EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of May 20, 2001
By and Among
VIVENDI UNIVERSAL, S.A.,
METRONOME ACQUISITION SUB INC.
And
XX0.XXX, INC.
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Contents, p. 1
TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger................................................2
SECTION 1.02. Closing...................................................2
SECTION 1.03. Effective Time............................................2
SECTION 1.04. Effects of the Merger.....................................3
SECTION 1.05. Certificate of Incorporation and By-laws..................3
SECTION 1.06. Directors.................................................3
SECTION 1.07. Officers..................................................3
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock...................................3
(a) Capital Stock of Sub.................................4
(b) Cancelation of Treasury Stock and
Parent-Owned Stock...................................4
(c) Conversion of Company Common Stock...................4
(d) Appraisal Rights.....................................5
SECTION 2.02. Anti-Dilution Provisions..................................6
SECTION 2.03. Exchange of Certificates..................................6
(a) Exchange Agent.......................................6
(b) Exchange Procedures..................................7
(c) Distributions with Respect to
Unexchanged Shares...................................8
(d) No Further Ownership Rights in
Company Common Stock.................................8
(e) No Fractional Shares.................................9
(f) Termination of Exchange Fund.........................9
(g) No Liability.........................................9
(h) Investment of Exchange Fund..........................9
(i) Lost Certificates...................................10
(j) Withholding Rights..................................10
SECTION 2.04. Elections................................................10
SECTION 2.05. Proration................................................12
Contents, p. 2
Page
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company..............................................13
(a) Organization, Standing and Corporate
Power................................................14
(b) Subsidiaries.........................................14
(c) Capital Structure....................................14
(d) Authority; Noncontravention..........................17
(e) SEC Documents; Undisclosed
Liabilities..........................................20
(f) Information Supplied.................................21
(g) Absence of Certain Changes or
Events...............................................21
(h) Litigation...........................................22
(i) Compliance with Applicable Laws......................23
(j) Absence of Changes in Benefit Plans..................24
(k) ERISA Compliance; Excess Parachute
Payments.............................................25
(l) Taxes................................................29
(m) Voting Requirements..................................30
(n) State Takeover Statutes..............................31
(o) Brokers; Schedules of Fees and
Expenses.............................................31
(p) Opinion of Financial Advisor.........................32
(q) Intellectual Property................................32
(r) Contracts............................................33
(s) Title to Properties..................................36
(t) Privacy Policy.......................................36
SECTION 3.02. Representations and Warranties of Parent
and Sub..................................................38
(a) Organization, Standing and
Corporate Power......................................38
(b) Authority; Noncontravention..........................38
(c) SEC Documents........................................40
(d) Absence of Material Adverse Change...................41
(e) Information Supplied.................................41
(f) No Parent Stockholder Vote
Required.............................................41
(g) Parent Shares........................................41
(h) Tax Matters..........................................42
(i) Interim Operations of Sub............................42
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business......................................42
(a) Conduct of Business by the Company.................. 42
Contents, p. 3
Page
(b) Advice of Changes; Filings...........................46
SECTION 4.02. No Solicitation by the Company...........................47
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form F-4 and the
Proxy Statement; Stockholders Meeting....................50
SECTION 5.02. Access to Information; Confidentiality...................51
SECTION 5.03. Reasonable Efforts.......................................52
SECTION 5.04. Stock Options............................................53
SECTION 5.05. Employee Matters.........................................54
SECTION 5.06. Indemnification, Exculpation and
Insurance................................................56
SECTION 5.07. Fees and Expenses........................................57
SECTION 5.08. Public Announcements.....................................57
SECTION 5.09. Affiliates...............................................57
SECTION 5.10. NYSE Listing.............................................58
SECTION 5.11. Litigation...............................................58
SECTION 5.12. Tax Treatment............................................58
SECTION 5.13. Stockholder Agreement Legend.............................59
SECTION 5.14. Termination of Agreements................................59
SECTION 5.15. Resignation of Directors of the Company..................59
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation To
Effect the Merger........................................59
(a) Stockholder Approval.................................59
(b) HSR Act..............................................60
(c) No Restraints........................................60
(d) Form F-4.............................................60
(e) NYSE Listing.........................................60
SECTION 6.02. Conditions to Obligations of Parent
and Sub..................................................60
(a) Representations and Warranties.......................60
(b) Performance of Obligations of the
Company..............................................61
(c) Tax Opinion..........................................61
SECTION 6.03. Conditions to Obligations of the Company.................61
(a) Representations and Warranties.......................61
(b) Performance of Obligations of
Parent and Sub.......................................62
(c) Tax Opinion..........................................62
SECTION 6.04. Frustration of Closing Conditions........................62
Contents, p. 4
Page
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination..............................................62
SECTION 7.02. Effect of Termination....................................63
SECTION 7.03. Amendment................................................64
SECTION 7.04. Extension; Waiver........................................64
SECTION 7.05. Procedure for Termination, Amendment,
Extension or Waiver......................................64
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties...............................................64
SECTION 8.02. Notices..................................................64
SECTION 8.03. Definitions..............................................66
SECTION 8.04. Interpretation...........................................67
SECTION 8.05. Counterparts.............................................68
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries............................................68
SECTION 8.07. Governing Law............................................68
SECTION 8.08. Assignment...............................................68
SECTION 8.09. Enforcement..............................................68
SECTION 8.10. Severability.............................................69
Annex I - Index of Defined Terms
Exhibit A - Form of Affiliate Letter
Schedule A - Employment Agreement Signatories
AGREEMENT AND PLAN OF MERGER (this
"Agreement") dated as of May 20, 2001, among
VIVENDI UNIVERSAL, a societe anonyme organized
under the laws of France ("Parent"), METRONOME
ACQUISITION SUB INC., a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), and
XX0.XXX, INC., a Delaware corporation (the
"Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved, and the Boards of Directors of Sub and the Company have
declared advisable, this Agreement and the merger of the Company with and into
Sub (the "Merger"), upon the terms and subject to the conditions set forth in
this Agreement, whereby each issued and outstanding share of common stock, par
value $0.001 per share, of the Company (the "Company Common Stock"), other
than shares owned by Parent, Sub or the Company, or any wholly owned
subsidiary of Parent, Sub or the Company, will be converted into, at the
option of the holder thereof (upon the terms and subject to the limitations
set forth herein), either (i) the right to receive ordinary shares, nominal
value (U)5.50 per share, of Parent (the "Parent Shares"), which shares will be
issued in the form of American depositary shares representing Parent Shares,
each American depositary share representing one Parent Share (the "Parent
ADSs"), or (ii) the right to receive cash;
WHEREAS simultaneously with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Parent and
Sub to enter into this Agreement, Parent and certain principal stockholders of
the Company (collectively, the "Company Stockholders") are entering into an
agreement (the "Stockholder Agreement") pursuant to which the Company
Stockholders will agree to vote to adopt and approve this Agreement and to
take certain other actions in furtherance of the Merger upon the terms and
subject to the conditions set forth in the Stockholder Agreement;
WHEREAS simultaneously with the execution of this Agreement and as a
condition and inducement to the willingness of Parent and Sub to enter into
this Agreement, Parent, the Company and those employees of the Company
identified on Schedule A have entered into employment agreements, conditioned
on the consummation of the Merger (each, an "Employment Agreement"), pursuant
to which Parent has agreed to employ such individuals following the Effective
Time and such individuals have agreed to certain modifications to the terms of
their Stock Options and to be
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subject to certain non-compete and non-solicitation obligations, in each case
upon the terms and conditions set forth in the applicable Employment
Agreement;
WHEREAS for U.S. Federal income tax purposes, it is intended that
(a) the Merger will qualify as a reorganization under the provisions of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and the rules and regulations promulgated thereunder and (b) this Agreement
constitutes a plan of reorganization; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), the Company shall be merged with and
into Sub at the Effective Time. At the Effective Time, the separate corporate
existence of the Company shall cease and Sub shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of the Company in accordance with the DGCL.
SECTION 1.02. Closing. The closing of the Merger (the "Closing")
shall take place at 10:00 a.m., New York City time, on the second business day
after satisfaction or (to the extent permitted by applicable law) waiver of
the conditions set forth in Article VI (other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of those conditions), at the offices of Cravath, Swaine
& Xxxxx, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place,
time and date as shall be agreed to in writing by Parent and the Company. The
date on which the Closing occurs is referred to in this Agreement as the
"Closing Date".
SECTION 1.03. Effective Time. Upon the terms and subject to the
conditions set forth in this Agreement, as
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soon as practicable on or after the Closing Date, the parties shall prepare
and file with the Secretary of State of the State of Delaware, a certificate
of merger or other appropriate documents (in any such case, the "Certificate
of Merger") executed in accordance with the relevant provisions of the DGCL
and shall make all other filings or recordings required under the DGCL. The
Merger shall become effective at such time as the Certificate of Merger is
duly filed with the Secretary of State of the State of Delaware, or at such
subsequent date or time as Parent and the Company shall agree and specify in
the Certificate of Merger (the time the Merger becomes effective being
referred to as the "Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws. (a) The
certificate of incorporation of Sub, as in effect immediately prior to the
Effective Time, shall be the certificate of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
(b) The by-laws of Sub, as in effect immediately prior to the
Effective Time, shall be the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. Directors. The directors of Sub immediately prior to
the Effective Time shall be the directors of the Surviving Corporation until
the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of the Company immediately
prior to the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any
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action on the part of the holder of any shares of Company Common Stock or any
shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
common stock of Sub shall remain outstanding as one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent-Owned Stock. Each
share of Company Common Stock that is owned by the Company, as treasury
stock, Parent or Sub, or any wholly owned subsidiary of the Company,
Parent or Sub, immediately prior to the Effective Time shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered or deliverable in exchange therefor.
(c) Conversion of Company Common Stock. Except as otherwise provided
in Section 2.05 and subject to Sections 2.01(d) and 2.03(e), each share
of Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares to be canceled in accordance with
Section 2.01(b)) shall be converted into the right to receive, at the
election of the holder thereof, one of the following (as adjusted
pursuant to Section 2.05, the "Merger Consideration"):
(i) for each such share of Company Common Stock with respect to
which an election to receive Parent Shares has been effectively
made, and not revoked or lost, pursuant to Section 2.04 (a "Share
Election"), the right to receive a number of fully paid and
nonassessable Parent Shares equal to the Exchange Ratio (the "Share
Consideration"); and
(ii) for each such share of Company Common Stock with respect
to which an election to receive cash has been effectively made, and
not revoked or lost, pursuant to Section 2.04 (a "Cash Election"),
and for each such share of Company Common Stock with respect to
which a Cash Election is deemed to have been made pursuant to
Section 2.04(d), the right to receive $5.00 in cash (the "Cash
Consideration").
The Parent Shares to be issued in the Merger shall be registered in the
name of The Bank of New York, as depositary (the "Depositary") under the
Deposit Agreement dated as of April 19, 1995, as amended and restated as
of September 11, 2000 and as further amended and restated as of December
8, 2000, among
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Parent, The Bank of New York, a New York banking corporation, and all
owners and beneficial owners from time to time of the American depositary
receipts issued thereunder (the "Deposit Agreement"), and then delivered
in the form of Parent ADSs, and such Parent ADSs shall be issued in
accordance with the Deposit Agreement. At the Effective Time, all such
shares of Company Common Stock shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate or certificates that immediately prior to the Effective Time
represented any such shares of Company Common Stock (the "Certificates")
shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration, certain dividends or other
distributions in accordance with Section 2.03(c) and cash in lieu of any
fractional Parent ADS in accordance with Section 2.03(e) upon the
surrender of such certificate in accordance with Section 2.03(b), without
interest. "Exchange Ratio" means the quotient (rounded to the fourth
decimal place) obtained by dividing $5.00 by the Average Closing Price.
"Average Closing Price" means an amount equal to the average per share
closing price of Parent ADSs on the New York Stock Exchange (the "NYSE"),
as reported in The Wall Street Journal, Northeastern edition (or, if not
reported therein in another authoritative source selected by Parent and
reasonably acceptable to the Company), for the five consecutive trading
days ending on the trading day immediately preceding the date on which
the Stockholders Meeting occurs.
(d) Appraisal Rights. Notwithstanding anything in this Agreement to
the contrary, shares ("Appraisal Shares") of Company Common Stock that
are outstanding immediately prior to the Effective Time and that are held
by any person who is entitled to demand and properly demands appraisal of
such Appraisal Shares pursuant to, and who complies in all respects with,
Section 262 of the DGCL ("Section 262") shall not be converted into
Merger Consideration as provided in Section 2.01(c), but rather the
holders of Appraisal Shares shall be entitled to payment of the fair
market value of such Appraisal Shares in accordance with Section 262;
provided, however, that if any such holder shall fail to perfect or
otherwise shall waive, withdraw or lose the right to appraisal under
Section 262, then the right of such holder to be paid the fair value of
such holder's Appraisal Shares shall cease and such Appraisal Shares
shall be deemed to have been converted as of the Effective Time into, and
to have become exchangeable solely for the right to
6
receive, the Merger Consideration as provided in Section 2.01(c) and in
accordance with 2.04(d). The Company shall serve prompt notice to Parent
of any demands received by the Company for appraisal of any shares of
Company Common Stock, and Parent shall have the right to participate in
and direct all negotiations and proceedings with respect to such demands.
Prior to the Effective Time, the Company shall not, without the prior
written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands, or agree to do any of the foregoing.
SECTION 2.02. Anti-Dilution Provisions. In the event Parent changes
(or establishes a record date for changing) the number of Parent Shares issued
and outstanding prior to the Effective Time as a result of a stock split,
stock dividend, recapitalization, subdivision, reclassification, combination,
exchange of shares or similar transaction with respect to the outstanding
Parent Shares and the record date therefor shall be prior to the Effective
Time, the Exchange Ratio shall be proportionately adjusted to reflect such
stock split, stock dividend, recapitalization, subdivision, reclassification,
combination, exchange of shares or similar transaction.
