than Significant Subsidiaries with
exercise or purchase prices that, in the aggregate, do not exceed $25 million
and that are not referenced in Section 3.2 of the Company Letter and (iii) as
set forth in Section 3.2 of the Company Letter, there are no options,
warrants, calls, rights, puts or agreements to which the Company or any of
its Subsidiaries is a party or by which any of them is bound obligating the
Company or any of its Subsidiaries to issue, deliver, sell or redeem, or
cause to be issued, delivered, sold or redeemed, any additional shares of
capital stock (or other voting securities or equity equivalents) or
convertible or exchangeable securities of the Company or any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, right, put or agreement.
True, complete and correct copies of the Company Charter and Company Bylaws
have been delivered to Parent.
(b) Each outstanding share of capital stock (or other
voting security or equity equivalent) of each Significant Subsidiary of the
Company is duly authorized, validly issued, fully paid and nonassessable, and
each such share (or other voting security or equity equivalent) is owned by the
Company or another Subsidiary of the Company, free and clear of all Liens other
than such Liens which (individually or in the aggregate) are not material. The
Company does not have any outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or convertible into or
exercisable for securities having the right to vote) with the stockholders of
the Company on any matter. Section 3.2(b) of the Company Letter contains a true,
accurate and correct statement in all material respects of Exhibit 21 if it were
dated as of March 15, 2001.
(c) The Company and its Subsidiaries have no mandatory
obligations, contingent or otherwise, to provide financing to or make any
investment in (in the form of a mandatory loan, capital contribution or similar
payment) any person or entity (other than wholly-owned subsidiaries) except (i)
in the case of such persons and entities other than Modem Media, Inc. for
obligations (A) involving no more than $15 million in the aggregate or (B) as
disclosed in the Company SEC Documents (as hereinafter defined) or in Section
3.2(c) of the Company Letter and (ii) in the case of Modem Media, Inc., the
guarantees referenced in Section 3.2(d) of the Company Letter.
(d) Section 3.2(d) of the Company Letter discloses all
the agreements that the Company has with Modem Media, Inc. and all guarantees,
indemnities and other forms of credit support that the Company and its
Subsidiaries have undertaken in respect of liabilities and obligations incurred
by Modem Media, Inc.
(e) Except as set forth in Section 3.2(e) of the Company
Letter, neither the Company nor any of its Subsidiaries is a party to any
agreement with Modem Media, Inc. that
14
restricts the acquisition or disposition of shares of Modem Media, Inc. other
than agreements with regard to restrictions relating to compliance with
applicable securities laws.
Section 3.3 AUTHORITY. On or prior to the date of this
Agreement, the Board of Directors of the Company has by unanimous vote of those
present (i) declared the agreement of merger (within the meaning of Section 251
of the DGCL) contained in this Agreement advisable and fair to and in the best
interest of the Company and its stockholders, (ii) approved and adopted this
Agreement in accordance with the DGCL, (iii) resolved to recommend the approval
and adoption of the agreement of merger (within the meaning of Section 251 of
the DGCL) contained in this Agreement by the Company's stockholders and (iv)
directed that the agreement of merger (within the meaning of Section 251 of the
DGCL) contained in this Agreement be submitted to the Company's stockholders for
approval and adoption. The Company has all requisite corporate power to enter
into this Agreement and, subject to approval by the stockholders of the Company
of this Agreement, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of the Company, subject to (x)
approval of this Agreement by the stockholders of the Company and (y) the filing
of appropriate Merger documents as required by the DGCL. This Agreement has been
duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent and Sub and
the validity and binding effect of the Agreement on Parent and Sub) constitutes
the valid and binding obligations of the Company enforceable against the Company
in accordance with its terms. The filing of the Proxy Statement with the SEC has
been duly authorized by the Company's Board of Directors.
Section 3.4 CONSENTS AND APPROVALS; NO VIOLATION. Assuming
that all consents, approvals, authorizations and other actions described in this
Section 3.4 and in Section 5.7 have been obtained and all filings and
obligations described in this Section 3.4 have been made, except as set forth in
Section 3.4 of the Company Letter, the execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give to
others a right of termination, cancellation or acceleration of any obligation or
the loss of a material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
the Company or any of its Subsidiaries under, any provision of (i) the Company
Charter or the Company Bylaws, (ii) any provision of the comparable charter or
organization documents of any of the Company's Subsidiaries, (iii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to the Company
or any of its Subsidiaries or any of their respective properties or assets or
(iv) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or any of their respective
properties or assets, other than, in the case of clauses (ii), (iii) or (iv),
any such violations, defaults, rights, liens, security interests, charges or
encumbrances that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company, materially impair the ability of the Company to
perform its obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is required by or
with respect to the Company or any of its Subsidiaries in
15
connection with the execution and delivery of this Agreement by the Company
or is necessary for the consummation of the Merger and the other transactions
contemplated by this Agreement except for (i) in connection, or in
compliance, with the provisions of the HSR Act and the Securities Act and the
Exchange Act, (ii) 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 or any of its Subsidiaries
is qualified to do business, (iii) such filings, authorizations, orders and
approvals as may be required to obtain the State Takeover Approvals, (iv)
such filings as may be required in connection with the taxes described in
Section 5.10, (v) applicable requirements, if any, of Blue Sky Laws and the
NYSE, (vi) as may be required under non-U.S. laws of general applicability
and (vii) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company, materially impair the ability of the Company to perform its
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby.
Section 3.5 SEC DOCUMENTS AND OTHER REPORTS. The Company has
timely filed all required documents with the SEC since December 31, 1999
(including, without limitation, financial statements, exhibits and schedules
included or incorporated by reference therein and all other documents
incorporated by reference therein, the "Company SEC Documents"). Except as set
forth in Section 3.5 of the Company Letter, as of their respective dates, the
Company SEC Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and, at the
respective times they were filed, 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 to make the statements therein, in
light of the circumstances under which they were made, not misleading. Except as
set forth in Section 3.5 of the Company Letter, the consolidated financial
statements (including, in each case, any notes thereto) of the Company included
in the Company SEC Documents complied as to form 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 generally
accepted accounting principles (except, in the case of the unaudited statements,
as permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly presented in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as at the respective
dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein that, in either case, have not been and will not
be material in amount). Except as disclosed in the Company SEC Documents or as
required by generally accepted accounting principles or as set forth in Section
3.5 of the Company Letter, the Company has not, between December 31, 1999 and
the date hereof, made any material change, in the accounting practices or
policies applied in the preparation of any of such financial statements.
Section 3.6 REGISTRATION STATEMENT AND PROXY STATEMENT. None
of the information to be supplied in writing by the Company for inclusion or
incorporation by reference in the Registration Statement or the Proxy Statement
will (i) in the case of the Registration Statement, at the time it becomes
effective, 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
16
statements therein not misleading or (ii) in the case of the Proxy Statement, at
the time of the mailing of the Proxy Statement and at the time of the
Stockholder 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. The Registration Statement will comply (with respect to
the Company) as to form in all material respects with the provisions of the
Securities Act, and the Proxy Statement will comply (with respect to the
Company) as to form in all material respects with the provisions of the Exchange
Act.
Section 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Company SEC Documents filed with the SEC prior to the date of
this Agreement or as disclosed in Section 3.7 of the Company Letter, since
December 31, 1999 (A) the Company and its Subsidiaries have not incurred any
material liability or obligation (indirect, direct or contingent) that would
result in a Material Adverse Effect on the Company, (B) the Company and its
Subsidiaries have not sustained any loss or interference with their business or
properties from fire, flood, windstorm, accident or other calamity (whether or
not covered by insurance) that has had a Material Adverse Effect on the Company,
(C) there has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its stock except for regular quarterly cash
dividends to shareholders of the Company consistent with past practice, (D)
there has been no Material Adverse Effect with respect to the Company and (E)
since September 30, 2000 through the date hereof, the Company has conducted its
business in the ordinary course in all material respects.
Section 3.8 PERMITS AND COMPLIANCE.
(a) Except as disclosed in the Company SEC Documents
filed before the date hereof, each of the Company and its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Entity necessary for the Company or any of its Subsidiaries
to own, lease and operate its properties or to carry on its business as it is
now being conducted (the "Company Permits"), except where the failure to have
any of the Company Permits would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. Except as disclosed in the Company SEC
Documents filed before the date hereof, neither the Company nor any of its
Subsidiaries is in violation of (A) the charter, by-laws or other organizational
documents of the Company or any of its Significant Subsidiaries, (B) the
charter, by-laws or other organizational documents of any Subsidiary that is not
a Significant Subsidiary, (C) any applicable law, ordinance, administrative or
governmental rule or regulation or (D) any order, decree or judgment of any
Governmental Entity having jurisdiction over the Company or any of its
Subsidiaries, except, in the case of clauses (B), (C) or (D), for any violations
that, individually or in the aggregate, would not have a Material Adverse Effect
on the Company.
(b) Section 3.8 of the Company Letter contains, as of the
date hereof, each contract or agreement that would be required to be filed by
the Company as a material contract pursuant to Item 601(b)(10) of Regulation S-K
under the Securities Act if the Company were filing an annual report on 10-K.
The material contracts disclosed in Section 3.8 of the Company Letter are in
full force and effect, as of the date hereof, except as otherwise expressly
stated in
17
the Company SEC Documents or Section 3.8 of the Company Letter. Except
as set forth in Section 3.8 of the Company Letter, neither the Company nor any
of its Subsidiaries is a party to or bound by any agreement evidencing, or
guarantee relating to, indebtedness for borrowed money to the extent the
aggregate principal amount outstanding thereunder exceeds $10,000,000. To the
knowledge of the Company, Section 3.8 of the Company Letter also sets forth all
agreements and contracts of the Company or any of its Subsidiaries (i) that both
(A) are not client contracts and (B) purport to limit, curtail or restrict the
ability of the Company or any of its Subsidiaries or affiliates to compete in
any geographic area or line of business or (ii) that both (A) are client
contracts and (B) from and after the Closing would, by their own terms, purport
to restrict, in any material respect, the continuation of the current conduct of
the businesses of Parent and its Subsidiaries, as described in the Parent SEC
Documents filed before the date hereof. Except as set forth in the Company SEC
Documents filed prior to the date of this Agreement or as disclosed in Section
3.8 of the Company Letter, no event of default or event that, but for the giving
of notice or the lapse of time or both, would constitute an event of default
exists or, upon the consummation by the Company of the transactions contemplated
by this Agreement will exist under any indenture, mortgage, loan agreement, note
or other agreement or instrument for borrowed money, any guarantee of any
agreement or instrument for borrowed money or any lease, contractual license or
other agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which the Company or any such Subsidiary is bound or to which any
of the properties, assets or operations of the Company or any such Subsidiary is
subject, other than any defaults that, individually or in the aggregate, would
not have a Material Adverse Effect on the Company.
Section 3.9 TAX MATTERS. (a) Except as otherwise set forth in
Section 3.9 of the Company Letter, (i) the Company and each of its Subsidiaries
have timely filed all Tax Returns (as hereinafter defined) required to have been
filed with a national taxing authority, and all material Tax Returns required to
have been filed with other taxing authorities, or appropriate extensions
therefor have been properly obtained, and such Tax Returns are correct and
complete, except to the extent that any failure to so file or any failure to be
correct and complete would not, individually or in the aggregate, have a
Material Adverse Effect on the Company; (ii) all Taxes (as hereinafter defined)
shown to be due on such Tax Returns have been timely paid or extensions for
payment have been properly obtained, except to the extent that any failure to so
pay or so obtain such an extension would not, individually or in the aggregate,
have a Material Adverse Effect on the Company; (iii) the Company and each of its
Subsidiaries have complied in all material respects with all rules and
regulations relating to the withholding of Taxes except to the extent that any
failure to comply with such rules and regulations would not, individually or in
the aggregate, have a Material Adverse Effect on the Company; (iv) no material
items that have been contested in writing by the relevant taxing authority in
connection with any examination of the Tax Returns referred to in clause (i) are
pending on the date hereof; and (v) all material deficiencies asserted or
assessments made as a result of any examination of such Tax Returns by any
taxing authority have been paid in full or are being timely and properly
contested. For purposes of this Agreement: (i) "Taxes" means any federal, state,
local, foreign or provincial income, gross receipts, property, sales, use,
license, excise, franchise, employment, payroll, withholding, alternative or
added minimum, ad valorem, value added, transfer or excise tax, or other tax,
custom, duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty imposed by any Governmental
Entity, and (ii) "Tax Return" means any return, report or similar statement
(including the attached schedules)
18
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.
(b) The Company has not constituted either a
"distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355 of the Code since the effective date of
Section 355(e) of the Code, and no Subsidiary has constituted such a
"distributing corporation" or "controlled corporation" unless any Subsidiary
constituting such a "distributing corporation" or "controlled corporation" would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
Section 3.10 ACTIONS AND PROCEEDINGS. Except as set forth in
the Company SEC Documents filed prior to the date of this Agreement and except
as set forth in Section 3.10 of the Company Letter, there are no outstanding
orders, judgments, injunctions, awards or decrees of any Governmental Entity
against or involving the Company or any of its Subsidiaries, or against or
involving any of the present or former directors, officers, employees of the
Company or any of its Subsidiaries, as such, or any of its or their properties,
assets, or business or any Company Plan (as hereinafter defined) that,
individually or in the aggregate, would have a Material Adverse Effect on the
Company or, as of the date hereof, materially impair the ability of the Company
to perform its obligations hereunder. Except as set forth in the Company SEC
Documents filed prior to the date of this Agreement or in Section 3.10 of the
Company Letter, there are no actions, suits or claims or legal, administrative
or arbitration proceedings or investigations pending or, to the Knowledge of the
Company, threatened against or involving the Company or any of its Subsidiaries
or any of its or their present or former directors, officers, employees, as
such, or any of its or their properties, assets or business that, individually
or in the aggregate, would have a Material Adverse Effect on the Company or, as
of the date hereof, materially impair the ability of the Company to perform its
obligations hereunder. As of the date hereof, there are no actions, suits, or
other litigation, legal or administrative proceedings or governmental
investigations pending or, to the Knowledge of the Company, threatened against
the Company or any of its Subsidiaries or any of its or their present or former
officers, directors, employees or any of its or their properties, assets or
business, in each case relating to the transactions contemplated by this
Agreement. For purposes of this Agreement, "Knowledge of the Company" means the
actual knowledge of the individuals identified on Section 3.10 of the Company
Letter.
Section 3.11 EMPLOYEE BENEFITS.
(a) Except as would not have a Material Adverse Effect on
the Company, (i) each Company Plan has been administered and is in compliance in
all material respects with the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), the Code, the terms of such plan and all other applicable
statutes and governmental rules and regulations, (ii) with respect to each
Company Plan, no governmental audits, actions, suits or claims (other than
routine claims for benefits in the ordinary course) are pending or, to the
Knowledge of the Company, threatened, and (iii) no "reportable event" (within
the meaning of Section 4043 of ERISA) has occurred with respect to any Company
Plan for which the 30-day notice requirement has not been waived. Neither the
Company nor any of its ERISA Affiliates (as hereinafter defined) has withdrawn
from any Company Plan or Company Multiemployer Plan (as hereinafter
19
defined) or instituted, or is currently considering taking, any action to do
so. No Company Plan, nor any trust created thereunder, has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived. The Company has provided or made available to Parent
true and complete copies of each material Company Plan other than (i) any
such material Company Plan maintained outside of the United States primarily
for the benefit of employees working outside of the United States and (ii)
any such material Company Plan which is an employment contract, and, with
respect to any such material Company Plan which is not in written form, a
summary of the material terms of such Company Plan. With respect to each
Company Plan that is an employment contract which provides for annual base
salary in excess of $350,000, to the specific Knowledge of the Company as of
the date hereof, the Company has provided a true and complete copy thereof to
Parent. The Company will use its reasonable best efforts to provide to
Parent, between the date hereof and the Effective Time, a copy of each
Company Plan that is an employment contract which provides for annual base
salary in excess of $350,000.
(b) No event has occurred and there exists no condition
or set of circumstances in connection with which the Company or any ERISA
Affiliate or Company Plan fiduciary could be subject to any liability under the
terms of such Company Plans, ERISA, the Code or any other applicable law, other
than liabilities for benefits payable in the normal course, which would have a
Material Adverse Effect on the Company.
(c) As used herein, (i) "Company Plan" means a "pension
plan" (as defined in Section 3(2) of ERISA (other than a Company Multiemployer
Plan)), a "welfare plan" (as defined in Section 3(1) of ERISA), or any bonus,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, holiday pay, vacation, severance,
death benefit, sick leave, fringe benefit, insurance, each employment contract
(which, to the Knowledge of the Company, is in effect and provides for annual
base salary in excess of $350,000) or other plan, arrangement or understanding,
in each case established or maintained by the Company or any of its ERISA
Affiliates or as to which the Company or any of its ERISA Affiliates has
contributed or otherwise may have any liability, (ii) "Company Multiemployer
Plan" means a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA)
to which the Company or any of its ERISA Affiliates is or has been obligated to
contribute or otherwise may have any liability and (iii) with respect to any
person, "ERISA Affiliate" means any trade or business (whether or not
incorporated) which is under common control or would be considered a single
employer with such person pursuant to Section 414(b), (c), (m) or (o) of the
Code and the regulations promulgated under those sections or pursuant to Section
4001(b) of ERISA and the regulations promulgated thereunder.
(d) Neither the Company nor any of its Subsidiaries has
disseminated in writing or otherwise broadly or generally notified employees of
any intent or commitment (whether or not legally binding) to create any
additional Company Plan or to amend, modify or terminate any existing Company
Plan which would be reasonably expected to result in material liabilities to the
Company and its Subsidiaries.
(e) The aggregate amount required to be contributed to
the Company Executive Benefit Trust as a result of the consummation of the
transactions contemplated by this Agreement, either alone or in connection with
any other event, shall not exceed $55,000,000.
20
Section 3.12 LABOR MATTERS. As of the date hereof, neither the
Company nor any of its Subsidiaries is a party to any collective bargaining
agreement. Except as would not have a Material Adverse Effect on the Company,
(i) there is no material labor strike, dispute, slowdown or stoppage pending or,
to the Knowledge of the Company, threatened against or affecting the Company or
any of its Subsidiaries, and (ii) to the Knowledge of the Company, no efforts or
attempts to unionize or enter into a collective bargaining agreement are ongoing
or threatened. Except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company, (i) neither the Company nor any of its
Subsidiaries, nor their respective businesses has committed any unfair labor
practices or violated any applicable employment laws in connection with the
operation of the respective businesses, and (ii) there is no pending or, to the
Knowledge of the Company, threatened charge or complaint against the Company or
any of its Subsidiaries by the National Labor Relations Board or any comparable
state agency, or by any employee or class of employees or governmental agency
relating to a purported violation of any applicable employment laws.
Section 3.13 OPINION OF FINANCIAL ADVISOR. The Company has
received the opinion of Xxxxxx Xxxxxxx & Co. Incorporated to the effect that, as
of the date thereof, the Exchange Ratio is fair to the Company's stockholders
from a financial point of view.
Section 3.14 REQUIRED VOTE OF COMPANY STOCKHOLDERS. The
affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock is required to approve and adopt the agreement of merger
(within the meaning of Section 251 of the DGCL) contained in this Agreement. No
other vote of the securityholders of the Company is required by law, the Company
Charter or the Company Bylaws or otherwise in order for the Company to
consummate the Merger and the transactions contemplated hereby.
Section 3.15 POOLING OF INTERESTS; REORGANIZATION. To the
Knowledge of the Company after due inquiry and consultation with Xxxxxx
Xxxxxxxx, its independent auditors, neither the Company nor any of its
Subsidiaries has (i) taken any action or failed to take any action which action
or failure (or has become aware of any fact or circumstance that) would, or
would be reasonably expected to, jeopardize the treatment of the Merger as a
pooling of interests for accounting purposes under applicable accounting rules
and the applicable rules and regulations of the SEC or (ii) taken any action or
failed to take any action which action or failure (or has become aware of any
fact or circumstance that) would, or would be reasonably expected to, jeopardize
the qualification of the Merger as a reorganization within the meaning of
Section 368 of the Code.