SECTION 2.03. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent shall provide, or
cause the Surviving Corporation to provide, to the Depositary the Parent Shares
being issued in the form of Parent ADSs in accordance with this Article II, and
the Depositary shall deposit with such bank or trust company as may be
designated by Parent and reasonably acceptable to the Company (the "Exchange
Agent"), for the benefit of the holders of shares of Company Common Stock, for
exchange in accordance with this Article II, through the Exchange Agent,
receipts issued in accordance with the Deposit Agreement evidencing the Parent
ADSs issuable pursuant to Section 2.01 in exchange for outstanding shares of
Company Common Stock, and Parent shall take all steps necessary to enable and
cause the Surviving Corporation to provide to the Exchange Agent, on a timely
basis, as and when needed after the Effective Time, cash necessary to pay for
the shares of Company Common Stock converted into the right to receive cash
pursuant to Section 2.01 (such receipts evidencing Parent ADSs and cash,
together with any dividends or other distributions with respect thereto in
accordance with Section 2.03(c) and any cash in lieu of any fractional Parent
ADS in accordance with Section 2.03(e), being hereinafter referred to as the
"Exchange Fund"). At the time of such deposit, Parent shall irrevocably instruct
the Exchange Agent to deliver the Exchange Fund to the Company's stockholders
after the Effective Time in accordance with the
7
procedures set forth in this Section 2.03, subject to Sections 2.03(f) and
2.03(g).
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
Certificate whose shares were converted into the right to receive the
applicable Merger Consideration pursuant to Section 2.01, (i) a form of letter
of transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in customary form and have
such other provisions as Parent may reasonably specify) and (ii) instructions
for use in surrendering the Certificates in exchange for the applicable Merger
Consideration with respect thereto. Upon surrender of a Certificate for
cancelation to the Exchange Agent, together with such letter of transmittal,
duly completed and validly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor a receipt evidencing that
number of whole Parent ADSs (together with cash in lieu of any fractional
Parent ADS in accordance with Section 2.03(e)), if any, and the amount of
cash, if any, that the aggregate number of shares of Company Common Stock
previously represented by such Certificate shall have been converted pursuant
to Section 2.01 into the right to receive, together with certain dividends or
other distributions in accordance with Section 2.02(c), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Company Common Stock that is not registered in the transfer
records of the Company, a receipt evidencing the proper number of Parent ADSs
may be issued and/or the proper amount of cash may be paid, as appropriate, in
exchange therefor to a person other than the person in whose name the
Certificate so surrendered is registered if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such issuance shall pay any transfer or other taxes required by reason of the
issuance of Parent ADSs to a person other than the registered holder of such
Certificate or establish to the satisfaction of Parent that such tax has been
paid or is not applicable. Until surrendered as contemplated by this Section
2.03(b), each Certificate shall be deemed at any time after the Effective Time
to represent only the right to receive upon such surrender the Merger
Consideration that the holder thereof has the right to receive pursuant to the
provisions of this Article II, certain dividends or other distributions in
accordance with Section 2.03(c) and cash in lieu of any fractional Parent ADS
in accordance with
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Section 2.03(e). No interest shall be paid or will accrue on any cash payable
upon surrender of any Certificate.
(c) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions declared or made with respect to Parent Shares with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the Parent ADSs represented thereby,
if any, and all such dividends and other distributions shall be paid by Parent
to the Exchange Agent and shall be included in the Exchange Fund, until the
surrender of such Certificate in accordance with this Article II. Subject to
the effect of applicable escheat or similar laws, following surrender of any
such Certificate there shall be paid to the holder of the receipt evidencing
whole Parent ADSs issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such
whole Parent ADSs and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time
but prior to such surrender and with a payment date subsequent to such
surrender payable with respect to such whole Parent ADSs.
(d) No Further Ownership Rights in Company Common Stock. All
receipts evidencing Parent ADSs issued and cash paid upon the surrender for
exchange of Certificates in accordance with the terms of this Article II
(including any dividends or other distributions paid pursuant to Section
2.03(c) and any cash in lieu of any fractional Parent ADS paid pursuant to
Section 2.03(e)) shall be deemed to have been issued and paid in full
satisfaction of all rights pertaining to the shares of Company Common Stock
formerly represented by such Certificates, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which may have been declared or
made by the Company with respect to such shares of Company Common Stock which
remain unpaid at the Effective Time. At the close of business on the day on
which the Effective Time occurs, the stock transfer books of the Company shall
be closed, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of Company
Common Stock that were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent for transfer or any other reason, they shall
be canceled and exchanged as provided in this Article II.
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(e) No Fractional Shares. (i) No certificates or scrip representing,
or receipts evidencing, fractional Parent ADSs shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution with
respect to Parent Shares shall relate to such fractional shares interests and
such fractional share interests shall not entitle the owner thereof to vote or
to any rights of a stockholder of Parent.
(ii) Notwithstanding any other provision of this Agreement, each
holder of shares of Company Common Stock exchanged pursuant to the Merger
who would otherwise have been entitled to receive a fraction of a Parent
ADS (after taking into account all such shares held by such holder) shall
receive, in lieu thereof, cash (without interest) in an amount, less the
amount of any withholding taxes that may be required thereon, equal to
such fractional part of a Parent ADS (rounded to the fourth decimal
place) multiplied by the Average Closing Price.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the holders of the Certificates for 12 months
after the Effective Time shall be delivered to Parent, upon demand, and any
holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to Parent for, and, subject to Section
2.03(g), Parent shall remain liable for, payment of their claim for the Merger
Consideration, certain dividends and other distributions in accordance with
Section 2.03(c) and any cash in lieu of any fractional Parent ADS in
accordance with Section 2.03(e).
(g) No Liability. None of Parent, Sub, the Company or the Exchange
Agent shall be liable to any person in respect of any receipts evidencing
Parent ADSs (or any dividends or distributions with respect thereto) or cash
from the Exchange Fund, in each case delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law. If any
Certificate shall not have been surrendered prior to three years after the
Effective Time (or immediately prior to such earlier date on which any amounts
payable pursuant to this Article II would otherwise escheat to or become the
property of any Governmental Entity), any such amounts shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest
any cash included in the Exchange Fund, as directed by Xxxxxx, on a daily
basis; provided that no
10
such investment or loss thereon shall affect the amounts payable to the
Company's stockholders pursuant to this Article II. Any interest and other
income resulting from such investments shall be the property of, and shall be
paid to, Parent, and Parent shall be responsible for paying all taxes with
respect to such interest and other income.
(i) 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, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificate the applicable Merger
Consideration with respect thereto, certain dividends and other distributions
in accordance with Section 2.03(c) and any cash in lieu of any fractional
Parent ADS in accordance with Section 2.03(e).
(j) Withholding Rights. Parent, Sub 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, Sub or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are
so withheld and paid over to the appropriate taxing authority by Parent, Sub
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, Sub or the Exchange Agent.
SECTION 2.04. Elections. (a) Each person who, on or prior to the
Election Date referred to in Section 2.04(b), is a record holder of shares of
Company Common Stock (which for this purpose shall be deemed to include an
authorized representative of the persons entitled to receive the 2,500,000
shares of Company Common Stock reserved for issuance pursuant to the
Stipulation of Settlement in the Company's class action and derivative
lawsuits) shall be entitled, with respect to all or any portion of such
shares, to make an unconditional Share Election or an unconditional Cash
Election, in each case specifying that number of shares of Company Common
Stock such holder desires to have converted into the Share Consideration and
that number of shares of Company Common Stock such holder desires to have
converted into the Cash
11
Consideration, as applicable, on or prior to such Election Date, on the basis
hereinafter set forth.
(b) Parent shall prepare a form of election, which form shall be
subject to the reasonable approval of the Company (the "Form of Election") and
shall be mailed with the Proxy Statement to the record holders of Company
Common Stock as of the record date for the Stockholders Meeting, which Form of
Election shall be used by each record holder of shares of Company Common Stock
who wishes to elect to receive the Share Consideration or the Cash
Consideration, as applicable, for any or all shares of Company Common Stock
held by such holder. The Company shall use all reasonable efforts to make the
Form of Election and the Proxy Statement available to all persons who become
record holders of Company Common Stock during the period between such record
date and the Election Date and to the authorized representative of the persons
entitled to receive the 2,500,000 shares of Company Common Stock reserved for
issuance pursuant to the Stipulation of Settlement in the Company's class
action and derivative lawsuits. Any such holder's (and such authorized
representative's) election to receive the Share Consideration or the Cash
Consideration, as applicable, shall have been properly made only if the
Exchange Agent shall have received at its designated office, by 5:00 p.m., New
York City time, on the business day immediately preceding the date of the
Stockholders Meeting (the "Election Date"), a Form of Election properly
completed and signed and (other than in the case of such authorized
representative) accompanied by Certificates for the shares of Company Common
Stock to which such Form of Election relates, duly endorsed in blank or
otherwise in a form acceptable for transfer on the books of the Company (or
accompanied by an appropriate guarantee of delivery of such Certificates as
set forth in such Form of Election from a firm that is a member of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an
office or correspondent in the United States).
(c) Any Form of Election may be revoked, by the stockholder who
submitted such Form of Election to the Exchange Agent, only by written notice
received by the Exchange Agent (i) prior to 5:00 p.m., New York City time, on
the Election Date or (ii) after such time, if (and only to the extent that)
the Exchange Agent is legally required to permit revocations and only if the
Effective Time shall not have occurred prior to such date. In addition, all
Forms of Election shall automatically be revoked if the Exchange Agent is
notified in writing by Parent and the Company that the Merger has been
abandoned. If a Form of Election is revoked, the Certificate or Certificates
(or
12
guarantees of delivery, as appropriate) for the shares of Company Common Stock
to which such Form of Election relates shall be promptly returned to the
stockholder that submitted the same to the Exchange Agent.
(d) The determination of the Exchange Agent in its sole discretion
shall be binding as to whether or not elections to receive the Share
Consideration or the Cash Consideration have been properly made or revoked
pursuant to this Section 2.04 with respect to shares of Company Common Stock
and when elections and revocations were received by it. If no Form of Election
is received with respect to shares of Company Common Stock, or if the Exchange
Agent determines that any election to receive the Share Consideration was not
properly made with respect to shares of Company Common Stock, the holder of
such shares shall be treated by the Exchange Agent as having submitted a Cash
Election with respect to such shares and, subject to Section 2.05, such shares
shall be converted at the Effective Time into the right to receive the Cash
Consideration. The Exchange Agent shall also make all computations as to the
proration contemplated by Section 2.05, and absent manifest error any such
computation shall be conclusive and binding on the holders of shares of
Company Common Stock. The Exchange Agent may, with the mutual agreement of
Parent and the Company, make such rules as are consistent with this Section
2.04 for the implementation of the elections provided for herein as shall be
necessary or desirable fully to effect such elections and the provisions of
this Section 2.04.
SECTION 2.05. Proration. (a) As is more fully set forth below, the
maximum aggregate number of Parent Shares to be issued to holders of Company
Common Stock pursuant to this Article II (the "Share Cap") shall be equal to
that number of Parent Shares having a value (calculated based on the Average
Closing Price) equal to the product of (x) 0.5 and (y) the aggregate Merger
Consideration (calculated by multiplying the aggregate number of outstanding
shares of Company Common Stock as of the Effective Time (excluding any shares
of Company Common Stock to be canceled pursuant to Section 2.01(b)) by the
Cash Consideration).
(b) As is more fully set forth below, the maximum aggregate amount
of cash to be paid to holders of Company Common Stock pursuant to this Article
II (the "Cash Cap") shall be equal to the product of (x) 0.5 and (y) the
aggregate Merger Consideration (calculated by multiplying the aggregate number
of outstanding shares of Company Common Stock as of the Effective Time
(excluding any shares of
13
Company Common Stock to be canceled pursuant to Section 2.01(b)) by the Cash
Consideration).
(c) In the event that the aggregate number of Parent Shares subject
to Share Elections received by the Exchange Agent (the "Requested Share
Amount") exceeds the Share Cap, each holder of Company Common Stock that has
made a Share Election shall receive, for each share of Company Common Stock
for which a Share Election has been made, (x) a number of Parent Shares (in
the form of Parent ADSs) equal to the product of the Exchange Ratio and the
Share Proration Factor (such product, the "Prorated Share Amount") and (y)
cash in an amount equal to the product of (A) the Exchange Ratio minus the
Prorated Share Amount and (B) the Average Closing Price. The "Share Proration
Factor" shall be a fraction, the numerator of which is the Share Cap and the
denominator of which is the Requested Share Amount.
(d) In the event that the aggregate amount of cash subject to Cash
Elections received (or deemed to have been received in accordance with Section
2.04(d)) by the Exchange Agent (the "Requested Cash Amount") exceeds the Cash
Cap, each holder making a Cash Election (and each holder who is deemed to have
made a Cash Election pursuant to Section 2.04(d)) shall receive, for each
share of Company Common Stock with respect to which a Cash Election has been
made, (x) cash in an amount equal to the product of the Cash Consideration and
a fraction, the numerator of which is the Cash Cap and the denominator of
which is the Requested Cash Amount (such product, the "Prorated Cash Amount")
and (y) a number of Parent Shares (in the form of Parent ADSs) equal to a
fraction, the numerator of which is equal to the Cash Consideration minus the
Prorated Cash Amount and the denominator of which is the Average Closing
Price.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company. Except
as set forth on the disclosure schedule (each section of which qualifies the
correspondingly numbered representation and warranty or covenant to the extent
specified therein and such other representations and warranties or covenants
to the extent a matter in such section is disclosed in such a way as to make
its relevance to the information called for by such other representation and
warranty or covenant reasonably apparent) delivered by the Company to Parent
prior to the execution of this
14
Agreement (the "Company Disclosure Schedule"), the Company represents and
warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The Company and each
of its subsidiaries is a corporation or other legal entity duly
organized, validly existing and in good standing (with respect to
jurisdictions which recognize such concept) under the laws of the
jurisdiction in which it is organized and has the requisite corporate or
other power, as the case may be, and authority to carry on its business
as now being conducted. The Company and each of its subsidiaries is duly
qualified or licensed to do business and is in good standing (with
respect to jurisdictions which recognize such concept) in each
jurisdiction in which the nature of its business or the ownership,
leasing or operation of its assets makes such qualification or licensing
necessary, except for those jurisdictions where the failure to be so
qualified or licensed or to be in good standing individually or in the
aggregate has not had and could not reasonably be expected to have a
material adverse effect on the Company. The Company has made available to
Parent prior to the execution of this Agreement complete and correct
copies of its certificate of incorporation and by-laws, as amended to the
date of this Agreement.