Section 3.16 BROKERS. No broker, investment banker or other
person, other than Xxxxxx Xxxxxxx & Co. Incorporated, the fees and expenses of
which will be paid by the Company (as reflected in an agreement between Xxxxxx
Xxxxxxx & Co. Incorporated and the Company dated February 29, 2000, a copy of
which has been furnished to Parent), is entitled to any broker's, finder'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.
Section 3.17 AMENDMENT TO THE RIGHTS AGREEMENT. The Board of
Directors of the Company has taken all necessary action under the Rights
Agreement (including any
21
amendment thereof) so that (a) none of the execution or delivery of this
Agreement, the exchange of the shares of Parent Common Stock for the shares
of Company Common Stock in accordance with Article I or any other transaction
contemplated hereby will cause (i) the rights issued pursuant to the Rights
Agreement to become exercisable under the Rights Agreement, (ii) a Stock
Acquisition Date (as defined in the Rights Agreement) to occur, (iii) Parent
or the Sub to be deemed an Acquiring Person (as defined in the Rights
Agreement) or (iv) a Triggering Event (as defined in the Rights Agreement) to
occur upon any such event; and (b) the execution and delivery of this
Agreement and the other transactions contemplated hereby will be exempt from
the Rights Agreement. The Company has furnished Parent with a true and
correct copy of the executed amendment to the Rights Agreement that has the
effects specified in the preceding sentence.
Section 3.18 TAKEOVER STATUTES. The Company's Board has
approved, for purposes of Section 203 of the DGCL, the Merger. The Board of
Directors of the Company has adopted an omnibus resolution providing that this
Agreement and the transactions contemplated hereby are exempt from the
requirements of any applicable "moratorium", "control share", "fair price",
"affiliate transaction", "business combination" or other antitakeover laws or
regulations of any state ("State Takeover Statutes").
Section 3.19 ACCURACY OF EARN-OUT SCHEDULE. Section 3.19 of
the Company Letter lists, as of March 8, 2001, the Company's good faith estimate
of the material payment obligations (whether contingent or otherwise) of the
Company and its Subsidiaries in respect of earn-outs, deferred purchase price
arrangements or similar arrangements that have arisen in connection with
investments in or acquisitions of companies, businesses or business lines, based
on the most recently available data after due inquiry.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 CONDUCT OF BUSINESS PENDING THE MERGER.
(a) Except as expressly permitted by clauses (i) through
(xvii) of this Section 4.1(a), during the period from the date of this Agreement
through the Effective Time, the Company shall (and shall cause its Significant
Subsidiaries to and shall use reasonable best efforts to cause its other
Subsidiaries to) in all material respects carry on its business in the ordinary
course of its business as currently conducted and, to the extent consistent
therewith, use reasonable best efforts to preserve intact its current business
organizations, keep available the services of its current officers and employees
and preserve its relationships with customers, suppliers and others having
business dealings with it. Without limiting the generality of the foregoing, and
except as otherwise contemplated by this Agreement or as set forth in Section
4.1 of the Company Letter, the Company shall not (and (1) in the case of clauses
(iii), (iv), (v), (vi), (viii), (ix) and (xvi), shall cause its Subsidiaries not
to and (2) in the case of clauses (i), (ii), (vii), (x)-(xv) and (xvii), shall
cause its Significant Subsidiaries not to and shall use reasonable best efforts
to cause its other Subsidiaries not to) without the prior written consent of
Parent, which consent shall not be unreasonably withheld or delayed:
22
(i) (A) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, or
otherwise make any payments to its stockholders in their capacity as
such other than dividends and distributions by any Subsidiary to its
parent and regular quarterly cash dividends to shareholders of the
Company consistent with past practice, (B) split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or (C) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any Subsidiary or
any other securities thereof or any rights, warrants or options to
acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock, any other voting securities
or equity equivalent or any securities convertible into, or any rights,
warrants or options to acquire any such shares, voting securities,
equity equivalent or convertible securities, other than (A) the
issuance or delivery of shares of Company Common Stock including the
associated Rights upon the exercise of existing Company Stock Options
in accordance with their terms as currently in effect, (B) the issuance
or delivery of options exercisable for Company Common Stock under
Company Stock Option Plans in the ordinary course of business
consistent with past practice and in an amount not to exceed options to
purchase 180,000 shares of Company Common Stock in the aggregate
(whether or not subject to subsequent approval of Parent's
stockholders); provided that no grants may be made to any officers,
directors or key employees whose annual base salary exceeds $350,000;
(C) the issuance or delivery of restricted stock in the ordinary course
of business consistent with past practice and in an amount not to
exceed 15,500 shares, in the aggregate; (D) the issuance or delivery of
shares of Company Common Stock (including the associated Rights)
pursuant to the Company's Nonemployee Directors Deferred Stock
Compensation Program or 401(k) retirement program, in each case in the
ordinary course, and in amounts not to exceed 20,000 shares and 160,000
shares, respectively, in the aggregate, provided, that, at the request
of Parent and subject to the agreement of the Company and further
subject to the requirements of applicable law or existing contractual
restrictions, in lieu of the delivery of shares pursuant to either such
plan, cash shall be delivered and may be used to purchase such shares
in the market; and (E) subject to Section 3.17 which shall remain
accurate, issuances pursuant to the Rights Agreement;
(iii) amend its charter or by-laws or other comparable charter
or organizational documents;
(iv) acquire or agree to acquire (except for any acquisition
or series of related acquisitions that does not involve more than $3
million in the aggregate and that, when aggregated with all other
acquisitions by the Company and its Subsidiaries between the date
hereof and the Effective Time, does not involve in excess of $15
million) (A) by merging or consolidating with, or by purchasing a
substantial portion of the assets of or equity in, or by any other
manner, any business or any corporation, limited liability company,
partnership, association or other business organization or division
thereof or (B) any assets that are material, individually or in the
aggregate, to the Company and its Subsidiaries taken as a whole;
23
(v) sell, lease (as lessor), license, mortgage, encumber or
otherwise dispose of material properties or assets, other than in
connection with sales of inventory in the ordinary course of business;
(vi) incur any indebtedness for borrowed money, guarantee any
such indebtedness or make any loans, advances or capital contributions
to, or other investments in, any other person, other than (A)
indebtedness or guarantees in the ordinary course of business, (B)
loans, advances, capital contributions and other investments between
the Company and any Subsidiary or between Subsidiaries and
(C)immaterial advances to employees in the ordinary course of business;
(vii) enter into, adopt or amend in any material respect any
pension, retirement, stock option, stock purchase, savings, profit
sharing, deferred compensation, bonus, group insurance or other
employee benefit, incentive, welfare or severance plan, agreement or
arrangement, Company Plan or employment or consulting agreement, except
as required by applicable law and except in the ordinary course of
business;
(viii) increase the compensation payable or to become payable
to employees other than in the ordinary course of business consistent
with past practice and other than as described in Section 4.1 of the
Company Letter;
(ix) enter into any material contract (as used in item
601(b)(10) of Regulation S-K) or amend in any material respect any
material contract (as used in item 601(b)(10) of Regulation S-K;
(x) make capital expenditures in excess of $25 million, in
the aggregate;
(xi) change, in any material respect, any accounting practices
or methodologies or revalue, in any material respect, any of its assets
other than in the ordinary course consistent with past practices or as
required by generally accepted accounting principles;
(xii) make or revoke any material Tax election or settle or
compromise any material Tax liability or change (or make a request to
any Taxing authority to change) any material aspect of its method of
accounting for Tax purposes;
(xiii) pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business consistent with past
practice of liabilities reflected or reserved against in the Company's
consolidated balance sheet as of September 30, 2000 (or the notes
thereto) as included in the Company SEC Documents (or off-balance sheet
liabilities incurred as of such date in the ordinary course of business
consistent with past practice), or incurred subsequent to such date in
the ordinary course of business consistent with past practice;
(xiv) refrain from enforcing any confidentiality, standstill
or similar agreement, in each case relating to any Takeover Proposal to
which the Company is a party;
24
(xv) settle or compromise any pending or threatened suit,
action or claim relating to the transactions contemplated hereby;
(xvi) enter into any agreement that purports to limit or
otherwise restricts (by its own terms) in any material respect, after
the Effective Time, Parent or any of its Subsidiaries (other than the
Company and its Subsidiaries) from engaging or competing in any line of
business or in any geographic area; or
(xvii) authorize, take, or agree to take, any of the actions
described in clauses (i) through (xvi) above or any action which would
be reasonably likely to result in any of the conditions to the Merger
set forth in Article VI hereof not being satisfied;
provided that, to the extent any action is specifically permitted under this
Section 4.1(a), nothing set forth in clauses (i) through (xvii) above shall be
construed to limit any such action.
(b) Except as otherwise contemplated by this Agreement or
as set forth in Section 4.1 of the Parent Letter, Parent shall not, and shall
not permit any of its Significant Subsidiaries to, without the prior written
consent of the Company, which consent shall not be unreasonably withheld or
delayed:
(i) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, or
otherwise make any payments to its stockholders in their capacity as
such, other than dividends and distributions by any Subsidiary to its
parent and regular quarterly cash dividends to shareholders of Parent
consistent with past practice;
(ii) liquidate or dissolve Parent;
(iii) amend the charter or by-laws of Parent in any manner
that would be adverse to holders of Parent Common Stock or the holders
of Company Common Stock; or
(iv) take, propose to take, or agree in writing or otherwise
to take, any of the actions described in clauses (i) through (iii)
above or any action which would be reasonably likely to result in any
of the conditions to the Merger set forth in Article VI hereof not
being satisfied.
Section 4.2 NO SOLICITATION BY THE COMPANY.