(b) Subsidiaries. Section 3.01(b) of the Company Disclosure Schedule
sets forth a true and complete list of each of the Company's
subsidiaries. All the outstanding shares of capital stock of, or other
equity interests in, each subsidiary of the Company have been validly
issued, are fully paid and nonassessable and are owned directly or
indirectly by the Company, free and clear of all pledges, claims, liens,
charges, encumbrances, mortgages and security interests of any kind or
nature whatsoever (collectively, "Liens") and free of any restriction on
the right to vote, sell or otherwise dispose of such capital stock or
other ownership interests except restrictions under applicable law.
(c) Capital Structure. The authorized capital stock of the Company
consists of 300,000,000 shares of Company Common Stock and 15,000,000
shares of preferred stock, par value $0.001 per share (the "Company
Preferred Stock"). At the close of business on May 17, 2001, (i)
68,704,430 shares of Company Common Stock were issued and outstanding;
(ii) no shares of Company Common Stock were held by the Company in its
treasury; (iii) no shares of Company Preferred Stock were issued
15
or outstanding or were held by the Company in its treasury; (iv)
26,671,250 shares of Company Common Stock were reserved for issuance
pursuant to the Company's 1998 Equity Incentive Plan, 2000 Equity
Incentive Plan and Founders Stock Option Plan (such plans, collectively,
the "Company Stock Plans"), of which 12,147,489 shares were subject to
outstanding Stock Options); (v) 300,000 shares of Company Common Stock
were reserved for issuance pursuant to the Company's Employee Stock
Purchase Plan (the "ESPP"), of which 184,555 shares of Company Common
Stock had been issued and 36,697 shares of Company Common Stock were
subject to outstanding purchase rights under the ESPP (assuming ESPP
payroll withholdings as of May 17, 2001 and a purchase price of
$4.2234375); (vi) 5,475,000 shares of Company Common Stock were reserved
for issuance upon the exercise of the warrants (the "Warrants") subject
to the warrant agreements listed in Section 3.01(c) of the Company
Disclosure Schedule; and (vii) 2,500,000 shares of Company Common Stock
were reserved for issuance pursuant to the Stipulation of Settlement in
the Company's class action and derivative lawsuits. No shares of Company
Common Stock are owned by any subsidiary of the Company. Except as set
forth above and except for shares of Company Common Stock issued upon the
exercise of Stock Options or Warrants referenced above subsequent to the
close of business on May 17, 2001 and prior to the date of this
Agreement, as of the date of this Agreement no shares of capital stock or
other voting securities of the Company were issued, reserved for issuance
or outstanding. There are no outstanding stock appreciation rights
("SARs") or rights (other than the Stock Options and purchase rights
under the ESPP) to receive shares of Company Common Stock on a deferred
basis or other rights that are linked to the value of shares of Company
Common Stock granted under the Company Stock Plans or otherwise. Section
3.01(c) of the Company Disclosure Schedule sets forth a complete and
correct list, as of May 17, 2001, of each holder of outstanding stock
options or other rights to purchase or receive Company Common Stock
granted under the Company Stock Plans or otherwise (collectively, the
"Stock Options") and the Warrants, the number of shares of Company Common
Stock subject to each such Stock Option and Warrant, the name of the
Company Stock Plan pursuant to which such Stock Options were granted, the
grant dates, expiration dates and exercise prices of such Stock Options
and Warrants and the dates on which such Stock Options and Warrants
become vested. All (i) outstanding shares of Company Common Stock in
respect of which the Company has a right under
16
specified circumstances to repurchase such shares at a fixed purchase
price and (ii) outstanding Stock Options, are evidenced by stock option
agreements and restricted stock purchase agreements in the forms attached
as Exhibit A to Section 3.01(c) of the Company Disclosure Schedule, and
no stock option agreement or restricted stock purchase agreement contains
terms that are inconsistent with such forms. No bonds, debentures, notes
or other indebtedness of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to
vote) on any matters on which stockholders of the Company or any of its
subsidiaries may vote are issued or outstanding or subject to issuance.
All outstanding shares of capital stock of the Company are, and all
shares which may be issued will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and will be delivered free and clear
of all Liens (other than Liens created by or imposed upon the holders
thereof) and not subject to preemptive rights. Except as set forth in
this Section 3.01(c) (including pursuant to the conversion or exercise of
the securities referred to above), (x) there are not issued, reserved for
issuance or outstanding (A) any shares of capital stock or other voting
securities of the Company or any of its subsidiaries (other than shares
of capital stock or other voting securities of such subsidiaries that are
directly or indirectly owned by the Company), (B) any securities of the
Company or any of its subsidiaries convertible into or exchangeable or
exercisable for shares of capital stock or other voting securities of, or
other ownership interests in, the Company or any of its subsidiaries or
(C) any warrants, calls, options or other rights to acquire from the
Company or any of its subsidiaries, and no obligation of the Company or
any of its subsidiaries to issue, any capital stock or other voting
securities of, or other ownership interests in, or any securities
convertible into or exchangeable or exercisable for any capital stock or
other voting securities of, or other ownership interests in, the Company
or any of its subsidiaries and (y) there are not any outstanding
obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any such securities or to issue, deliver or
sell, or cause to be issued, delivered or sold, any such securities. The
Company is not a party to any voting agreement with respect to the voting
of any such securities. As of the date of this Agreement, the Subject
Shares (as such term is defined in the Stockholder Agreement) represent
more than 50% of the shares of Company Common Stock outstanding.
17
Section 3.01(c) of the Company Disclosure Schedule sets forth a complete
and correct list of all securities or other beneficial ownership
interests in any other entity beneficially owned, directly or indirectly,
by the Company, other than the capital stock of, or other equity
interests in, its subsidiaries.
(d) Authority; Noncontravention. The Company has all requisite
corporate power and authority to enter into this Agreement and, subject
to obtaining the Stockholder Approval, to consummate the transactions
contemplated by this Agreement. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated by this Agreement have been duly authorized by
all necessary corporate action on the part of the Company and no other
corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated
by this Agreement, subject, in the case of the Merger, to obtaining the
Stockholder Approval. This Agreement has been duly executed and delivered
by the Company and, assuming the due authorization, execution and
delivery by Xxxxxx and Sub, constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms. The Board of Directors of the Company formed a special
committee of the Board of Directors of the Company, composed of Xxxxxx X.
Xxxxxxx, Xxxxxxxx X. Xxxxxx III and Justice Xxxxxx X. Xxxxxx (the
"Special Committee"), to consider this Agreement and the Stockholder
Agreement and the transactions contemplated hereby and thereby and to
make a recommendation with respect thereto to the entire Board of
Directors of the Company. The Special Committee, at a meeting duly called
and held at which all members of the Special Committee were present
either in person or by telephone, duly and unanimously (and without any
abstentions) adopted resolutions (i) approving and declaring advisable
this Agreement, (ii) declaring that it is in the best interests of the
Company's stockholders that the Company enter into this Agreement and
consummate the Merger on the terms and subject to the conditions set
forth in this Agreement, (iii) declaring that the consideration to be
paid to the Company's stockholders in the Merger is fair to such
stockholders, (iv) approving the Stockholder Agreement and the
transactions contemplated thereby and (v) recommending that the Board of
Directors of the Company approve this Agreement and the Stockholder
Agreement and the transactions contemplated hereby and thereby and that
the Board of Directors of the Company
18
declare the advisability of this Agreement. After receiving and
considering such resolutions of the Special Committee, the Board of
Directors of the Company, at a meeting duly called and held at which all
directors of the Company were present either in person or by telephone,
duly and unanimously (and without any abstentions) adopted resolutions
(i) approving and declaring advisable this Agreement, (ii) declaring that
it is in the best interests of the Company's stockholders that the
Company enter into this Agreement and consummate the Merger on the terms
and subject to the conditions set forth in this Agreement, (iii)
declaring that the consideration to be paid to the Company's stockholders
in the Merger is fair to such stockholders, (iv) directing that this
Agreement be submitted to a vote at a meeting of the Company's
stockholders to be held as promptly as practicable following the date of
this Agreement, (v) recommending that such stockholders adopt this
Agreement and (vi) approving the Stockholder Agreement and the
transactions contemplated thereby, which resolutions have not been
subsequently rescinded, modified or withdrawn in any way. The execution
and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance by the Company
with the provisions of this Agreement will not, conflict with, or result
in any violation or breach of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancelation or acceleration of any obligation or to the loss of a benefit
under, or result in the creation of any Lien upon any of the properties
or assets of the Company or any of its subsidiaries under, (i) the
certificate of incorporation or by-laws of the Company or the comparable
organizational documents of any of its subsidiaries, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other
contract, agreement, obligation, commitment, arrangement, understanding,
instrument, permit, concession, franchise, license or similar
authorization (each, a "Contract") to which the Company or any of its
subsidiaries is a party or otherwise applicable to the Company or any of
its subsidiaries or their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, (A) any judgment, order or decree or (B) any statute,
law, ordinance, rule or regulation, in each case applicable to the
Company or any of its subsidiaries or their respective properties or
assets, other than, in the case of clauses (ii) and (iii), any such
conflicts, violations, breaches,
19
defaults, rights, losses or Liens that individually or in the aggregate
could not reasonably be expected to (x) have a material adverse effect on
the Company, (y) impair in any material respect the ability of the
Company to perform its obligations under this Agreement or (z) prevent or
materially impede, interfere with, hinder or delay the consummation of
the transactions contemplated by this Agreement. No consent, approval,
order or authorization of, action by or in respect of, or registration,
declaration or filing with, any Federal, state, local or foreign
government, any court, administrative, regulatory or other governmental
agency, commission or authority or any non-governmental self-regulatory
agency, commission or authority (each a "Governmental Entity") is
required to be obtained or made by or with respect to the Company or any
of its subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated by this Agreement, except for (1) the filing of
a premerger notification and report form by the Company under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and any applicable filings and approvals under similar
foreign antitrust or competition laws and regulations ("Foreign Antitrust
Laws"); (2) the filing with the Securities and Exchange Commission (the
"SEC") of (A) a proxy statement relating to the adoption of this
Agreement by the Company's stockholders at the Stockholders Meeting (such
proxy statement, as amended or supplemented from time to time, the "Proxy
Statement"), and (B) such reports under Section 13(a), 13(d), 15(d) or
16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as may be required in connection with this Agreement and the
Stockholder Agreement and the transactions contemplated by this Agreement
and the Stockholder Agreement; (3) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in
which the Company or any of its subsidiaries is qualified to do business;
and (4) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be made
or obtained individually or in the aggregate could not reasonably be
expected to (x) have a material adverse effect on the Company, (y) impair
in any material respect the ability of the Company to perform its
obligations under this Agreement or (z) prevent or materially impede,
interfere with, hinder or delay the consummation of the transactions
contemplated by this Agreement.
20
(e) SEC Documents; Undisclosed Liabilities. The Company has filed
all required reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) with
the SEC since July 20, 1999 (together with the Company's Registration
Statement on Form S-1 (Registration No. 333-78545), the "Company SEC
Documents"). As of their respective dates, the Company SEC Documents
complied in all material respects with the requirements of the Securities
Act of 1933 (the "Securities Act") or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Company SEC Documents, and none of the Company SEC
Documents when filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the
extent that information contained in any Company SEC Document has been
revised or superseded by a later filed Company SEC Document, none of the
Company SEC Documents contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents comply as
to form, as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto (the
"Accounting Rules"), have been prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case of 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 in the
notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal recurring year-end audit
adjustments). Except (i) as reflected in the most recent financial
statements contained in the Company Filed SEC Documents or in the notes
thereto or (ii) for liabilities incurred in connection with this
Agreement or the transactions contemplated hereby, neither the Company
nor any of its subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) which,
21
individually or in the aggregate, have had or could reasonably be
expected to have a material adverse effect on the Company.
(f) Information Supplied. (i) None of the information supplied or to
be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the registration statement on Form F-4 to be filed with
the SEC by Parent in connection with the issuance of Parent Shares in the
Merger (the "Form F-4") will, at the time the Form F-4 is filed with the
SEC, at any time it is amended or supplemented and at the time it becomes
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or
(ii) the Proxy Statement will, at the date it is first mailed to the
Company's stockholders or at the time of the Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they
are made, not misleading. The Proxy Statement will comply as to form in
all material respects with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder. No representation or
warranty is made by the Company with respect to statements made or
incorporated by reference in the Proxy Statement based on information
supplied by Parent specifically for inclusion or incorporation by
reference in the Proxy Statement.
(ii) The information set forth in Section 3.01(f)(ii) of the Company
Disclosure Schedule is true and correct.
(g) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement or the transactions
contemplated hereby and except as disclosed in the Company SEC Documents
filed and publicly available prior to the date of this Agreement (the
"Company Filed SEC Documents"), since the date of the most recent audited
financial statements included in the Company Filed SEC Documents, the
Company and its subsidiaries have conducted their business only in the
ordinary course, and since such date there has not been (1) any material
adverse change with respect to the Company, (2) any declaration, setting
aside or payment of any dividend or other distribution (whether in cash,
stock or property) with
22
respect to any of the Company's capital stock, (3) any split, combination
or reclassification of any of the Company's capital stock or any issuance
or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of the Company's capital
stock, (4) (A) any granting by the Company or any of its subsidiaries to
any current or former director, consultant, executive officer or other
employee of the Company or its subsidiaries of any increase in
compensation, bonus or other benefits, except for normal increases in
cash compensation and the granting of Stock Options, in each case prior
to the date of this Agreement in the ordinary course of business
consistent with past practice, or as was required under employment
agreements in effect as of the date of the most recent audited financial
statements included in the Company Filed SEC Documents, (B) any granting
by the Company or any of its subsidiaries to any such current or former
director, consultant, executive officer or employee of any increase in
severance or termination pay, except as was required under employment
agreements in effect as of the date of the most recent audited financial
statements included in the Company Filed SEC Documents, (C) any entry by
the Company or any of its subsidiaries into, or any amendment of, any
Benefit Agreement or (D) any amendment to, or modification of, any Stock
Option, (5) except insofar as may have been required by a change in GAAP,
any change in accounting methods, principles or practices by the Company
or any of its subsidiaries materially affecting their respective assets,
liabilities or businesses, (6) any tax election that individually or in
the aggregate could reasonably be expected to adversely affect in any
material respect the tax liability or tax attributes of the Company or
any of its subsidiaries or (7) any settlement or compromise of any
material income tax liability.
(h) Litigation. Section 3.01(h) of the Company Disclosure Schedule
sets forth, as of the date of this Agreement, a complete and accurate
list of (i) all suits, actions and proceedings pending or, to the
knowledge of the Company or any of its subsidiaries, threatened against
the Company or any of its subsidiaries and (ii) all judgments, decrees,
injunctions, rules and orders of any Governmental Entity or arbitrator
outstanding against the Company or any of its subsidiaries. Section
3.01(h) of the Company Disclosure Schedule sets forth, as of the date of
this Agreement, a complete and accurate list of each settlement or
similar agreement in respect of any pending or threatened suit, action,
proceeding,
23
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator which the Company or any of its subsidiaries has entered into
or become bound by since December 31, 1998. Section 3.01(h) of the
Company Disclosure Schedule sets forth a complete and accurate list of
all legal fees in excess of $1,000,000 owed by the Company as of the date
of this Agreement.
(i) Compliance with Applicable Laws. (i) The Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders,
registrations and approvals of all Governmental Entities (collectively,
"Permits") that are required for them to own, lease or operate their
assets and to carry on their businesses as now conducted, except for
failures to hold Permits that individually or in the aggregate have not
had and could not reasonably be expected to have a material adverse
effect on the Company. The Company and its subsidiaries are in compliance
with the terms of the Permits and all applicable statutes, laws,
ordinances, rules and regulations, except for instances of noncompliance
or possible noncompliance that individually or in the aggregate have not
had and could not reasonably be expected to have a material adverse
effect on the Company. The Merger, in and of itself, would not cause the
revocation or cancelation of any Permit that individually or in the
aggregate could reasonably be expected to have a material adverse effect
on the Company. Section 3.01(i) of the Company Disclosure Schedule sets
forth, as of the date of this Agreement, a complete and accurate list of
all actions, demands, requirements or investigations by any Governmental
Entity with respect to the Company or any of its subsidiaries or any of
their respective properties. Other than the matters set forth on Section
3.01(i) of the Company Disclosure Schedule, as of the Closing Date there
will not be any action, demand, requirement or investigation by any
Governmental Entity with respect to the Company or any of its
subsidiaries or any of their respective properties pending or, to the
knowledge of the Company, threatened that individually or in the
aggregate has had or could reasonably be expected to have a material
adverse effect on the Company.
(ii) To the Company's knowledge, there have been no Releases of any
Hazardous Materials at, on or under any facility or property currently or
formerly owned, leased, or operated by the Company or any of its
subsidiaries that, individually or in the aggregate, have had or could
reasonably be expected to have a
24
material adverse effect on the Company. Neither the Company nor any of
its subsidiaries is the subject of any pending or, to the Company's
knowledge, threatened investigation or proceeding under Environmental Law
relating in any manner to the off-site treatment, storage or disposal of
any Hazardous Materials generated at any facility or property currently
or formerly owned, leased or operated by the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries has assumed
or otherwise agreed to be responsible for any liabilities arising under
Environmental Law. The term "Environmental Law" means any and all
applicable laws or regulations or other requirements of any Governmental
Entity concerning the protection of human health or the environment. The
term "Hazardous Materials" means all explosive or regulated radioactive
materials, hazardous or toxic substances, wastes or chemicals, petroleum
(including crude oil or any fraction thereof) or petroleum distillates,
asbestos or asbestos-containing materials, and all other materials or
chemicals regulated under any Environmental Law. The term "Release" means
any spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching, emanation or migration in, into, onto, or
through the environment.
(j) Absence of Changes in Benefit Plans. Except as disclosed in the
Company Filed SEC Documents, since the date of the most recent audited
financial statements included in the Company Filed SEC Documents, there
has not been any adoption or amendment by the Company or any of its
subsidiaries of any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
thrift, savings, stock bonus, restricted stock, cafeteria, paid time off,
perquisite, fringe benefit, vacation, severance, disability, death
benefit, hospitalization, medical, welfare benefit or other plan,
arrangement or understanding (whether or not legally binding) maintained,
contributed to or required to be maintained or contributed to by the
Company, any of its subsidiaries, or any other person or entity that,
together with the Company, is treated as a single employer under Section
414(b), (c), (m) or (o) of the Code (a "Commonly Controlled Entity")
providing benefits to any current or former employee, officer, consultant
or director of the Company or any of its subsidiaries (collectively, the
"Benefit Plans"), or any change in the manner in which contributions to
any Benefit Plans of the Company are made or the basis on which such
contributions are
25
determined. Except as disclosed in the Company Filed SEC Documents, there
are no currently binding (1) employment, consulting, deferred
compensation, indemnification, severance or termination agreements or
similar arrangements or understandings between the Company or any of its
subsidiaries and any current or former employee, officer, consultant or
director of the Company or any of its subsidiaries or (2) agreements
between the Company or any of its subsidiaries and any current or former
employee, officer, consultant or director of the Company or any of its
subsidiaries, the benefits of which are contingent, or the terms of which
are materially altered, upon the occurrence of a transaction involving
the Company of a nature contemplated by this Agreement (collectively, the
"Benefit Agreements").
(k) ERISA Compliance; Excess Parachute Payments. (i) Section 3.01(k)
of the Company Disclosure Schedule contains a list of each Benefit Plan
that is an "employee pension benefit plan" (as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (sometimes referred to herein as a "Pension Plan"), "employee
welfare benefit plan" (as defined in Section 3(1) of ERISA) and all other
Benefit Plans and Benefit Agreements. The Company has made available to
Parent true, complete and correct copies of (a) each Benefit Plan and
Benefit Agreement (or, in the case of any unwritten Benefit Plan or
Benefit Agreement, a description thereof), (b) the two most recent annual
reports on Form 5500 filed with the Internal Revenue Service with respect
to each Benefit Plan (if any such report was required), (c) the most
recent summary plan description for each Benefit Plan for which such
summary plan description is required and (d) each trust agreement and
insurance or group annuity contract relating to any Benefit Plan.
(ii) Each Benefit Plan has been administered in accordance with its
terms in all material respects. The Company, its subsidiaries and each
Benefit Plan are in compliance in all material respects with the
applicable provisions of ERISA and the Code, and all other applicable
laws, including laws of foreign jurisdictions. All Pension Plans intended
to be tax-qualified have either received a favorable determination
letter from the Internal Revenue Service to the effect that such Pension
Plans are qualified and exempt from Federal income taxes under Sections
401(a) and 501(a), respectively, of the Code, or the remedial amendment
period under Section 401(b) of the Code has not expired, and no such
determination letter has been
26
revoked nor, to the knowledge of the Company, has revocation been
threatened, nor has any event occurred since the date of its most recent
determination letter, application therefor or Pension Plan's adoption
that would adversely affect its qualification or materially increase its
costs. All Pension Plans required to have been approved by any foreign
Governmental Entity have been so approved; no such approval has been
revoked (or, to the knowledge of the Company, has revocation been
threatened) nor has any event occurred since the date of the most recent
approval or application therefor relating to any such Pension Plan that
would materially affect any such approval relating thereto or materially
increase the costs relating thereto. The Company has delivered to Parent
a true and complete copy of the most recent determination letter received
with respect to each Pension Plan, as well as a true and complete copy of
each pending application for a determination letter, if any.
(iii) No Pension Plan is a "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA (a "Multiemployer Pension Plan") or is
subject to the provisions of Title IV of ERISA, and neither the Company
nor any Commonly Controlled Entity could have any liability under Title
IV of ERISA. None of the Company, any of its subsidiaries, any officer of
the Company or any of its subsidiaries or any of the Benefit Plans which
are subject to ERISA, including the Pension Plans, any trusts created
thereunder or any trustee or administrator thereof, has engaged in a
"prohibited transaction" (as such term is defined in Section 406 of ERISA
or Section 4975 of the Code) or any other breach of fiduciary
responsibility that could subject the Company, any of its subsidiaries or
any officer of the Company or any of its subsidiaries to the tax or
penalty on prohibited transactions imposed by such Section 4975 or to any
liability under Section 502(i) or 502(l) of ERISA. None of such Benefit
Plans and trusts has been terminated. All contributions and premiums and
benefit payments required to be made under the terms of any Benefit Plan
as of the date hereof have been timely made or have been reflected on the
most recent consolidated balance sheet included in the Company Filed SEC
Documents.
(iv) All material reports, returns and similar documents with
respect to all Benefit Plans required to be filed with any Governmental
Entity or distributed to any Benefit Plan participant have been duly and
timely filed or distributed. None of the Company or any of its
subsidiaries has received notice of, and to the
27
knowledge of the Company, there are no investigations by any Governmental
Entity with respect to, termination proceedings or other claims (except
claims for benefits payable in the normal operation of the Benefit
Plans), suits or proceedings against or involving any Benefit Plan or
asserting any rights or claims to benefits under any Benefit Plan that
could give rise to any liability, and, to the knowledge of the Company,
there are not any facts that could give rise to any liability in the
event of any such investigation, claim, suit or proceeding.
(v) The Company and its subsidiaries, with respect to each Benefit
Plan that is a "group health plan" (as such term is defined in Section
5000(b)(1) of the Code), comply in all material respects with the
applicable requirements of Section 4980B(f) of the Code. Neither the
Company nor any of its subsidiaries has any obligations for retiree
health or life insurance benefits under any Benefit Plan or Benefit
Agreement.
(vi) Except as expressly contemplated by this Agreement or as set
forth in any Employment Agreement, none of the execution and delivery of
this Agreement, the consummation of the Merger or any other transaction
contemplated by this Agreement and the Stockholder Agreement (including
as a result of any termination of employment following the Effective
Time) will (x) entitle any employee, officer, consultant or director of
the Company or any of its subsidiaries to severance or termination pay,
(y) accelerate the time of payment or vesting or trigger any payment or
funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or trigger any other material
obligation pursuant to, any of the Benefit Plans or Benefit Agreements or
(z) result in any breach or violation of, or a default under, any of the
Benefit Plans or Benefit Agreements.
(vii) Other than payments or benefits that may be made or provided
to the persons listed in Section 3.01(k)(vii) of the Company Disclosure
Schedule (the "Primary Company Executives"), no amount or other
entitlement or economic benefit that could be received (whether in cash
or property or the vesting of property) as a result of the Merger or any
other transaction contemplated by this Agreement or the Stockholder
Agreement (including as a result of termination of employment on or
following the Effective Time) by or for the benefit of any employee,
officer, director or consultant of the Company or any of its
28
affiliates who is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any Benefit Plan or
Benefit Agreement or otherwise would be characterized as an "excess
parachute payment" (as defined in Section 280G(b)(1) of the Code), and
no disqualified individual is entitled to receive any additional payment
from the Company or any of its subsidiaries, the Surviving Corporation or
any other person in the event that the excise tax under Section 4999 of
the Code is imposed on such disqualified individual. Set forth in Section
3.01(k)(vii) of the Company Disclosure Schedule is (a) the estimated
maximum amount that could be paid to each Primary Company Executive as a
result of the Merger and the other transactions contemplated by this
Agreement and the Stockholder Agreement based upon the assumptions set
forth therein (including as a result of a termination of employment on or
following the Effective Time) under all Benefit Plans and Benefit
Agreements and (b) the "base amount" (as defined in Section 280G(b)(3) of
the Code) for each Primary Company Executive calculated as of the date of
this Agreement.
(viii) The Company and its subsidiaries are in compliance in all
material respects with all Federal, state and local requirements
regarding employment. Neither the Company nor any of its subsidiaries is
a party to any collective bargaining or other labor union contract
applicable to persons employed by the Company or any of its subsidiaries
and no collective bargaining agreement is being negotiated by the Company
or any of its subsidiaries. As of the date of this Agreement, there is no
labor dispute, strike or work stoppage against the Company or any of its
subsidiaries pending or, to the knowledge of the Company, threatened
which may interfere with the respective business activities of the
Company or its subsidiaries. As of the date of this Agreement, to the
knowledge of the Company, none of the Company, any of its subsidiaries or
any of their respective representatives or employees has committed an
unfair labor practice in connection with the operation of the respective
businesses of the Company or any of its subsidiaries, and there is no
charge or complaint against the Company or any of its subsidiaries by the
National Labor Relations Board or any comparable governmental agency
pending or threatened in writing.
(ix) None of the Company nor any of its subsidiaries has any
material liability or obligations, including under or on account of a
Benefit Plan,
29
arising out of the hiring of persons to provide services to the Company
or any of its subsidiaries and treating such persons as consultants or
independent contractors and not as employees of the Company or any of its
subsidiaries.