(a) From the date hereof until the earlier of the
Effective Time or the date on which this Agreement is terminated in accordance
with the terms hereof, the Company shall not, nor shall it authorize or
knowingly allow any of its Subsidiaries to, nor shall it authorize or knowingly
allow any officer, director or employee of or any financial advisor, attorney or
other advisor or representative of, the Company or any of its Subsidiaries to,
(i) solicit, initiate or purposefully encourage the submission of, any Takeover
Proposal (as hereafter defined), (ii) enter into any binding or non-binding
agreement with respect to any Takeover Proposal (other than a confidentiality
agreement to the extent information is permitted to be furnished to any person
pursuant to this Section 4.2(a)), (iii) participate in any discussions or
negotiations
25
regarding, or furnish to any person any information with respect to or in
connection with, or take any other action to facilitate knowingly any
inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Takeover Proposal; (iv) amend or grant any waiver
or release under any confidentiality, standstill or similar agreement, in
each case relating to a Takeover Proposal or (v) except as expressly
contemplated by this Agreement with respect to the Merger, amend or grant any
waiver or release or approve any transaction or redeem any rights under the
Rights Agreement; PROVIDED, HOWEVER, that, nothing contained in this
Agreement shall prevent the Company or its Board of Directors from (i)
complying with Rules 14d-9 and 14e-2 under the Exchange Act or publicly
disclosing the existence of a Takeover Proposal involving the Company to the
extent required by applicable law or (ii) furnishing non-public information
to, or entering into discussions or negotiations with, any person or entity
in connection with an unsolicited bona fide written Takeover Proposal by such
person or entity, if (x) the failure to take such action would, in the good
faith judgment of the Board of Directors of the Company, taking into
consideration the advice of independent legal counsel of the Company, violate
the fiduciary duties of the Board of Directors of the Company to the
Company's stockholders under applicable law, (y) (1) such Takeover Proposal
is not subject to any financing contingencies or complete copies of executed,
bona fide customary commitments from reputable financial institutions for all
necessary financing shall have been furnished to the Company and (2) the
Board of Directors of the Company has determined in good faith that (A) such
Takeover Proposal, if accepted, would be reasonably likely to be consummated
taking into account all legal, financial, regulatory and other aspects of the
proposal and the person making the proposal, and (B) after consultation with
and considering the advice of independent financial advisors of national
standing and after taking into account the strategic benefits to be derived
from the Merger and the long term prospects of Parent and its Subsidiaries
and after consideration of other matters it deems relevant, would, if
consummated, result in a transaction more favorable to the Company's
stockholders from a financial point of view than the Merger (a Takeover
Proposal satisfying such criteria being a "Superior Proposal"), and (z) prior
to furnishing such non-public information to, or entering into discussions or
negotiations with, such person or entity, such Board of Directors receives
from such person or entity an executed confidentiality agreement with
provisions not less favorable to the Company than those contained in the
Confidentiality Agreements (as defined below) and provides at least two full
business days' advance notice to Parent to the effect that it is proposing to
take such action, together with the information required to be provided
pursuant to Section 4.2(b). For purposes of this Agreement, "Takeover
Proposal" means any offer or proposal by any third party (or binding or
non-binding agreement by any third party with the Company with respect to, or
any public announcement or SEC filing by any third party that indicates an
intention to make, such an offer or proposal) (a) for a merger,
consolidation, share exchange, recapitalization or other business combination
involving the Company or any of its Significant Subsidiaries or (b) to
acquire in any manner (including by disposition or transfer), directly or
indirectly, a 15% or greater equity interest in, 15% or more of the voting
securities or capital stock of, or 15% or more of the assets of, the Company
or any of its Significant Subsidiaries, other than the transactions
contemplated by this Agreement.
(b) With respect to any Takeover Proposal as to which the
Company proposes to take any action permitted by clause (ii) of the proviso in
Section 4.2(a) above, the Company shall notify Parent of such Takeover Proposal
as promptly as practicable (but in no case later than 48 hours) after the
Company's decision to take such action, and shall provide Parent with
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the material terms of such Takeover Proposal and the identity of the person
making it and all information provided by the Company to such person in
accordance with Section 4.2(a) to the extent not previously delivered to
Parent, and shall thereafter convey to Parent, as promptly as practicable
(but in no case later than 48 hours) after the Company becomes aware thereof,
all material changes to such terms and all additional information provided by
the Company to such person to the extent not previously delivered to Parent.
Subject to Section 4.2(a), immediately after the execution and delivery of
this Agreement, the Company will, and will direct its Subsidiaries to, and
will direct its and their respective officers, directors, employees,
financial advisors, attorneys, other advisors and representatives to, cease
and terminate all existing activities, discussions and negotiations with any
parties conducted heretofore with respect to any possible Takeover Proposal.
Section 4.3 POOLING OF INTERESTS; REORGANIZATION. During the
period from the date of this Agreement through the Effective Time, unless the
other party shall otherwise agree in writing, none of Parent, the Company or any
of their respective Subsidiaries shall (a) knowingly take or fail to take any
action which action or failure would jeopardize the treatment of the Merger as a
pooling of interests for accounting purposes under accounting rules and the
applicable SEC rules and regulations or (b) knowingly take or fail to take any
action which action or failure would jeopardize the qualification of the Merger
as a reorganization within the meaning of Section 368 of the Code. Between the
date of this Agreement and the Effective Time, Parent and the Company each shall
take, or cause to be taken, all actions reasonably necessary in order for the
Merger to be treated as a pooling of interests for accounting purposes.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 STOCKHOLDER MEETING. The Company will, as soon as
practicable following the date of this Agreement, duly call, give notice of,
convene and hold a meeting of stockholders (the "Stockholder Meeting") for the
purpose of considering the approval and adoption of the agreement of merger
(within the meaning of Section 251 of the DGCL) contained in this Agreement. The
Company will, through its Board of Directors, recommend to its stockholders
approval and adoption of this Agreement, shall use all reasonable efforts to
solicit such approval by its stockholders and shall not withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent such recommendation
(or announce publicly its intention to do so), except if the Company has
complied with Section 4.2, an unsolicited bona fide written Superior Proposal is
then-outstanding, the Company provides at least two full business days' advance
notice to Parent to the effect that it is proposing to take such action,
together with the information required to be provided pursuant to Section
4.2(b), if applicable, and in the good faith judgment of the Company's Board of
Directors, taking into consideration the advice of independent legal counsel of
the Company, the making of, or the failure to withdraw or modify, such
recommendation would violate the fiduciary duties of such Board of Directors to
the Company's stockholders under applicable law. The Company agrees to submit
this Agreement to its stockholders for approval and adoption whether or not the
Board of Directors of the Company determines at any time subsequent to the date
hereof that this
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Agreement is no longer advisable and recommends that the stockholders of the
Company reject it and notwithstanding any Takeover Proposal.
Section 5.2 PREPARATION OF THE REGISTRATION STATEMENT AND THE
PROXY STATEMENT. (a) The Company and Parent shall promptly prepare, and the
Company shall file with the SEC, the Proxy Statement and Parent shall prepare
and file with the SEC the Registration Statement, in which the Proxy Statement
will be included as a prospectus. Each of Parent and the Company shall use its
reasonable best efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after such filing. As
promptly as practicable after the Registration Statement shall have become
effective, the Company shall mail the Proxy Statement to its stockholders.
Parent shall also take any action reasonably required to be taken under any
applicable state securities laws in connection with the issuance of Parent
Common Stock in the Merger (other than qualifying to do business in any
jurisdiction where it is not now so qualified or to file a general consent to
service of process in any jurisdiction), 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 Company and
Parent shall use reasonable best efforts to cause their accountants and counsel
to deliver necessary or required instruments in connection with the Registration
Statement and the Proxy Statement, including opinions, consents and
certificates. If, at any time prior to the Effective Time, the Company or Parent
shall become aware of any event that is required to be described in an amendment
or supplement to the Registration Statement or the Proxy Statement, then such
party shall promptly so advise the other. Each of the Company and Parent shall
give the other reasonable opportunity to review and comment on any filing
(including amendments and supplements) in connection with the Registration
Statement or the Proxy Statement before so filed and will provide the other with
a copy of each such filing. In addition, each will advise the other of any
comments (oral or written) received from the staff of the SEC in connection with
the Registration Statement or the Proxy Statement.
(b) The Company shall use all reasonable best efforts to
cause to be delivered to Parent a letter of Xxxxxx Xxxxxxxx LLP, the Company's
independent auditors, dated a date within two business days before the date on
which the Registration Statement shall become effective (and before the date on
which each posteffective amendment to the Registration Statement shall become
effective) and addressed to Parent, in form and substance reasonably
satisfactory to Parent and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Registration Statement.
(c) Parent shall use all reasonable best efforts to cause
to be delivered to the Company a letter of PriceWaterhouseCoopers, Parent's
independent auditors, dated a date within two business days before the date on
which the Registration Statement shall become effective (and before the date on
which each posteffective amendment to the Registration Statement shall become
effective) and addressed to the Company, in form and substance reasonably
satisfactory to the Company and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Registration Statement.
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Section 5.3 ACCESS TO INFORMATION. (a) Subject to currently
existing contractual and legal restrictions applicable to the Company or any of
its Subsidiaries, including those in the Confidentiality Agreement, dated
December 15, 2000, between Parent and the Company, relating to information
provided by the Company, as amended or supplemented (the "Company
Confidentiality Agreement"), the Company shall, and shall cause each of its
Subsidiaries to, afford to the accountants, counsel, financial advisors and
other representatives of Parent reasonable access to, and permit them to make
such inspections as they may reasonably require of, during normal business hours
during the period from the date of this Agreement through the Effective Time,
all of its properties, books, contracts, commitments and records (including,
without limitation, the work papers of independent accountants, if available and
subject to the consent of such independent accountants).
(b) Subject to currently existing contractual and legal
restrictions applicable to Parent and any of its Subsidiaries or the Company and
any of its Subsidiaries, as the case may be, including those in the Company
Confidentiality Agreement and the Confidentiality Agreement, dated March 2001,
between the Company and Parent relating to information provided by Parent, as
amended or supplemented (together with the Company Confidentiality Agreement,
the "Confidentiality Agreements"), each of Parent and the Company shall, and
shall cause each of its Significant Subsidiaries to, furnish promptly to the
other (A) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of federal
or state securities laws and (B) all other information concerning its business,
properties and personnel as the other may reasonably request.
(c) In addition the Company shall provide Parent, as soon
as reasonably practicable following the delivery to management, such monthly
financial statements and data as are regularly prepared for distribution to
Company management, all of which shall be kept confidential pursuant to the
supplement dated March 9, 2001 to the Company Confidentiality Agreement.
(d) No investigations pursuant to this Section 5.3 shall
affect or be deemed to modify any representations or warranties hereunder. All
information obtained pursuant to this Section 5.3 shall be kept confidential in
accordance with the Confidentiality Agreements.