(l) Taxes. (i) Each of the Company and its subsidiaries has timely
filed all tax returns and reports required to be filed by it, and all
such returns and reports are true, complete and correct in all material
respects. Each of the Company and its subsidiaries has timely paid all
taxes required to be paid by it and withheld and timely paid to the
proper taxing authority all taxes required to be withheld. The most
recent financial statements included in the Company Filed SEC Documents
reflect an adequate reserve for all taxes payable by the Company and its
subsidiaries for all taxable periods and portions thereof accrued through
the date of such financial statements.
(ii) No deficiencies for any taxes have been assessed or, to the
knowledge of the Company, proposed or asserted against the Company or any
of its subsidiaries that are not adequately reserved for in the most
recent financial statements included in the Company Filed SEC Documents.
All assessments for taxes due with respect to any concluded litigation
have been fully paid or have been adequately reserved for in the most
recent financial statements included in the Company Filed SEC Documents.
The statute of limitations for the assessment or collection of tax
liability has not expired with respect to any income tax returns of the
Company or any of its subsidiaries. There is no currently effective
agreement or other document extending, or having the effect of extending,
the period of assessment or collection of any taxes of the Company or any
of its subsidiaries and no power of attorney with respect to taxes has
been executed or filed with any taxing authority. No tax returns of the
Company or any of its subsidiaries are currently under audit or
examination by any taxing authority.
(iii) There are no material Liens for taxes (other than for taxes
not yet due and payable) on the assets of the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries is bound by
any agreement with respect to taxes.
(iv) Neither the Company nor any of its subsidiaries has been a
United States real property holding corporation within the meaning of
Section
30
897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
(v) Neither the Company nor any of its subsidiaries has taken any
action or knows of any fact, agreement, plan or other circumstance that
is reasonably likely to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(vi) The Benefit Plans and other employee compensation arrangements
in effect as of the date of this Agreement have been designed so that the
disallowance of a material deduction under Section 162(m) of the Code for
employee remuneration will not apply to any amounts paid or payable by
the Company or any of its subsidiaries under any such plan or arrangement
and, to the knowledge of the Company, no fact or circumstance exists that
is reasonably likely to cause such disallowance to apply to any such
amounts.
(vii) Neither the Company nor any of its subsidiaries has
constituted either a "distributing corporation" or a "controlled
corporation" (within the meaning of Section 355(a)(1)(A) of the Code) in
a distribution of stock qualifying for tax-free treatment under Section
355 of the Code (x) in the two years prior to the date of this Agreement
or (y) in a distribution which could otherwise constitute part of a
"plan" or "series of related transactions" (within the meaning of Section
355(e) of the Code) in conjunction with the Merger.
(viii) As used in this Agreement, "taxes" shall include all (x) U.S.
Federal, state, local or foreign income, property, sales, excise and
other taxes or similar governmental charges, including any interest,
penalties or additions with respect thereto, (y) liability for the
payment of any amounts of the type described in (x) as a result of being
a member of an affiliated, consolidated, combined or unitary group, and
(z) liability for the payment of any amounts as a result of being party
to any tax sharing (or similar) agreement or as a result of any express
or implied obligation to indemnify any other person with respect to the
payment of any amounts of the type described in clause (x) or (y).
(m) Voting Requirements. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock at the
Stockholders Meeting to
31
adopt this Agreement (the "Stockholder Approval") is the only vote of the
holders of any class or series of the Company's capital stock necessary
to approve and adopt this Agreement and the transactions contemplated
hereby.
(n) State Takeover Statutes. The approval of this Agreement and the
Merger and the Stockholder Agreement and the transactions contemplated by
this Agreement and the Stockholder Agreement by the Special Committee and
the Board of Directors of the Company referred to in Section 3.01(d)
constitutes approval of this Agreement and the Merger and the Stockholder
Agreement and the transactions contemplated by this Agreement and the
Stockholder Agreement by the Special Committee and the Board of Directors
of the Company under the provisions of Section 203 of the DGCL and
represents all the action necessary to ensure that the restrictions
contained in Section 203 of the DGCL do not apply to Parent or Sub in
connection with the Merger and the other transactions contemplated by
this Agreement and the Stockholder Agreement. To the knowledge of the
Company, except for Section 203 of the DGCL (which has been rendered
inapplicable), no state takeover statute is applicable to the Merger or
the other transactions contemplated by this Agreement and by the
Stockholder Agreement.
(o) Brokers; Schedules of Fees and Expenses. No broker, investment
banker, financial advisor or other person, other than Credit Suisse First
Boston Corporation, the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on
behalf of the Company. The Company has furnished to Parent true and
complete copies of all agreements under which any such fees or expenses
are payable and all indemnification and other agreements related to the
engagement of the persons to whom such fees are payable. The Company's
good faith estimates of the fees and expenses of any accountant, broker,
financial advisor, consultant, legal counsel or other person retained by
the Company in connection with this Agreement or the transactions
contemplated hereby incurred or to be incurred by the Company in
connection with this Agreement and the transactions contemplated by this
Agreement have been previously provided to Parent in writing, identified
by category of advisor.
32
(p) Opinion of Financial Advisor. The Company has received the
opinion of Credit Suisse First Boston Corporation, as of the date of this
Agreement, to the effect that, as of such date, the consideration
provided for in the Merger is fair to the holders of Company Common Stock
from a financial point of view. A signed copy of such opinion set forth
in writing and dated as of the date of this Agreement will be delivered
to Parent promptly after the date of this Agreement.
(q) Intellectual Property. (i) A complete and accurate list of all
trademarks, service marks, copyrights and patents, and all applications
for registration and registrations for such trademarks, copyrights and
patents (all of the foregoing, together with all trade names, brands,
trade secrets, confidential and proprietary information, formulas,
designs, proprietary rights, know-how and processes collectively
hereinafter referred to as the "Intellectual Property Rights") owned by
or licensed to or used by the Company, and all licenses and contracts
with respect to the foregoing, is set forth in Section 3.01(q) of the
Company Disclosure Schedule. The Company has furnished or granted access
to Parent (or with respect to any patents or patent applications, to
Xxxxxx's outside patent counsel) true and complete copies of each of the
foregoing and, to the Company's knowledge, all the material Intellectual
Property Rights owned by or licensed to the Company are valid,
enforceable and in full force and effect. The Company and its
subsidiaries own, free and clear of all Liens, or are validly licensed or
otherwise have the right to use, all the Intellectual Property Rights
which are material to the conduct of the business of the Company and its
subsidiaries.
(ii) To the knowledge of the Company, neither the Company nor any of
its subsidiaries has infringed upon or misappropriated any Intellectual
Property Rights or other proprietary information of any other person,
except for instances of infringement or misappropriation that
individually or in the aggregate have not had and could not reasonably be
expected to have a material adverse effect on the Company. As of the date
of this Agreement, neither the Company nor any of its subsidiaries has
received any written charge, complaint, claim, demand or notice alleging
any such infringement or misappropriation (including any claim that the
Company or any such subsidiary must license or refrain from using any
Intellectual Property Rights or other proprietary information of any
other person)
33
which has not been settled or otherwise fully resolved. To the Company's
knowledge, no other person has infringed upon or misappropriated any
Intellectual Property Rights of the Company or any of its subsidiaries,
except for instances of infringement or misappropriation that
individually or in the aggregate have not had and could not reasonably be
expected to have a material adverse effect on the Company.
(iii) As the business of the Company and its subsidiaries is
presently conducted and proposed to be conducted without giving effect to
any change with respect thereto that may be made by Parent, to the
Company's knowledge, Xxxxxx's use after the Closing of the Intellectual
Property Rights which are material to the conduct of the business of the
Company and its subsidiaries taken as a whole will not infringe upon or
misappropriate the Intellectual Property Rights or other proprietary
information of any other person.
(iv) The Company has taken, and until the Closing Date, the Company
will take all steps reasonably necessary to preserve the Company's legal
rights in, and the secrecy of, all its Intellectual Property Rights. In
addition, to the Company's knowledge, each employee, agent, consultant or
contractor who has materially contributed to or participated in the
creation or development of any copyrightable, patentable or trade secret
material on behalf of the Company, any of its subsidiaries or any
predecessor-in-interest thereto either (x) is a party to a "work-for-
hire" agreement under which the Company or such subsidiary is deemed to
be the original owner/author of all property rights therein in
substantially the form attached as Exhibit A to Section 3.01(q) of the
Company Disclosure Schedule, or (y) has executed an assignment or an
agreement to assign in favor of the Company, such subsidiary or such
predecessor-in-interest, as applicable, all right, title and interest in
such material in substantially the form attached as Exhibit B to Section
3.01(q) of the Company Disclosure Schedule.
(r) Contracts. Except for Contracts filed as exhibits to the
Company Filed SEC Documents and Contracts that have previously expired
or been terminated, none of the Company or any of its
34
subsidiaries is a party to or bound by, and none of their respective
properties or assets are bound by or subject to, any written or oral:
(i) material Contract not made in the ordinary course of business
entered into prior to the date of this Agreement;
(ii) Contract pursuant to which the Company or any of its
subsidiaries has agreed not to compete with any person or to engage in
any activity or business, or pursuant to which any benefit is required to
be given or lost as a result of so competing or engaging;
(iii) Contract pursuant to which the Company or any of its
subsidiaries is restricted in any material respect in the development,
marketing or distribution of their respective products or services;
(iv) Contract with (A) any affiliate of the Company or any of its
subsidiaries or (B) any current or former director or officer of the
Company or any of its subsidiaries or of any affiliate of the Company or
any of its subsidiaries or any of the 25 most highly compensated
employees of the Company and its subsidiaries, taken as a whole, or (C)
any affiliate of any such person (other than (w) contracts on arm's-
length terms with companies whose common stock is publicly traded, (x)
offer letters providing solely for "at will" employment, (y) invention
assignment and confidentiality agreements relating to the assignment of
inventions to the Company or any of its subsidiaries not involving the
payment of money and (z) Benefit Plans referred to in Section 3.01(j));
(v) license granted by the Company or any of its subsidiaries
pursuant to which the Company or any of its subsidiaries has agreed to
refrain from granting license rights to any other person;
(vi) Contract under which the Company or any of its subsidiaries has
(i) incurred any indebtedness that is currently owing or (ii) given any
guarantee in respect of indebtedness, in each case having an aggregate
principal amount in excess of $100,000;
(vii) material Contract that requires consent, approval or waiver of
or notice to a third party in the event of or with respect to the Merger,
including in order to avoid termination of or a loss of material benefit
under any such Contract;
35
(viii) Contract or other agreement, whether written or oral, that
contains any guarantees as to the Company's or any of its subsidiaries'
future revenues;
(ix) Contract providing for payments of royalties to third
parties in excess of $250,000 per year or $500,000 in the aggregate;
(x) Contract not made in the ordinary course of business granting a
third party any license to Intellectual Property Rights of the Company or
any of its subsidiaries that is not limited to the internal use of such
third party;
(xi) Contract providing confidential treatment by the Company or any
of its subsidiaries of third party information other than (x)
non-disclosure agreements and provisions entered into by the Company in
the ordinary course of business consistent with past practice and (y) the
Confidentiality Agreement;
(xii) Contract granting the other party to such Contract or a third
party "most favored nation" status that, following the Merger, would in
any way apply to Parent or any of its subsidiaries (other than the
Company and its subsidiaries and their products or services or any
similar products or services produced or offered by Parent or its
subsidiaries (other than the Company and its subsidiaries)); or
(xiii) Contract which (i) has aggregate future sums due from the
Company or any of its subsidiaries in excess of $250,000 and is not
terminable by the Company or any such subsidiary for a cost of less than
$250,000 or (ii) is otherwise material to the business of the Company and
its subsidiaries, taken as a whole, as presently conducted or as proposed
by management of the Company to be conducted.
Each Contract of the Company and its subsidiaries is in full force and
effect and is a legal, valid and binding agreement of the Company or such
subsidiary and, to the knowledge of the Company or such subsidiary, of
each other party thereto, enforceable against the Company or such
subsidiary, as the case may be, and, to the knowledge of the Company or
such subsidiary, against the other party or parties thereto, in each
case, in accordance with its terms, except for such failures to be in
full force and effect or enforceable that individually or in the
aggregate have not had and could not reasonably be expected to have a
material adverse effect on the Company. Each of the Company and its
36
subsidiaries has performed or is performing all material obligations
required to be performed by it under its Contracts and is not (with or
without notice or lapse of time or both) in breach or default in any
material respect thereunder, and, to the knowledge of the Company or such
subsidiary, no other party to any of its Contracts is (with or without
notice or lapse of time or both) in breach or default in any material
respect thereunder except, in each case, for such breaches that
individually or in the aggregate have not had and could not reasonably be
expected to have a material adverse effect on the Company.
(s) Title to Properties. (i) Section 3.01(s) of the Company
Disclosure Schedule sets forth a complete and accurate list of all real
property and material personal property owned or leased by the Company or
any of its subsidiaries. Each of the Company and its subsidiaries has
good and valid title to, or valid leasehold interests in or valid rights
to, all its material properties and assets except for such as are no
longer used or useful in the conduct of its businesses or as have been
disposed of in the ordinary course of business and except for defects in
title, easements, restrictive covenants and similar encumbrances that
individually or in the aggregate do not materially interfere with its
ability to conduct its business as currently conducted. All such material
assets and properties, other than assets and properties in which the
Company or any of its subsidiaries has a leasehold interest, are free and
clear of all Liens except for Liens that individually or in the aggregate
do not materially interfere with the ability of the Company and its
subsidiaries to conduct their respective businesses as currently
conducted.
(ii) Each of the Company and its subsidiaries has complied in all
material respects with the terms of all real property leases to which it
is a party and under which it is in occupancy, and all such leases are in
full force and effect. Each of the Company and its subsidiaries enjoys
peaceful and undisturbed possession under all such leases, except for
failures to do so that individually or in the aggregate have not had and
could not reasonably be expected to have a material adverse effect on the
Company.