Section 5.4 COMPLIANCE WITH THE SECURITIES ACT.
(a) Section 5.4(a) of the Company Letter contains a list
identifying all persons who, at the time of the Stockholder Meeting, may be
deemed to be "affiliates" of the Company as that term is used in paragraphs (c)
and (d) of Rule 145 under the Securities Act and under applicable SEC accounting
releases with respect to pooling of interests accounting treatment (the "Rule
145 Affiliates"). The Company shall use its reasonable best efforts to cause
each person who is identified as a Rule 145 Affiliate in such list to execute
and deliver to Parent within 30 days of the date hereof a written agreement in
substantially the form of EXHIBIT 5.4(a) hereto (the "Company Affiliate
Letter"). Prior to the Effective Time, the Company shall amend and supplement
Section 5.4(a) of the Company Letter and use its reasonable best efforts to
cause each additional person who is identified as a Rule 145 Affiliate of the
Company to execute the Company Affiliate Letter.
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(b) Section 5.4(b) of the Parent Letter contains a list
identifying those persons who may be affiliates of Parent under applicable SEC
accounting releases with respect to pooling of interests accounting treatment.
Parent shall use its reasonable best efforts to enter into a written agreement
in substantially the form of EXHIBIT 5.4(b) hereto (the "Parent Affiliate
Letter") within 30 days of the date hereof with each of such persons identified
in the foregoing list. Prior to the Effective Time, Parent shall amend and
supplement Section 5.4(b) of the Parent Letter and use its reasonable best
efforts to cause each additional person who is identified as an affiliate of
Parent to execute the Parent Affiliate Letter.
Section 5.5 CURRENT NYSE LISTING. Each of Parent and the
Company shall use its reasonable best efforts to continue the listing of the
Parent Common Stock and the Company Common Stock on the NYSE during the term of
this Agreement to the extent necessary so that appraisal rights will not be
available to stockholders of the Company under Section 262 of the DGCL.
Section 5.6 FEES AND EXPENSES.
(a) Except as provided in this Section 5.6 and Section
5.10, whether or not the Merger is consummated, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby
including, without limitation, the fees and disbursements of counsel, financial
advisors and accountants, shall be paid by the party incurring such costs and
expenses, provided that all printing expenses and all filing fees payable to
Governmental Entities (including, without limitation, filing fees under the
Securities Act, the Exchange Act and the HSR Act) shall be shared equally by
Parent and the Company.
(b) Notwithstanding any provision in this Agreement to
the contrary, if (i)(A) this Agreement is terminated by the Company or Parent
pursuant to Section 7.1.(d)(i) or 7.1(e) or by Parent pursuant to Section
7.1(b), (B) a Takeover Proposal (or the intent to make a Takeover Proposal),
whether or not conditional, was publicly announced or made to the Company or its
Board either publicly or privately or to its stockholders generally by a person
or entity that, together with its affiliates and controlling persons or
entities, has assets of not less than $100 million at any time from and after
the date hereof and on or before the date of the event that gave rise to such
termination and (C) at any time on or before the first anniversary of any such
termination a Third Party Acquisition Event (as defined below) occurs or the
Company shall enter into any letter of intent, agreement in principle,
definitive acquisition agreement or other similar agreement with respect to a
Third Party Acquisition Event or (ii) this Agreement is terminated by Parent
pursuant to Section 7.1(f), then, in each case, the Company shall (without
prejudice to any other rights that Parent may have against the Company for a
breach of this Agreement) pay to Parent a fee of $80 million in cash, such
payment to be made promptly, but in no event later than, in the case of clause
(i), the closing of such Third Party Acquisition Event or the signing of such
agreement, as the case may be, or, in the case of clause (ii), the first day
following such termination.
(c) All payments under this Section 5.6 shall be made by
wire transfer of immediately available U.S. dollar funds to an account
designated by Parent.
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(d) The Company acknowledges that the agreements
contained in Section 5.6(b) and (c) are an integral part of the transactions
contemplated by this Agreement and that, without these agreements, Parent would
not have entered into this Agreement; accordingly, if the Company fails to pay
any amount when, due pursuant to Sections 5.6(b) and (c) and, in order to obtain
such payment, Parent brings a suit or action which results in a judgment against
the Company, then the Company shall pay to Parent its costs and expenses
(including attorneys' fees) in connection with such suit or action.
As used in this Agreement, a "Third Party Acquisition Event"
means (i) a transaction or series of transactions pursuant to which any person
or group (as such term is defined under the Exchange Act), other than Parent or
Sub, or any affiliate thereof ("Third Party"), acquires more than 25% of the
equity securities or voting power of the Company or any of its Significant
Subsidiaries, pursuant to a tender offer or exchange offer or otherwise, (ii) a
merger, consolidation, share exchange or other business combination involving
the Company or any of its Significant Subsidiaries pursuant to which any Third
Party acquires ownership of more than 25% of the outstanding equity securities
or voting power of the Company or any of its Significant Subsidiaries or of the
entity surviving such merger or business combination or resulting from such
consolidation, (iii) any other transaction or series of transactions pursuant to
which any Third Party acquires control of assets of the Company or any of its
Significant Subsidiaries (including, for this purpose, outstanding equity
securities of Significant Subsidiaries of such party) having a fair market value
equal to more than 25% of the fair market value of all the consolidated assets
of the Company and its Subsidiaries, taken as a whole, immediately prior to such
transaction or series of transactions, or (iv) any transaction or series of
transactions pursuant to which any Third Party acquires control of the Board of
Directors of the Company or by which nominees of any Third Party are elected or
appointed to a majority of the seats on the Board of Directors of the Company.
Section 5.7 COMPANY STOCK PLANS. (a) Not later than the
Effective Time, each Company Stock Option which is outstanding immediately prior
to the Effective Time pursuant to a Company Stock Option Plan shall become and
represent an option to purchase the number of shares of Parent Common Stock (a
"Substitute Option") (decreased to the nearest full share) determined by
multiplying (i) the number of shares of Company Common Stock subject to such
Company Stock Option immediately prior to the Effective Time by (ii) the
Exchange Ratio, at an exercise price per share of Parent Common Stock (rounded
up to the nearest cent) equal to the exercise price per share of Company Common
Stock immediately prior to the Effective Time divided by the Exchange Ratio.
After the Effective Time, except as provided above in this Section 5.7, each
Substitute Option shall be exercisable upon the same terms and conditions as
were applicable under the related Company Stock Option immediately prior to or
at the Effective Time. The Company shall, if so requested by Parent, use
reasonable best efforts to obtain any consents that may be required in
connection with implementing the provisions of this Section 5.7 (it being
understood that, in connection with any such consents that may be so required,
the Company will have satisfied its obligation under this Agreement relating
thereto if it has used reasonable best efforts to obtain such consents, whether
or not successful) or provide any notice or take any other similar action
reasonably requested in connection therewith. As soon as reasonably practicable,
and in no event later than ten days after the Effective Time, Parent shall file
a registration statement on Form S-8 (or any successor or other appropriate
form) with respect to Parent Common Stock subject to such Substitute Options, or
shall cause such
31
Substitute Options to be deemed to be issued pursuant to a Parent Stock Plan
for which shares of Parent Common Stock have been previously registered
pursuant to an appropriate registration form.
(b) As of the Effective Time, the right of each
nonemployee director of the Company who has elected to receive shares of Company
Common Stock pursuant to the deferred stock compensation program maintained by
the Company shall become and represent a right to receive the number of shares
of Parent Common Stock (decreased to the nearest whole share) determined by
multiplying (i) the number of shares of Company Common Stock which would be
issuable to such nonemployee director if he or she ceased serving as a director
immediately prior to the Effective Time by (ii) the Exchange Ratio. Such shares
of Parent Common Stock shall be issued to such nonemployee director as soon as
practicable after the Effective Time.
Section 5.8 REASONABLE BEST EFFORTS; POOLING OF INTERESTS.
(a) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties agrees to use 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, but not limited to: (i) obtaining all
necessary actions or non-actions, waivers, consents and approvals from all
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities) and taking all reasonable steps
(subject to clause (c) below, including, in the case of Parent, divesting or
holding separate any assets or agreeing to any governmental conditions), as may
be necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity (including those in connection with the
HSR Act), (ii) obtaining all necessary consents, approvals or waivers from third
parties, (iii) defending any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, (iv) each of Parent and the Company agreeing to take,
together with their respective accountants, all actions reasonably necessary in
order to obtain a favorable determination (if required) from the SEC that the
Merger may be accounted for as a pooling of interests in accordance with
generally accepted accounting principles and (v) the execution and delivery of
any additional instruments reasonably necessary to consummate the transactions
contemplated by this Agreement. No party to this Agreement shall consent to any
voluntary delay of the consummation of the Merger at the behest of any
Governmental Entity without the consent of the other parties to this Agreement,
which consent shall not be unreasonably withheld.
(b) Each party shall use all reasonable best efforts to
not take any action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue in any
material respect or result in a material breach of any covenant made by it in
this Agreement or which could reasonably be expected to impede, interfere with
or prevent in any material respect the Merger.
32
(c) Notwithstanding anything herein to the contrary,
Parent shall not be obligated (i) to enter into any "hold-separate" agreement or
other agreement with respect to the disposition of any assets or businesses of
the Parent or any of its Subsidiaries or the Company or any of its Subsidiaries
(if such agreements would, individually or in the aggregate, have a material and
adverse impact on the business of Parent or the Company or on the benefits that
would have otherwise been derived by Parent from the Merger or if such agreement
would impose or give rise to any of the conditions of the type described in
clause (ii) below with the impact described in clause (ii) below) in order to
obtain clearance from the Federal Trade Commission or the Antitrust Division of
the Department of Justice or any other antitrust or competition authorities to
proceed with the consummation of the transactions contemplated hereby or (ii) to
consummate the transactions contemplated hereby in the event that both (A) any
consent, approval or authorization of any Governmental Entity obtained or sought
to be obtained in connection with this Agreement is conditioned upon the
imposition of any restrictions upon (or the making of any accommodation
(financial or otherwise) in respect of the transactions contemplated hereby or)
the conduct of the business of the Surviving Corporation or of Parent or its
Subsidiaries (including any agreement not to compete in any geographic area or
line of business) or results, or would result in, the abrogation or diminishment
of any authority or license granted by any Governmental Entity and (B) such
restrictions, accommodations and abrogations would, individually or in the
aggregate, have a material and adverse impact on the business of Parent or the
Company or on the benefits that would otherwise have been derived by Parent from
the Merger. Parent's exercise of its rights under this paragraph (c) shall not
in any way prejudice the rights of Parent under this Agreement in respect of
Closing conditions and termination rights.
Section 5.9 PUBLIC ANNOUNCEMENTS. Parent and the Company will
not issue any press release with respect to the transactions contemplated by
this Agreement or otherwise issue any written public statements with respect to
such transactions without prior consultation with the other party, except as may
be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange or the rules of the NYSE.
Section 5.10 REAL ESTATE TRANSFER AND GAINS TAX. Parent and
the Company agree that either the Company or the Surviving Corporation will pay
any state or local tax which is attributable to the transfer of the beneficial
ownership of the Company's or its Subsidiaries' real property, if any
(collectively, the "Gains Taxes"), and any penalties or interest with respect to
the Gains Taxes, payable in connection with the consummation of the Merger. The
Company and Parent agree to cooperate with the other in the filing of any
returns with respect to the Gains Taxes, including supplying in a timely manner
a complete list of all real property interests held by the Company and its
Subsidiaries and any information with respect to such property that is
reasonably necessary to complete such returns. The portion of the consideration
allocable to the real property of the Company and its Subsidiaries shall be
determined by Parent in its reasonable discretion.
Section 5.11 STATE TAKEOVER LAWS. If any "fair price,"
"business combination" or "control share acquisition" statute or other similar
statute or regulation shall become applicable to the transactions contemplated
hereby, Parent and the Company and their respective Boards of Directors shall
use their reasonable best efforts to grant such approvals and take such actions
as are necessary so that the transactions contemplated hereby and thereby may be
33
consummated as promptly as practicable on the terms contemplated hereby and
thereby and otherwise act to minimize the effects of any such statute or
regulation on the transactions contemplated hereby.
Section 5.12 INDEMNIFICATION; DIRECTORS AND OFFICERS
INSURANCE.
(a) From and after the Effective Time, Parent shall, and
shall cause the Surviving Corporation to, indemnify and hold harmless all past
and present officers, directors, employees and agents of the Company and of its
Subsidiaries to the full extent such persons are currently indemnified by the
Company for acts or omissions occurring at or prior to the Effective Time
pursuant to the Company Charter, the Company Bylaws and any existing agreements.
Without limiting the generality of the foregoing, in the event any person
entitled to indemnification under this Section 5.12(a) becomes involved in any
claim, action, proceeding or investigation after the Effective Time, Parent
shall, or shall cause the Surviving Corporation to, periodically advance to such
person his or her reasonable legal and other reasonably incurred expenses
(including the cost of any investigation and preparation incurred in connection
therewith), subject to such person providing an undertaking to reimburse all
amounts so advanced in the event of a final nonappealable determination by a
court of competent jurisdiction that such person is not entitled thereto.
(b) Parent shall provide, or shall cause the Surviving
Corporation to provide, for an aggregate period of not less than six (6) years
from the Effective Time, the Company's current directors and officers an
insurance and indemnification policy that provides coverage for events occurring
on or prior to the Effective Time (the "D&O Insurance") that is substantially
similar (with respect to limits and deductibles and scope) to the Company's
existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; PROVIDED, HOWEVER, that the Parent and
the Surviving Corporation shall not be required to pay an annual premium for the
D&O Insurance in excess of 150% of the last annual premium paid prior to the
date of this Agreement.
(c) The provisions of this Section 5.12 are intended for
the benefit of, and shall be enforceable by, each person entitled to
indemnification under this Section 5.12, his or her heirs and his or her
personal representatives.
Section 5.13 NOTIFICATION OF CERTAIN MATTERS. Parent shall use
its reasonable best efforts to give prompt notice to the Company, and the
Company shall use its reasonable best efforts to give prompt notice to Parent,
of: (i) the occurrence, or non-occurrence, of any event of which it is aware and
which would be reasonably likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect,
or (ii) any failure of Parent or the Company, as the case may be, to comply in a
timely manner with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; PROVIDED, HOWEVER, that the delivery
of any notice pursuant to this Section 5.13 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
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Section 5.14 EMPLOYEE BENEFIT PLANS AND AGREEMENTS.
(a) From the Effective Time through December 31, 2001,
Parent shall cause the Company and its Subsidiaries to continue to maintain the
material benefit plans and programs provided to employees of the Company and its
Subsidiaries immediately prior to the Effective Time (excluding any such plans
(or any portion of any such plan) providing for equity-related benefits) and
subject to the requirements of applicable law; provided, however, that the
performance criteria under any such plan or program that provides for
performance-based incentive compensation shall be modified or adjusted
appropriately to reflect the transactions contemplated by this Agreement and
prevent a change in the incentive compensation opportunities thereunder. For a
period of not less than six months following December 31, 2001, Parent shall
cause to be provided, to employees of the Company or its Subsidiaries as of the
Effective Time (including each such person who is on vacation, temporary layoff,
approved leave of absence, sick leave or short or long-term disability)
(collectively the "Company Employees"), employee benefits (excluding for this
purpose equity-related benefits) that are, in the aggregate, at least as
favorable as those benefits provided to such Company Employees immediately prior
to the Effective Time and such Company Employees shall be eligible to
participate in equity plans of Parent on a substantially equivalent basis as
similarly situated employees of Parent and its affiliates. Nothing herein shall
require the Company or its Subsidiaries to make matching or profit-sharing
contributions in Company Common Stock under the Company Retirement Plan. For
purposes of vesting, eligibility to participate and benefit accrual (other than
accrual under a defined benefit pension plan) under the employee benefit plans
of Parent and its Subsidiaries providing benefits to any Company Employees after
the Effective Time (collectively the "New Plans"), each Company Employee shall
be credited with his or her years of service with the Company and its
Subsidiaries before the Effective Time, to the same extent as such Company
Employee was entitled, before the Effective Time, to credit for such service
under any similar Company benefit plan in which such Company Employee
participated or was eligible to participate immediately prior to the Effective
Time; provided that the foregoing shall not apply to the extent that its
application would result in a duplication of benefits or for newly established
plans and programs in which employees of Parent and its Subsidiaries participate
and for which prior service of employees of Parent and its Subsidiaries is not
taken into account. In addition, without limiting the generality of the
foregoing: (i) each Company Employee shall be immediately eligible to
participate, without any waiting time, in any and all New Plans to the extent
coverage under such New Plans replaces coverage under a comparable Company
employee benefit plan or compensation arrangement or agreements in which such
Company Employee participated immediately before the Effective Time
(collectively the "Old Plans") and (ii) for purposes of each New Plan providing
medical, dental, pharmaceutical and/or vision benefits to any Company Employee,
Parent shall cause all pre-existing condition exclusions of such New Plans to be
waived for such employee and his or her dependents, unless such conditions would
not have been waived under the comparable plans of the Company and its
Subsidiaries in which such employee participated or in which such employee would
have been eligible to participate immediately prior to the Effective Time and
Parent shall cause any eligible expenses incurred by such employee and his or
her covered dependents during the portion of the plan year of the Old Plan
ending on the date of such employee's participation in the corresponding New
Plans to be taken into account under such New Plan for purposes of satisfying
all deductible, coinsurance and maximum out-of-pocket
35
requirements applicable to such employee and his or her covered dependents
for the applicable plan year as if such amounts had been paid in accordance
with such New Plan.
(b) Except as otherwise provided by this Section, nothing
in this Agreement shall be interpreted as limiting the power of the Surviving
Corporation to amend or terminate any particular Company Plan or any other
particular employee benefit plan, program, agreement or policy or as requiring
the Surviving Corporation to offer to continue the employment of any employee
(other than as required by the terms of any written employment contract or
benefit plan).
(c) Parent shall take all reasonable steps to ensure that
(i) the obligations of the Company or the Surviving Corporation to fund the
Company's Executive Benefit Trust (the "Rabbi Trust") within seven days after
the approval of the Merger by the stockholders of the Company shall be honored,
provided that if the Effective Time does not occur within this seven-day period,
the Company shall be entitled to fund such obligations, and that (ii) the
obligations of the Company or the Surviving Corporation under the Rabbi Trust
shall be honored following the Effective Time.
(d) From the Closing, Parent shall cause to be honored by
the Company, the Surviving Corporation and their Subsidiaries all employment
agreements, bonus agreements, severance agreements and any other similar
agreements with the persons who are directors, officers and employees of the
Company and its Subsidiaries.
Section 5.15 SECTION 16(b). The Parent shall use reasonable
best efforts to cause, before the Effective Time, any acquisitions of equity
securities of Parent (including derivative securities) contemplated by this
Agreement by each individual who becomes a director or officer of Parent to be
exempt under Rule 16b-3 promulgated under the Exchange Act.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER. The respective obligations of each party to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been
duly approved by the requisite vote of stockholders of the Company in accordance
with applicable law and the Company Charter and the Company Bylaws.
(b) QUOTATION OF STOCK. The Parent Common Stock issuable
in the Merger shall have been authorized for quotation on the NYSE, subject to
official notice of issuance.
(c) HSR. The waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated.
36
(d) AUTHORIZATIONS AND CONSENTS. All authorizations,
consents, orders, declarations or approvals of, or filings with, or terminations
or expirations of waiting periods imposed by, any Governmental Entity, which the
failure to obtain, make or occur would have the effect of making the Merger or
any of the transactions contemplated hereby illegal or would have, individually
or in the aggregate, a Material Adverse Effect on Parent (assuming the Merger
had taken place) or on the Company, shall have been obtained, shall have been
made or shall have occurred.
(e) REGISTRATION STATEMENT. The Registration Statement
shall have become effective in accordance with the provisions of the Securities
Act. No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose shall have
been initiated or, to the Knowledge of Parent or the Company, threatened by the
SEC. All necessary state securities or Blue Sky authorizations (including State
Takeover Approvals) shall have been received.
(f) NO ORDER. No court or other Governmental Entity
having jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of making the Merger or any of the transactions contemplated hereby
illegal.