(t) Privacy Policy. (i) For purposes of this Section 3.01(t):
(A) "Privacy Statement" means the Company's privacy policies
published on its web site regarding
37
the collection, use and distribution of personal information from
visitors to its web site and consumers of its products and services;
(B) "Terms and Conditions" means the terms and conditions published
on the Company's web site that govern the use of the Company's products
and services.
(ii) The Privacy Statement and Terms and Conditions are posted at
all times on the Company's web site. The Company maintains a link to the
Privacy Statement from its homepage and makes an effort to include a link
from any page on which personal information is collected from visitors to
its web site and users of its products and services. The Privacy
Statement is clearly written and includes at the minimum the following:
(A) notice to users about the Company's web site's information collection
policies and practices prior to disclosing their personal information;
and (B) a description of how users' personal information will be used,
including any uses beyond those for which the information was provided.
(iii) The Company has adequate technological and procedural measures
in place to protect data collected from visitors and users against loss,
theft, unauthorized access or disclosure. The Company does not knowingly
collect information from or target children under the age of thirteen.
The Company does not sell, rent or otherwise make available to third
parties any personally-identifiable data submitted by users.
(iv) The Privacy Statement is accurate and consistent with the Terms
and Conditions. The Company and its employees have (A) complied at all
times with the then current privacy policy issued by the Company, all
applicable U.S. privacy laws regarding the disclosure and use of data,
(B) not violated the Privacy Statement or the Terms and Conditions and
(C) taken all appropriate and reasonable steps to protect and maintain
the confidential nature of the information provided to the Company by
visitors and users. Neither the Company nor any of its subsidiaries is
party to any Contract or subject to any other obligation that, following
the Merger, would prevent Parent and its affiliates from using the
information covered by the Privacy Statement in a manner consistent with
applicable privacy laws and industry standards regarding the disclosure
and use of data. No claims or controversies have arisen regarding the
Privacy
38
Statement, the Terms and Conditions or the implementation of any of the
foregoing.
SECTION 3.02. Representations and Warranties of Parent and Sub.
Except as set forth on the disclosure schedule (each section of which
qualifies the correspondingly numbered representation and warranty or covenant
to the extent specified therein and such other representations and warranties
or covenants to the extent a matter in such section is disclosed in such a way
as to make its relevance to the information called for by such other
representation and warranty or covenant reasonably apparent) delivered by
Parent to the Company prior to the execution of this Agreement (the "Parent
Disclosure Schedule"), Parent and Sub represent and warrant to the Company as
follows:
(a) Organization, Standing and Corporate Power. Parent is a
corporation duly incorporated and validly subsisting under the laws of
France, Sub is a corporation duly incorporated, validly existing and in
good standing under the DGCL, and each of Parent and Sub has the
requisite corporate power and authority to carry on its business as now
being conducted. Each of Parent and Sub is duly qualified or licensed to
do business and is in good standing (with respect to jurisdictions which
recognize such concept) in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its assets makes such
qualification or licensing necessary, except for those jurisdictions
where the failure to be so qualified or licensed or to be in good
standing individually or in the aggregate has not had and could not
reasonably be expected to have a material adverse effect on Parent.
Parent has made available to the Company prior to the execution of this
Agreement complete and correct copies of its certificate of incorporation
and by-laws and the certificate of incorporation and by-laws of Sub, in
each case as amended to the date of this Agreement.
(b) Authority; Noncontravention. Each of Parent and Sub has all
requisite corporate power and authority to enter into this Agreement
and to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by Parent and Sub and the
consummation by Parent and Sub of the transactions contemplated by
this Agreement have been duly authorized by all necessary corporate
action on the part of Parent and Sub and no other corporate
proceedings on the part of Parent or Sub are necessary to authorize
this Agreement or to consummate the transactions contemplated by this
Agreement. This
39
Agreement has been duly executed and delivered by Xxxxxx and Sub and,
assuming the due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of Parent and Sub,
enforceable against each of them in accordance with its terms. The
execution and delivery of this Agreement do not, and the consummation of
the transactions contemplated by this Agreement and compliance by Parent
and Sub with the provisions of this Agreement will not, conflict with, or
result in any violation or breach of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancelation or acceleration of any obligation or loss of a benefit under,
or result in the creation of any Lien upon any of the properties or
assets of Parent or Sub under, (i) the Restated Corporate Statutes of
Parent or the certificate of incorporation or by-laws of Sub, (ii) any
Contract to which Parent or Sub is a party or otherwise applicable to
Parent or Sub or their respective properties or assets or (iii) subject
to the governmental filings and other matters referred to in the
following sentence, (A) any judgment, order or decree or (B) any statute,
law, ordinance, rule or regulation, in each case applicable to Parent or
Sub or any of their respective properties or assets, other than, in the
case of clauses (ii) and (iii), any such conflicts, violations, breaches,
defaults, rights, losses or Liens that individually or in the aggregate
could not reasonably be expected to (x) have a material adverse effect on
Parent, (y) impair in any material respect the ability of Parent or Sub
to perform its obligations under this Agreement or (z) prevent or
materially impede, interfere with, hinder or delay the consummation of
the transactions contemplated by this Agreement. No consent, approval,
order or authorization of, action by, or in respect of, or registration,
declaration or filing with, any Governmental Entity is required to be
obtained or made by or with respect to Parent or Sub in connection with
the execution and delivery of this Agreement by Parent and Sub or the
consummation by Parent and Sub of the transactions contemplated by this
Agreement, except for (1) the filing of a premerger notification and
report form by Parent under the HSR Act and any applicable filings and
approvals under Foreign Antitrust Laws; (2) the filing with the SEC of
(A) the Form S-4 and (B) such reports under Section 13(a), 13(d), 15(d)
or 16(a) of the Exchange Act as may be required in connection with this
Agreement and the Stockholder Agreement and the transactions contemplated
by this Agreement and the Stockholder Agreement; (3) the filing of the
Certificate of Merger with the Secretary of
40
State of the State of Delaware and appropriate documents with the
relevant authorities of other states in which Parent is qualified to do
business; (4) such filings with and approvals of the NYSE to permit the
Parent ADSs that are to be issued in the Merger to be listed on the NYSE;
and (5) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be made
or obtained individually or in the aggregate could not reasonably be
expected to (x) have a material adverse effect on Parent, (y) impair in
any material respect the ability of Parent or Sub to perform its
obligations under this Agreement or (z) prevent or materially impede,
interfere with, hinder or delay the consummation of the transactions
contemplated by this Agreement.
(c) SEC Documents. Parent has filed all required reports, schedules,
forms, statements and other documents (including exhibits and all other
information incorporated therein) with the SEC since September 11, 2000
(collectively, 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 the rules and regulations of the SEC promulgated thereunder
applicable to such Parent SEC Documents, and none of the Parent SEC
Documents when filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the
extent that information contained in any Parent SEC Document has been
revised or superseded by a later filed Parent SEC Document, none of the
Parent SEC Documents contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of Parent included in the Parent SEC Documents comply as to
form, as of their respective dates of filing with the SEC, in all
material respects with the Accounting Rules, have been prepared in
accordance with French GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and
fairly present in all material respects the consolidated financial
position of Parent and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows
for the periods then
41
ended. The notes to the financial statements of Parent included in the
Parent SEC Documents reconciling to U.S. GAAP the consolidated net income
and shareholders' equity of Parent comply in all material respects with
the Accounting Rules applicable to such reconciliation.
(d) Absence of Material Adverse Change. Since the date of the most
recent audited financial statements included in Parent SEC Documents
filed and publicly available prior to the date of this Agreement, there
has not been any material adverse change with respect to Parent.
(e) Information Supplied. None of the information supplied or to be
supplied by Parent specifically for inclusion or incorporation by
reference in (i) the Form F-4 will, at the time the Form F-4 is filed
with the SEC, at any time it is amended or supplemented and at the time
the Form F-4 becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading or (ii) the Proxy Statement will, at the date it is first
mailed to the Company's stockholders or at the time of the Stockholders
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they are made, not misleading. The Form F-4 will comply as to form in all
material respects with the requirements of the Securities Act and the
rules and regulations thereunder. No representation or warranty is made
by Parent or Sub with respect to statements made or incorporated by
reference in the Form F-4 based on information supplied by the Company
specifically for inclusion or incorporation by reference in the Form F-4.
(f) No Parent Stockholder Vote Required. This Agreement and the
transactions contemplated hereby, including the issuance of Parent Shares
pursuant to Article II hereof, do not require the approval of the holders
of any shares of capital stock of Parent.
(g) Parent Shares. All outstanding Parent Shares, Parent ADSs and
receipts evidencing Parent ADSs are, and all Parent Shares, Parent ADSs
and receipts evidencing Parent ADSs which may be issued pursuant to this
Agreement shall when issued in accordance with this Agreement be, duly
authorized, validly issued,
42
fully paid and nonassessable and not subject to preemptive rights.
(h) Tax Matters. Neither Parent nor any of its subsidiaries has
taken any action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of
the Code.
(i) Interim Operations of Sub. Sub 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 IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of Business by the
Company. Except as set forth in Section 4.01(a) of the Company Disclosure
Schedule, as otherwise expressly contemplated by this Agreement or as
consented to in writing by Parent, during the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause its
subsidiaries to, carry on their respective businesses only in the ordinary
course consistent with past practice and in compliance in all material
respects with all applicable laws and regulations and, to the extent
consistent therewith, use all reasonable efforts to preserve intact their
current business organizations, use reasonable efforts to keep available the
services of their current officers and other key employees and preserve their
relationships with those persons having business dealings with them to the end
that their goodwill and ongoing businesses shall be unimpaired at the
Effective Time. Without limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective Time, except as set
forth in Section 4.01(a) of the Company Disclosure Schedule or as otherwise
expressly contemplated by this Agreement, the Company shall not, and shall not
permit any of its subsidiaries to, without Parent's prior written consent:
(i) other than dividends and distributions (including liquidating
distributions) by a direct or indirect wholly owned subsidiary of the
Company to its parent, (x) declare, set aside or pay any dividends on, or
make any other distributions (whether in cash, stock, property or
otherwise) in respect of, any of its
43
capital stock, (y) 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 (z)
purchase, redeem or otherwise acquire, directly or indirectly, any shares
of capital stock of the Company or any of its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities, except for repurchases of outstanding
unvested shares of Company Common Stock in respect of which the Company
has a right under specified circumstances to repurchase such shares at a
fixed purchase price (which shall not exceed the Cash Consideration)
pursuant to restricted stock purchase agreements in the form attached as
Exhibit A to Section 3.01(c) of the Company Disclosure Schedule;
(ii) issue, deliver, sell, pledge or otherwise encumber or subject
to any Lien (w) any shares of its capital stock, (x) any other voting
securities, (y) any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting securities or convertible
securities or (z) any "phantom" stock or stock rights, SARs or
stock-based performance units other than (A) the issuance of Company
Common Stock upon the exercise of Stock Options, purchase rights under
the ESPP or the Warrants, in each case outstanding as of the date hereof
in accordance with their present terms or (B) the issuance of up to
2,500,000 shares of Company Common Stock pursuant to the Stipulation of
Settlement in the Company's class action and derivative lawsuits;
(iii) amend the Company's certificate of incorporation, by-laws or
other comparable organizational documents other than as necessary to
implement the corporate governance enhancements to be entered into in
accordance with the Stipulation of Settlement in the Company's class
action and derivative lawsuits;
(iv) directly or indirectly acquire (x) by merging or consolidating
with, or by purchasing assets of, or by any other manner, any person or
division, business or equity interest of any person or (y) any assets
that, individually, have a purchase price in excess of $100,000 or, in
the aggregate, have a purchase price in excess of $100,000, except for
purchases of components or supplies in the ordinary course of business
consistent with past practice;
44
(v) sell, lease, license, sell and leaseback, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of its
properties or assets (including securitizations), other than sales or
licenses of finished goods or services in the ordinary course of business
consistent with past practice;
(vi) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement
having the economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business (or to refund
existing or maturing indebtedness) consistent with past practice not to
exceed $100,000 at any time outstanding and except for intercompany
indebtedness between the Company and any of its subsidiaries or between
such subsidiaries;
(vii) make any loans, advances or capital contributions to, or
investments in, any other person;
(viii) make any new capital expenditures, or enter into any
agreements providing for payments which, individually, are in excess of
$100,000 or, in the aggregate, are in excess of $1,000,000;
(ix) make any tax election that, individually or in the aggregate,
is reasonably likely to adversely affect in any material respect the tax
liability or tax attributes of the Company or any of its subsidiaries or
settle or compromise any material income tax liability;
(x) (A) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), or litigation (whether or not commenced prior to the date of
this Agreement), or modify the terms of any existing settlement agreement
or arrangement, other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of Non-Litigation
Liabilities recognized or disclosed in the most recent consolidated
financial statements (or the notes thereto) of the Company included in
the Company Filed SEC Documents or Non-Litigation Liabilities incurred
since the date of such financial statements in the ordinary course of
business consistent with past
45
practice (it being understood and agreed that, without limiting the
generality of the foregoing proscription, all matters relating to the
payment, discharge, settlement or satisfaction of any matters covered by
Section 5.11(b) shall be governed exclusively by such Section 5.11(b)),
(B) cancel any indebtedness, (C) waive or assign any claims or rights of
substantial value, (D) waive any benefit of, agree to modify in any
manner, terminate, release any person from or fail to enforce any
standstill or similar agreement to which the Company or any of its
subsidiaries is a party or of which the Company or any of its
subsidiaries is a beneficiary or (E) waive any material benefit of, agree
to modify in any material respect, terminate, release any person from or
fail to enforce any confidentiality or similar agreement to which the
Company or any of its subsidiaries is a party or of which the Company or
any of its subsidiaries is a beneficiary;
(xi) except as required by law or as otherwise contemplated by this
Agreement, (x) establish, enter into, adopt or amend or terminate any
Benefit Plan or Benefit Agreement, (y) change the manner in which
contributions to any Pension Plan are made or the basis on which such
contributions are determined or (z) take any action to accelerate any
rights or benefits, or make any material determinations not in the
ordinary course of business consistent with past practice, under any
Benefit Plan or Benefit Agreement;
(xii) (w) increase the compensation, bonus or fringe or other
benefits of any current or former director, consultant, officer or other
employee, except for (A) salary increases for non-executive officer
employees as part of an annual review process or part of a promotion in
job title or responsibility in the ordinary course of business consistent
with past practice or (B) after consultation with Parent, bonuses awarded
in the ordinary course of business consistent with past practice,
including bonuses to be awarded in June 2001 and paid in July 2001, (x)
grant any current or former director, consultant, officer or other
employee any increase in severance or termination pay, (y) amend or
modify any Stock Option, or (z) or pay any benefit or amount not required
by a plan or arrangement as in effect on the date of this Agreement to
any such person;
(xiii) transfer or license to any person or entity or otherwise
extend, amend or modify any rights to the Intellectual Property Rights of
the Company and its subsidiaries other than in the ordinary course of
46
business consistent with past practices; provided that in no event shall
the Company or any of its subsidiaries license on an exclusive basis or
sell any Intellectual Property Rights of the Company and its
subsidiaries;
(xiv) enter into or amend any agreements pursuant to which any
person is granted exclusive marketing, manufacturing or other rights with
respect to any product, process or technology of the Company or any of
its subsidiaries;
(xv) enter into or amend any Contract or other agreement, whether
written or oral, that contains any guarantees as to the Company's or any
of its subsidiaries' future revenues;
(xvi) obtain, through acquisition, lease, sublease or otherwise, any
real property for use as an office or similar facility of the Company or
any of its subsidiaries;
(xvii) increase the headcount of employees of the Company by more
than 5%;
(xviii) except insofar as may be required by a change in GAAP,
make any changes in accounting methods, principles or practices;
(xix) take any action that would, or that could reasonably be
expected to, result in any condition to the Merger set forth in Article
VI not being satisfied; or
(xx) authorize, or commit, resolve or agree to take, any of the
foregoing actions.