Section 6.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT
THE MERGER. The obligation of the Company to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND
WARRANTIES. Each of Parent and Sub shall have performed in all material respects
each of its agreements contained in this Agreement required to be performed on
or prior to the Effective Time, each of the representations and warranties of
Parent and Sub contained in this Agreement that is qualified by materiality
shall be true and correct on and as of the Effective Time as if made on and as
of such date (other than representations and warranties which address matters
only as of a certain date which shall be true and correct as of such certain
date) and each of the representations and warranties that is not so qualified
shall be true and correct in all material respects on and as of the Effective
Time as if made on and as of such date (other than representations and
warranties which address matters only as of a certain date which shall be true
and correct in all material respects as of such certain date), in each case
except as contemplated or permitted by this Agreement, and the Company shall
have received a certificate signed on behalf of Parent by its Chief Executive
Officer and its Chief Financial Officer to such effect.
(b) TAX OPINION. The Company shall have received an
opinion of its counsel, Sidley & Austin, in form and substance reasonably
satisfactory to the Company, dated the Effective Time, substantially to the
effect that, on the basis of facts, representations and assumptions set forth in
such opinion, (i) the Merger will constitute a tax-free reorganization within
the meaning of Section 368 of the Code and (ii) for U.S. federal income tax
purposes, the shareholders of the Company will recognize no gain or loss upon
the conversion of their shares of Company Common Stock into shares of Parent
Common Stock pursuant to the Merger, except with respect to cash, if any,
received in lieu of fractional shares of Parent Common Stock.
37
In rendering such opinion, Sidley & Austin may rely upon
representations contained herein and may receive and rely upon representations
from Parent, the Company, and others, including representations from Parent
substantially similar to the representations in the Parent Tax Certificate
attached to the Parent Letter and representations from the Company substantially
similar to the representations in the Company Tax Certificate attached to the
Company Letter.
(c) CONSENTS. Parent shall have obtained the consent or
approval of each person that is not a Governmental Entity whose consent or
approval shall be required in connection with the transactions contemplated
hereby under any loan or credit agreement, note, mortgage, indenture, lease or
other agreement by which Parent or any of its Subsidiaries is bound, except as
to which the failure to obtain such consents and approvals would not,
individually or in the aggregate, have a Material Adverse Effect on Parent
(assuming the Merger has taken place).
Section 6.3 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB TO
EFFECT THE MERGER. The obligations of Parent and Sub to effect the Merger shall
be subject to the fulfillment at or Prior to the Effective Time of the following
additional conditions:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND
WARRANTIES. The Company shall have performed in all material respects each of
its agreements contained in this Agreement required to be performed on or prior
to the Effective Time, each of the representations and warranties of the Company
contained in this Agreement that is qualified by materiality shall be true and
correct on and as of the Effective Time as if made on and as of such date (other
than representations and warranties which address matters only as of a certain
date which shall be true and correct as of such certain date) and each of the
representations and warranties that is not so qualified shall be true and
correct in all material respects on and as of the Effective Time as if made on
and as of such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct in all
material respects as of such certain date), in each case except as contemplated
or permitted by this Agreement, and Parent shall have received a certificate
signed on behalf of the Company by its Chief Executive Officer and its Chief
Financial Officer to such effect.
(b) TAX OPINION. Parent shall have received an opinion of
its counsel, Cleary, Gottlieb, Xxxxx & Xxxxxxxx, in form and substance
reasonably satisfactory to Parent, dated the Effective Time, substantially to
the effect that, on the basis of facts, representations and assumptions set
forth in such opinion, (i) the Merger will constitute a tax-free reorganization
within the meaning of Section 368 of the Code and (ii) for U.S. federal income
tax purposes, the shareholders of the Company will recognize no gain or loss
upon the conversion of their shares of Company Common Stock into shares of
Parent Common Stock pursuant to the Merger, except with respect to cash, if any,
received in lieu of fractional shares of Parent Common Stock.
In rendering such opinion, Cleary, Gottlieb, Xxxxx & Xxxxxxxx may rely
upon representations contained herein and may receive and rely upon
representations from Parent, the Company, and others, including representations
from Parent substantially similar to the representations in the Parent Tax
Certificate attached to the Parent Letter and representations from the Company
substantially similar to the representations in the Company Tax Certificate
attached to the Company Letter.
38
(c) CONSENTS. The Company shall have obtained the consent
or approval of each person that is not a Governmental Entity whose consent or
approval shall be required in connection with the transactions contemplated
hereby under any loan or credit agreement, note, mortgage, indenture, lease or
other agreement or instrument by which the Company or any of its Subsidiaries is
bound, except as to which the failure to obtain such consents and approvals
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
(d) ACCOUNTING. The Company shall have received the
written opinion, dated as of the Effective Time, of Xxxxxx Xxxxxxxx that the
Company is eligible to be a party to a business combination accounted for as a
pooling of interests in accordance with U.S. generally accepted accounting
principles ("GAAP") and applicable published rules and regulations of the SEC.
Parent shall have received the written opinion, dated as of the Effective Time,
of PriceWaterhouseCoopers that Parent is eligible to be a party to a business
combination accounted for as a pooling of interests in accordance with GAAP and
applicable published rules and regulations of the SEC, and that the Merger will
qualify for pooling of interests accounting. Each of such written opinions will
be in form and substance reasonably satisfactory to the Parent.
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 any approval of
the matters presented in connection with the Merger by the stockholders of the
Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the other party
shall have failed to comply in any material respect with any of its covenants or
agreements contained in this Agreement required to be complied with prior to the
date of such termination, which failure to comply has not been cured within
thirty business days following receipt by such other party of written notice
from the non-breaching party of such failure to comply (it being understood (i)
that any breach of Section 4.2 or 5.1 shall be considered material for purposes
of this Section 7.1(b) and (ii) that a breach of Section 4.2 or the penultimate
sentence of Section 5.1 is not capable of cure and therefore the 30-day cure
period shall not apply in the case of any such breach);
(c) by either Parent or the Company if there has been (i)
a breach by the other party (in the case of Parent, including any breach by Sub)
of any representation or warranty that is not qualified as to materiality which
has the effect of making such representation or warranty not true and correct in
all material respects or (ii) a breach by the other party (in the case of
Parent, including any breach by Sub) of any representation or warranty that is
qualified as to materiality, in each case which breach has not been cured within
thirty business days following receipt by the breaching party from the
non-breaching party of written notice of the breach;
(d) by Parent or the Company if: (i) the Merger has not
been effected on or prior to the close of business on the 180th day after the
date hereof (provided that if either Parent
39
or the Company determines that additional time is necessary in connection
with obtaining any consent, registration, approval, permit or authorization
required to be obtained from any Governmental Entity, such date may be
extended by Parent or the Company from time to time by written notice to the
other party to a date not beyond the 270th day after the date hereof if the
extending party in good faith believes that such consent, registration,
approval, permit or authorization can be obtained by such date); PROVIDED,
HOWEVER, that the right to terminate this Agreement pursuant to this Section
7.1(d)(i) shall not be available to any party whose failure to fulfill any of
its obligations contained in this Agreement has been the cause of, or
resulted in, the failure of the Merger to have occurred on or prior to the
aforesaid date; or (ii) any court or other Governmental Entity having
jurisdiction over a party hereto shall have issued an order, decree or ruling
or taken any other action permanently enjoining, restraining or otherwise
prohibiting the consummation of the Merger and such order, decree, ruling or
other action shall have become final and nonappealable;
(e) by Parent or the Company if the stockholders of the
Company do not approve and adopt the agreement of merger (within the meaning of
Section 251 of the DGCL) contained in this Agreement at the Stockholder Meeting
or at any adjournment or postponement thereof; PROVIDED, HOWEVER, that the
Company may not terminate this Agreement pursuant to this Section 7.1(e) if the
Company has not complied with its obligations under Sections 4.2, 5.1 and 5.2 or
has otherwise breached in any material respect its obligations under this
Agreement in any manner that could reasonably have caused the failure of the
stockholder approval to be obtained at the Stockholder Meeting; or
(f) by Parent if (without regard to whether or not a
breach of this Agreement has occurred) (i) the Board of Directors of the Company
shall not have recommended, or shall have resolved not to recommend, or shall
have adversely qualified, adversely modified or withdrawn its recommendation of
the Merger or declaration that the Merger is advisable and fair to and in the
best interest of the Company and its stockholders, or shall have resolved to do
so (even if permitted by Section 5.1), (ii) any person (other than Parent or its
affiliates) acquires or becomes the beneficial owner of 15% or more of the
outstanding shares of Company Common Stock, (iii) the Board of Directors of the
Company shall have recommended to the stockholders of the Company any Takeover
Proposal involving the Company or shall have resolved to do so or (iv) a tender
offer or exchange offer for 15% or more of the outstanding shares of capital
stock of the Company is commenced, and the Board of Directors of the Company
fails, within 10 business days of such commencement, to recommend against
acceptance of such tender offer or exchange offer by its stockholders (including
by taking no position with respect to the acceptance of such tender offer or
exchange offer by its stockholders).
The right of any party hereto to terminate this Agreement
pursuant to this Section 7.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
person controlling any such party or any of their respective officers or
directors, whether prior to or after the execution of this Agreement.
Section 7.2 EFFECT OF TERMINATION. In the event of termination
of this Agreement by either Parent or the Company, as provided in Section 7.1,
this Agreement shall forthwith become void and there shall be no liability
hereunder on the part of the Company, Parent, Sub or their respective officers
or directors (except for the Confidentiality Agreements
40
and the entirety of Section 5.6, which shall survive the termination);
PROVIDED, HOWEVER, that nothing contained in this Section 7.2 shall relieve
any party hereto from any liability for any willful breach of a
representation or warranty contained in this Agreement or the breach of any
covenant contained in this Agreement.
Section 7.3 AMENDMENT. This Agreement may be amended by the
parties hereto, by or pursuant to action taken by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger at the Stockholder Meeting, but, after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further 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 WAIVER. At any time prior to the Effective Time,
the parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall terminate at the Effective Time.