For purposes of this Agreement, "Non-Litigation Liabilities" means all
liabilities of the Company and its subsidiaries of a type that would be
disclosed in consolidated financial statements of the Company prepared in
accordance with GAAP, other than (i) liabilities pertaining to the line item
"Reserve for litigation and copyright matters" (or any similar line item) on
any condensed consolidated balance sheet of the Company or the related notes
thereto and (ii) liabilities of a type described in Section 5.11(b).
(b) Advice of Changes; Filings. The Company and Parent shall
promptly advise the other party orally and in writing to the extent it has
knowledge of (i) any representation or warranty made by it (and, in the
case of Parent, made by Sub) contained in this Agreement that is
47
qualified as to materiality becoming untrue or inaccurate in any respect or
any such representation or warranty that is not so qualified becoming untrue
or inaccurate in any material respect, (ii) the failure by it (and, in the
case of Parent, by Sub) to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement and (iii) any change or event having, or which could reasonably
be expected to have, a material adverse effect on such party or on the ability
of the conditions set forth in Article VI to be satisfied; provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties (or remedies with respect thereto) or
the conditions to the obligations of the parties under this Agreement. The
Company and Parent shall promptly provide the other copies of all filings made
by such party with any Governmental Entity in connection with this Agreement
and the transactions contemplated hereby, other than the portions of such
filings that include confidential information not directly related to the
transactions contemplated by this Agreement.
SECTION 4.02. No Solicitation by the Company.
(a) The Company shall not, nor shall it permit any of its subsidiaries
to, nor shall it authorize or permit any of its or any of its subsidiaries'
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
subsidiaries to, directly or indirectly through another person, (i) solicit,
initiate or encourage (including by way of furnishing information), or take any
other action intended to, or which could reasonably be expected to, facilitate,
any inquiries or the making of any proposal that constitutes, or could
reasonably be expected to lead to, any Takeover Proposal or (ii) enter into,
continue or otherwise participate in any discussions or negotiations regarding,
or furnish to any person any information with respect to, or otherwise cooperate
in any way with, any Takeover Proposal. Notwithstanding the foregoing, in the
event that, notwith standing compliance with the preceding sentence, the Company
receives a bona fide written Takeover Proposal that the Board of Directors of
the Company determines in good faith (after consultation with outside counsel
and a financial advisor of nationally recognized reputation) constitutes or is
reasonably likely to lead to a Superior Proposal, the Company may, to the extent
that the Board of Directors of the Company determines in good faith (after
consultation with outside counsel) that it is required to do so in order to
comply with its fiduciary duties, participate in discussions or negotiations
regarding such Takeover Proposal in order to inform itself in a manner required
to comply with its fiduciary duties with respect to such Xxxxxxxx
48
Proposal so that it may make any determination permitted pursuant to Section
4.02(b)(i) and meet its fiduciary duties of full disclosure to the
stockholders of the Company. In such event, the Company shall, (i) no less
than 48 hours prior to participating in any such discussions or negotiations,
inform Parent of the material terms and conditions of such Takeover Proposal,
including the identity of the person making such Takeover Proposal, (ii)
promptly inform Parent of the substance of any discussions or negotiations
relating to such Superior Proposal and (iii) promptly keep Parent fully
informed of the status, including any change to the details of, any such
Takeover Proposal. Without limiting the foregoing, it is understood that any
violation in any material respect of the restrictions set forth in the first
sentence of this Section 4.02(a) by any director, officer or employee of the
Company or any of its subsidiaries or any investment banker, financial
advisor, attorney, accountant or other representative of the Company or any of
its subsidiaries shall be deemed to be a breach of this Section 4.02(a) by the
Company.
For purposes of this Agreement, "Superior Proposal" means any offer
not solicited by the Company made by a third party to consummate a tender
offer, exchange offer, merger, consolidation, share exchange or similar
transaction which would result in such third party (or its shareholders)
owning, directly or indirectly, 50% or more of the shares of Company Common
Stock then outstanding (or of the surviving entity in a merger) or 50% or more
of the assets of the Company and its subsidiaries and otherwise on terms which
the Board of Directors of the Company determines in good faith (following
receipt of the advice of a financial advisor of nationally recognized
reputation) to be more favorable to the Company's stockholders from a
financial point of view than the Merger.
For purposes of this Agreement, "Takeover Proposal" means any
inquiry, proposal or offer from any person relating to any direct or indirect
acquisition or purchase of 20% or more of the assets of the Company and its
subsidiaries, taken as a whole, or 20% or more of any class or series of
equity securities of the Company or any of its subsidiaries, any tender offer
or exchange offer that if consummated would result in any person beneficially
owning 20% or more of any class or series of equity securities of the Company
or any of its subsidiaries, or any merger, consolidation, share exchange,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its subsidiaries pursuant to which
any person (or its shareholders) would beneficially own 20% or more of any
class or series of
49
equity securities of the Company (or any resulting parent or surviving
entity), other than the transactions contemplated by this Agreement.
(b) Neither the Company nor the Board of Directors of the Company
nor any committee thereof shall (i) withdraw or modify, or propose to withdraw
or modify, in a manner adverse to Parent, the approval or recommendation by
such Board of Directors or such committee of the Merger or this Agreement,
except to the extent that such Board of Directors determines in good faith
(after consultation with outside counsel) that it is required to do so in
order to comply with its fiduciary duties, (ii) approve or recommend, or
propose to approve or recommend, any Takeover Proposal or (iii) approve or
recommend, or propose to approve or recommend, or execute or enter into, any
letter of intent, memorandum of understanding, agreement in principle, merger
agreement, acquisition agreement, option agreement, joint venture agreement,
partnership agreement or other similar agreement or propose or agree to do any
of the foregoing constituting or related to, or which is intended to or could
reasonably be expected to lead to, any Takeover Proposal.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02, the Company shall immediately
(and no later than 48 hours) advise Parent orally and in writing of any
request for information or of any inquiry with respect to a Takeover Proposal,
the material terms and conditions of such request, inquiry or Takeover
Proposal and the identity of the person making such request, inquiry or
Takeover Proposal. The Company shall promptly keep Parent informed of the
status and details (including amendments or changes or proposed amendments or
changes) of any such request, inquiry or Takeover Proposal.
(d) Nothing contained in this Section 4.02 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14d-9 or 14e-2 promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good faith judgment of the
Board of Directors of the Company, after consultation with outside counsel,
failure so to disclose would be inconsistent with its obligations under
applicable law; provided, however, that, subject to Section 4.02(b)(i),
neither the Company nor its Board of Directors nor any committee thereof shall
withdraw or modify, or propose to withdraw or modify, its position with
respect to this Agreement or the Merger or approve or recommend, or propose to
approve or recommend, a Takeover Proposal.
50
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form F-4 and the Proxy Statement;
Stockholders Meeting. (a) As soon as practicable following the date of this
Agreement, Parent and the Company shall prepare and file with the SEC the
Proxy Statement and Parent and the Company shall prepare and Parent shall file
with the SEC the Form F-4, in which the Proxy Statement will be included as a
prospectus. Parent shall use all reasonable efforts to have the Form F-4
declared effective under the Securities Act as promptly as practicable after
such filing. The Company will use all reasonable efforts to cause the Proxy
Statement to be mailed to the Company's stockholders as promptly as
practicable after the Form F-4 is declared effective under the Securities Act.
Parent shall also take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified or to file a general consent
to service of process) required to be taken under any applicable state
securities laws in connection with the issuance of Parent Shares in the
Merger, 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 and the preparation, filing and distribution
of the Proxy Statement. No filing of, or amendment or supplement to, or
correspondence to the SEC or its staff with respect to, the Form F-4 will be
made by Parent, or the Proxy Statement will be made by the Company, without
providing the other party a reasonable opportunity to review and comment
thereon. Parent will advise the Company, promptly after it receives notice
thereof, of the time when the Form F-4 has become effective or any supplement
or amendment has been filed, the issuance of any stop order, the suspension of
the qualification of the Parent Shares issuable in connection with the Merger
for offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Form F-4 or comments thereon and responses thereto or
requests by the SEC for additional information. The Company will advise
Parent, promptly after it receives notice thereof, of any request by the SEC
for the amendment of the Proxy Statement or comments thereon and responses
thereto or requests by the SEC for additional information. If at any time
prior to the Effective Time any information relating to the Company or Parent,
or any of their respective affiliates, officers or directors, should be
discovered by the Company or Parent which should be set forth in an amendment
or supplement to any of the Form F-4 or the Proxy Statement, so that any of
such documents would not include any misstatement of a material fact or omit
to state any material fact necessary
51
to make the statements therein, in light of the circumstances under which they
were made, not misleading, the party which discovers such information shall
promptly notify the other parties hereto and an appropriate amendment or
supplement describing such information shall be promptly filed with the SEC
and, to the extent required by law, disseminated to the stockholders of the
Company.
(b) The Company shall, as soon as practicable following the date of
this Agreement, establish a record date (which will be as soon as practicable
following the date of this Agreement) for, duly call, give notice of, convene
and hold a meeting of its stockholders (the "Stockholders Meeting") solely for
the purpose of obtaining the Stockholder Approval. The Company shall cause the
Stockholders Meeting to be held as promptly as practicable after the date of
this Agreement. Subject to Section 4.02(b)(i), the Company shall, through its
Board of Directors, recommend to its stockholders that they adopt this
Agreement and shall include such recommendation in the Proxy Statement.
Without limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to this Section 5.01(b) shall not be affected by (i) the
commencement, public proposal, public disclosure or communication to the
Company or any other person of any Takeover Proposal or (ii) the withdrawal or
modification by the Board of Directors of the Company or any committee thereof
of such Board of Directors' or such committee's approval or recommendation of
the Merger or this Agreement.
SECTION 5.02. Access to Information; Confidentiality. Upon
reasonable notice and subject to the Confidentiality Agreement dated as of
March 14, 2001, between Parent and the Company (the "Confidentiality
Agreement"), the Company shall, and shall cause each of its subsidiaries to,
afford to Parent and to its officers, employees, accountants, counsel,
financial advisors and other representatives (including insurance providers
and consultants), reasonable access during normal business hours during the
period prior to the Effective Time to all its properties, books, contracts,
commitments, personnel and records (including electronic databases) and,
during such period, the Company shall, and shall cause each of its
subsidiaries to, furnish promptly to Parent (a) a copy of each report,
schedule, form, 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 Parent
may reasonably request (including the Company's outside accountants' work
papers). The Company shall not be required to provide access to or disclose
information where such access or disclosure would contravene
52
any law, rule, regulation, order or decree of any Governmental Entity. No
review pursuant to this Section 5.02 shall have an effect for the purpose of
determining the accuracy of any representation or warranty given by the
Company to Parent and Sub. Parent will hold, and will cause its officers,
employees, accountants, counsel, financial advisors and other representatives
and affiliates to hold, any nonpublic information in accordance with the terms
of the Confidentiality Agreement.
SECTION 5.03. Reasonable Efforts. (a) Upon the terms and subject to
the conditions set forth in this Agreement, each of the parties agrees to use
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement and the Stockholder Agreement, including using
reasonable efforts to accomplish the following: (i) the taking of all
reasonable acts necessary to cause the conditions to Closing to be satisfied
as promptly as practicable; (ii) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, including under the HSR Act) and the taking of all
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity; (iii) the obtaining of all
necessary consents, approvals or waivers from third parties; (iv) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the Stockholder Agreement or the
consummation of the transactions contemplated by this Agreement or the
Stockholder Agreement, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated or
reversed; and (v) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully carry
out the purposes of, this Agreement and the Stockholder Agreement; provided,
however, that Parent will not be required to agree to, or proffer to, (i)
divest or hold separate, or enter into any licensing or similar arrangement
with respect to, any assets (whether tangible or intangible) or any of
Parent's, the Company's or any of their respective affiliates' businesses or
(ii) cease to conduct business or operations in any jurisdiction in which
Parent, the Company or any of their respective subsidiaries conducts business
or operations as of the date of this Agreement.