Section 8.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, one day after being delivered to an overnight courier or when
telecopied (with a confirmatory copy sent by overnight courier) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent or Sub, to
The Interpublic Group of Companies, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
41
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxx, Xxxxxxx X. Xxxxx and
Xxxxx X. Xxxxxxxxxx
Facsimile No.: (000) 000-0000
(b) if to the Company, to
True North Communications Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile No.(000) 000-0000
with a copy to:
Sidley & Austin
Bank One Plaza
00 X. Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx and
Xxxx X. Xxxxx
Facsimile No.: (000) 000-0000
Section 8.3 INTERPRETATION. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents, list of defined terms 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 "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
Section 8.4 COUNTERPARTS. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 8.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.
This Agreement and the Confidentiality Agreements constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof. This
Agreement, except as provided in the next sentence, is not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.
The parties hereto expressly intended the provisions of Section 5.12 to confer a
benefit upon and be enforceable by, as third party beneficiaries of this
Agreement, the third persons referred to in, or intended to be benefited by such
provision.
42
Section 8.6 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 8.7 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Any transfer in violation of Section 8.7
shall be null and void.
Section 8.8 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 terms, conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic and legal substance of the transactions contemplated hereby are not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the transactions contemplated by this
Agreement may be consummated as originally contemplated to the fullest extent
possible.
* * * *
43
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.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By:/s/ Xxxxxxxx X. Camera
--------------------------------------------
Name: Xxxxxxxx X. Camera
Its: Senior Vice President, Secretary
and General Counsel
VERITAS ACQUISITION CORP.
By:/s/ Xxxxxxxx X. Camera
--------------------------------------------
Name: Xxxxxxxx X. Camera
Its: Senior Vice President, Secretary
and General Counsel
TRUE NORTH COMMUNICATIONS INC.
By:/s/ Xxxxx X. Xxxx
--------------------------------------------
Name: Xxxxx X. Xxxx
Its: Chairman and Chief Executive
Officer
44
Exhibit 5.4(a)
[FORM OF COMPANY AFFILIATE LETTER TO PARENT]
[Date]
[Parent Address]
Dear Sir or Madam:
Reference is made to the provisions of the Agreement and Plan
of Merger, dated as of [ ], 2001 (together with any amendments thereto, the
"MERGER AGREEMENT"), among [________________________], a Delaware corporation
("PARENT"), [_____], a Delaware corporation and a direct wholly owned subsidiary
of Parent ("SUB") and [________________________], a Delaware corporation (the
"COMPANY"), pursuant to which Sub will be merged with and into the Company, with
the Company continuing as the surviving corporation (the "MERGER"). This letter
constitutes the undertakings of the undersigned contemplated by the Merger
Agreement, as is being furnished pursuant to Section 5.4(a) thereto.
I understand that I may be deemed to be an "affiliate" of the
Company, as such term is defined for purposes of paragraphs (c) and (d) of Rule
145 ("RULE 145") promulgated under the Securities Act of 1933, as amended (the
"SECURITIES ACT"). Execution of this letter shall not be construed as an
admission of "affiliate" status nor as a waiver of any rights that I may have to
object to any claim that I am an "affiliate" on or after the date of this
letter.
If in fact I were to be deemed an "affiliate" of the Company
under paragraphs (c) and (d) of Rule 145, my ability to sell, transfer or
otherwise dispose of any shares of the common stock, par value $0.10 per share,
of Parent (the "PARENT SHARES") received by me in exchange for any shares of
common stock, par value $.33 per share, of the Company (the "COMPANY SHARES")
pursuant to the Merger may be restricted.
I hereby represent, warrant and covenant to Parent that:
I will not sell, pledge, transfer or otherwise dispose of any
of the Parent Shares except (i) pursuant to an effective registration statement
under the Securities Act, or (ii) as permitted by, and in accordance with, Rule
145 or another applicable exemption under the Securities Act and the rules and
regulations promulgated thereunder;
Except as permitted by Staff Accounting Bulletin No. 76 issued
by the Securities and Exchange Commission, I will not (i) sell, pledge, transfer
or dispose of, or otherwise reduce my risk relative to, any Company Shares
during the 30-day period prior to the Effective Time (as defined in the Merger
Agreement) or (ii) sell, pledge, transfer or dispose of, or otherwise reduce my
risk (within the meaning of the Securities and Exchange Commission's Financial
Reporting Release No. 1, "Codification of Financial Reporting Policies", Section
201.01 47 F.R. 21028 (April 15, 1982)) relative to, any Parent Shares until
after such time as consolidated financial results (including combined sales and
net income) covering at least 30 days of post-merger combined operations of
Parent and the Company have been published by Parent in the form of a
1
quarterly earnings report, an effective registration statement filed with the
Commission, a report to the Commission on Form 10-K, 10-Q, or 8-K, or any
other public filing or announcement which includes the combined results of
operations. Parent shall notify the "affiliates" of the publication of such
results.
I understand that during the period described in the paragraph
immediately above, subject to providing written notice to Parent and the other
restrictions set forth above, and to the extent permitted under the "pooling of
interest" accounting rules and applicable securities laws, I will be permitted
to sell up to 10% of the Parent Shares (the "10% Shares") received by me or the
Company Shares owned by me or to make charitable contributions or bona fide
gifts of the Parent Shares received by me or the Company Shares owned by me,
subject to the same restrictions. I agree that I will give Parent not less than
five (5) business days notice prior to making any sales, charitable
contributions or gifts as contemplated under this paragraph, that I will provide
any information reasonably requested by Parent or Parent's accounting firm
regarding any such sale, charitable contribution or gift, and that I will
refrain from making such sales, charitable contributions or gifts if Parent
determines, after consultation with its accounting firm, that such transaction
could preclude the Merger from being accounted for as a "pooling of interest."
The 10% Shares shall be calculated in accordance with SEC Accounting Series
Release No. 135 as amended by Staff Accounting Bulletin No. 76.
I hereby acknowledge that Parent is under no obligation to
register the sale, transfer, pledge or other disposition of the Parent Shares or
to take any other action necessary for the purpose of making an exemption from
registration available.
I understand that Parent will issue stop transfer instructions
to its transfer agents with respect to the Parent Shares and that a restrictive
legend will be placed on certificates delivered to me evidencing the Parent
Shares in substantially the following form:
"This certificate and the shares represented hereby have been issued
pursuant to a transaction governed by Rule 145 ("RULE 145") promulgated
under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
and may not be sold or otherwise disposed of unless registered under
the Securities Act pursuant to a Registration Statement in effect at
the time or unless the proposed sale or disposition can be made in
compliance with Rule 145 or without registration in reliance on another
exemption therefrom."
The term Parent Shares as used in this letter shall mean and
include not only the common stock of Parent as presently constituted, but also
any other stock which may be issued in exchange for, in lieu of, or in addition
to, all or any part of such Parent Shares.
I hereby acknowledge that Parent and its independent public
accountants will be relying upon this letter in connection with the
determination that the Merger will qualify and be accounted for as a "pooling of
interests", and that I understand the requirements of this letter and the
limitations imposed upon the transfer, sale or other disposition of the Company
Shares and the Parent Shares.
2
By Parent's acceptance of this letter, Parent hereby agrees
with me as follows:
It is understood and agreed that certificates with the legend
set forth above will be substituted by delivery of certificates without such
legend if (i) one year shall have elapsed from the date the undersigned acquired
the Parent Shares received in the Merger and the provisions of Rule 145(d)(2)
are then available to the undersigned, (ii) two years shall have elapsed from
the date the undersigned acquired the Parent Shares received in the Merger and
the provisions of Rule 145(d)(3) are then applicable to the undersigned, or
(iii) the Parent has received either a written opinion of counsel, which opinion
and counsel shall be reasonably satisfactory to Parent, or a "no action" letter
obtained by the undersigned from the staff of the Commission, to the effect that
the restrictions imposed by Rule 145 under the Act no longer apply to the
undersigned.
Very truly yours,
[Name]
Accepted and Agreed:
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By:
------------------------------------
Name:
Title:
3
Exhibit 5.4(a)
[FORM OF PARENT AFFILIATE LETTER TO PARENT]
[Date]
[Parent]
Dear Sir/Madam:
Reference is made to the provisions of the Agreement and Plan
of Merger, dated as of [ ], 2001 (together with any amendments thereto, the
"MERGER AGREEMENT"), among [_____________________], a Delaware corporation
("PARENT"), [_____], a Delaware corporation and a direct wholly owned subsidiary
of Parent ("SUB") and [Company], a Delaware corporation (the "COMPANY"),
pursuant to which Sub will be merged with and into the Company, with the Company
continuing as the surviving corporation (the "MERGER"). This letter constitutes
the undertakings of the undersigned contemplated by the Merger Agreement, as is
being furnished pursuant to Section 5.4(b) thereto.
I hereby represent, warrant and covenant to the Company that:
Except as permitted by Staff Accounting Bulletin No. 76 issued
by the Securities and Exchange Commission, I will not (i) sell, pledge, transfer
or dispose of, or otherwise reduce my risk relative to any shares of common
stock, par value $.10 per share, of the Parent ("PARENT SHARES") during the
30-day period prior to the Effective Time (as defined in the Merger Agreement)
or (ii) sell, pledge, transfer or dispose of, or otherwise reduce my risk
(within the meaning of the Securities and Exchange Commission's Financial
Reporting Release No. 1., "Codification of Financial Reporting Policies",
Section 201.01 47 F.R. 21028 (April 15, 1982)) relative to, any Parent Shares
until after such time as consolidated financial results (including combined
sales and net income) covering at least 30 days of post-merger combined
operations of Parent and the Company have been published by Parent in the form
of a quarterly earnings report, an effective registration statement filed with
the Commission, a report to the Commission on Form 10-K, 10-Q, or 8-K, or any
other public filing or announcement which includes the combined results of
operations. Parent shall notify the "affiliates" of the publication of such
results.
The term Parent Shares as used in this letter shall mean and
include not only the common stock of Parent as presently constituted, but also
any other stock which may be issued in exchange for, in lieu of, or in addition
to, all or any part of such Parent Shares.
I hereby acknowledge that the Parent and its independent
public accountants will be relying upon this letter in connection with the
determination that the Merger will qualify and be accounted for as a "pooling of
interests", and that I understand the requirements of this letter and the
limitations imposed upon the transfer, sale or other disposition of Parent
Shares.
4
Very truly yours,
[Name]
Accepted and Agreed:
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By:
-------------------------------------
Name:
Title:
5