53
(b) In connection with and without limiting the foregoing, the
Company and its Board of Directors shall (i) take all action necessary to
ensure that no state takeover statute or similar statute or regulation is or
becomes applicable to the Merger, this Agreement, the Stockholder Agreement or
any of the other transactions contemplated by this Agreement or the
Stockholder Agreement and (ii) if any state takeover statute or similar
statute or regulation becomes applicable to the Merger, this Agreement, the
Stockholder Agreement or any other transaction contemplated by this Agreement
or the Stockholder Agreement, take all action necessary to ensure that the
Merger and the other transactions contemplated by this Agreement and the
Stockholder Agreement may be consummated as promptly as practicable on the
terms contemplated by this Agreement and the Stockholder Agreement and
otherwise to minimize the effect of such statute or regulation on the Merger
and the other transactions contemplated by this Agreement and the Stockholder
Agreement.
SECTION 5.04. Stock Options. (a) As soon as practicable following
the date of this Agreement, the Board of Directors of the Company (or, if
appropriate, any committee thereof administering the Stock Plans) shall adopt
such resolutions or take such other actions as may be required to effect the
following:
(i) adjust the terms of all outstanding Stock Options granted under
the Company Stock Plans, whether vested or unvested, as necessary to
provide that, at the Effective Time, each Stock Option outstanding
immediately prior to the Effective Time shall be amended and converted
into an option to acquire, on the same terms and conditions as were
applicable under such Stock Option, the number of Parent Shares (rounded
down to the nearest whole share) equal to (A) the number of shares of
Company Common Stock subject to such Stock Option immediately prior to
the Effective Time multiplied by (B) the Exchange Ratio, at an exercise
price per Parent Share (rounded up to the nearest whole cent) equal to
(x) the exercise price per share of Company Common Stock otherwise
purchasable pursuant to such Stock Option immediately prior to the
Effective Time divided by (y) the Exchange Ratio (each, as so adjusted,
an "Adjusted Option"); and
(ii) make such other changes to the Company Stock Plans as the
Company and Parent may agree are appropriate to give effect to the
Merger.
(b) The adjustments provided in this Section 5.04 with respect to
any Stock Option to which Section 421(a) of
54
the Code applies shall be and are intended to be effected in a manner which is
consistent with Section 424(a) of the Code. As soon as practicable after the
Effective Time, Parent shall deliver to the holders of Stock Options
appropriate notices setting forth such holders' rights pursuant to the
respective Company Stock Plans and the agreements evidencing the grants of
such Stock Options and that such Stock Options and agreements shall be assumed
by Parent and shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 5.04 after giving effect
to the Merger).
(c) A holder of an Adjusted Option may exercise such Adjusted Option
in whole or in part in accordance with its terms by following procedures to be
communicated by Parent with the notice contemplated by Section 5.04(b),
together with the consideration therefor and the Federal withholding tax
information, if any, required in accordance with the related Company Stock
Plan or Stock Option Agreement.
(d) Except to the extent required under the respective terms of the
Stock Options, all restrictions or limitations on transfer and vesting with
respect to Stock Options awarded under the Company Stock Plans or any other
plan, program or arrangement of the Company or any of its subsidiaries, to the
extent that such restrictions or limitations shall not have already lapsed,
and all other terms thereof, shall remain in full force and effect with
respect to such options after giving effect to the Merger and the assumption
by Parent as set forth above.
(e) Prior to the Effective Time, Parent shall take all necessary
action to assume as of the Effective Time all obligations undertaken by Parent
under this Section 5.04, including the reservation, issuance and listing of a
number of Parent ADSs at least equal to the number of Parent Shares subject to
the Adjusted Options. No later than one business day after the Effective Time,
Parent shall prepare and file with the SEC a registration statement on Form
S-8 (or another appropriate form) registering a number of Parent ADSs
representing the number of Parent Shares subject to the Adjusted Options and
shall maintain the effectiveness of such registration statement (and maintain
the current status of the prospectus contained therein) for so long as such
Adjusted Options remain outstanding. The Company shall cooperate with, and
assist Parent in the preparation of, such registration statement.
SECTION 5.05. Employee Matters. (a) For a period ending not
earlier than December 31, 2002, employees of the Company and its
subsidiaries who continue their
55
employment after the Effective Time (the "Affected Employees") shall receive
employee benefits that are substantially comparable in the aggregate to the
employee benefits provided to the Affected Employees immediately prior to the
Effective Time; provided, that neither Parent nor the Surviving Corporation
shall have any obligation to issue, or adopt any plans or arrangements
providing for the issuance of, shares of capital stock, warrants, options,
SARs or other rights in respect of any shares of capital stock of any entity
or any securities convertible or exchangeable into such shares pursuant to any
such plans or arrangements; provided, further, that no plans or arrangements
of the Company or any of its subsidiaries providing for such issuance shall be
taken into account in determining whether employee benefits are substantially
comparable in the aggregate. Affected Employees shall be given credit under
each employee benefit plan, program, policy or arrangement of Parent or any of
its affiliates in which the Affected Employees are eligible to participate for
all service with the Company or any predecessor employer (to the extent such
credit was given by the Company) for purposes of eligibility, vesting,
severance and vacation entitlement.
(b) With respect to the ESPP, the Company shall take all actions
necessary to provide that (i) no offerings that would commence on a date
following the date of this Agreement shall be permitted, (ii) with respect any
offering thereunder that is in effect immediately prior to the Effective Time,
each participant's accumulated payroll deductions shall be used to purchase
shares of Company Common Stock immediately prior to the Effective Time in
accordance with the terms of the ESPP and (iii) the ESPP shall terminate at
the Effective Time.
(c) Parent and the Company agree to implement the arrangements
described in Section 5.05(c) of the Company Disclosure Schedule. In addition,
Xxxxxx agrees that, if it offers a one-year written employment agreement to
any employee of the Company or the Surviving Corporation, such employment
agreement will be in the form previously agreed to by Parent and the Company.
(d) Nothing contained in this Section 5.05 or elsewhere in this
Agreement shall be construed to prevent the termination of employment of any
individual Company Employee or any change in the employee benefits available
to any individual Company Employee or the amendment or termination of any
particular Benefit Plan or Benefit Agreement to the extent permitted by its
terms as in effect immediately prior to the Effective Time.
56
SECTION 5.06. Indemnification, Exculpation and Insurance. (a) Parent
agrees that all rights to indemnification and exculpation from liabilities for
acts or omissions occurring at or prior to the Effective Time now existing in
favor of the current or former directors or officers of the Company and its
subsidiaries as provided in their respective articles of organization or
by-laws (or comparable organizational documents) and any indemnification
agreements of the Company (as each is in effect on the date hereof), the
existence of which does not constitute a breach of this Agreement, shall be
assumed by the Surviving Corporation in the Merger, without further action, as
of the Effective Time and shall survive the Merger and shall continue in full
force and effect in accordance with their terms, and Parent shall cause the
Surviving Corporation to honor all such rights.
(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person
and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all
of its properties and assets to any person, or Parent otherwise dissolves the
Surviving Corporation, then, and in each such case, Parent shall cause proper
provision to be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 5.06.
(c) The Surviving Corporation shall, at its option, for a period of
not less than six years after the Effective Time, either (i) maintain the
Company's current directors' and officers' liability insurance covering acts
or omissions occurring at or prior to the Effective Time ("D&O Insurance")
with respect to those persons who are currently covered by the Company's
directors' and officers' liability insurance policy on terms with respect to
such coverage and amount no less favorable than those of such policy in effect
on the date hereof or (ii) cause to be provided coverage no less favorable to
such directors or officers, as the case may be, than the D&O Insurance, in
each case so long as the annual premium therefor would not be in excess of
200% of the last annual premium paid for the D&O Insurance prior to the date
of this Agreement (such 200% amount the "Maximum Premium"); provided that if
the annual premium for such coverage exceeds the Maximum Premium, Parent shall
be obligated to obtain a policy with the greatest coverage available for a
cost not exceeding the Maximum Premium. If the existing or substituted
directors' and officers' liability insurance expires, is terminated or
canceled during such six-year period, the Surviving Corporation will obtain as
much D&O Insurance as can be
57
obtained for the remainder of such period for an annualized premium not in
excess of the Maximum Premium. The Company represents that the Maximum Premium
is $3,874,800.
(d) The provisions of this Section 5.06 (i) are intended to be for
the benefit of, and will be enforceable by, each indemnified party, his or her
heirs and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
SECTION 5.07. Fees and Expenses. All fees and expenses incurred in
connection with the Merger, this Agreement, the Stockholder Agreement and the
transactions contemplated by this Agreement and the Stockholder Agreement
shall be paid by the party incurring such fees or expenses, whether or not the
Merger is consummated, except that each of Parent and the Company shall bear
and pay one-half of the costs and expenses incurred in connection with the
filing, printing and mailing of the Form F-4 and the Proxy Statement
(including SEC filing fees).
SECTION 5.08. Public Announcements. Parent and the Company will
consult with each other before issuing, and provide each other the opportunity
to review, comment upon and concur with, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Merger and the Stockholder Agreement, and shall not issue any
such press release or make any such public statement prior to such
consultation, except as either party may determine is required by applicable
law, the SEC or any similar foreign regulatory authority, court process or by
obligations pursuant to any listing or similar foreign regulatory authority or
quotation agreement with any national securities exchange or national trading
system. The parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement and the Stockholder
Agreement shall be in the form heretofore agreed to by the parties.
SECTION 5.09. Affiliates. The Company shall deliver to Parent at
least 15 days prior to the Closing Date a letter identifying all persons who
are, at the time this Agreement is submitted for adoption by the stockholders
of the Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act. The Company shall use reasonable efforts to cause each such
person who makes or proposes to make a Share Election to deliver to Parent
prior to the Closing Date a written agreement substantially in the form
attached as Exhibit A hereto.
58
SECTION 5.10. NYSE Listing. Parent shall use reasonable efforts to
cause the Parent ADSs issuable in the Merger and issuable upon exercise of the
Adjusted Options to be approved for listing on the NYSE, subject to official
notice of issuance, as promptly as practicable after the date hereof, and in
any event prior to the Closing Date.
SECTION 5.11. Litigation. (a) The Company shall give Parent the
opportunity to participate in the defense or settlement of any litigation
against the Company and/or its directors relating to the transactions
contemplated by this Agreement and the Stockholder Agreement, and no such
settlement shall be agreed to without Parent's prior written consent, which
consent shall not be unreasonably withheld.
(b) The Company shall keep Parent fully informed of the status and
details of any discussions, negotiations or litigation relating to any of the
matters set forth in Section 3.01(h) of the Company Disclosure Schedule (and
shall promptly provide Parent with copies of any relevant documents or
materials related thereto), and shall give Parent and its counsel the
opportunity to participate in any such discussions or negotiations and in the
defense of any litigation in respect of any such matters. The Company shall
also inform Parent promptly of the commencement of any suit, action or
proceeding (whether or not relating to any matter set forth in Section 3.01(h)
of the Company Disclosure Schedule) against the Company, and of the assertion
or threatened assertion of any claim against, or demand made upon, the Company
by any person (and promptly provide Parent with copies of all complaints,
briefs, claims, demands, correspondence and other documents relating thereto),
shall keep Parent fully informed of the status and details of all such
litigation claims and demands and of any settlement discussions or
negotiations relating thereto and shall give Parent the opportunity to
participate in the defense thereof and in any such discussions or
negotiations. The Company shall not enter into any agreement that has the
effect of settling, releasing or otherwise disposing of any such litigation,
claim or demand (or enter into any licensing agreement relating thereto)
without Parent's prior written consent.
SECTION 5.12. Tax Treatment. Each of Parent and the Company shall
use reasonable efforts to cause the Merger to qualify as a reorganization
under the provisions of Section 368(a) of the Code and to obtain the tax
opinions referred to in Sections 6.02(c) and 6.03(c), including the execution
of the letters of representation referred to therein. Neither Parent nor the
Surviving Corporation shall take any action after the Effective Time that is
reasonably likely to prevent the Merger from qualifying as a
59
reorganization under the provisions of Section 368(a) of the
Code.
SECTION 5.13. Stockholder Agreement Legend. The Company will
inscribe upon any certificate representing Subject Shares (as defined in the
Stockholder Agreement) tendered by the Company Stockholders in connection with
any proposed transfer of any Subject Shares by the Company Stockholders in
accordance with the terms of the Stockholder Agreement the following legend:
"THE SHARES OF COMMON STOCK, PAR VALUE $0.001 PER SHARE, OF XX0.XXX, INC.,
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDER AGREEMENT DATED
AS OF MAY 20, 2001, AND ARE SUBJECT TO THE TERMS THEREOF. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF XX0.XXX,
INC."; and the Company will return such certificate containing such
inscription to the Company Stockholders within three business days following
the Company's receipt thereof.
SECTION 5.14. Termination of Agreements. The Company shall cause all
provisions of all purchase agreements, stockholder agreements, registration
rights agreements, investors' rights agreements, co-sale agreements, rights of
first refusal and similar agreements between any stockholder of the Company
and the Company to terminate and be of no further force and effect upon
consummation of the Merger. A list of all of such agreements is set forth in
Section 5.14 of the Company Disclosure Schedule.
SECTION 5.15. Resignation of Directors of the Company. Prior to the
Effective Time, the Company shall cause each member of its Board of Directors
to execute and deliver a letter effectuating his or her resignation as a
director of such Board effective immediately prior to the Effective Time.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. The Stockholder Approval shall have
been obtained.
60
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired, and any required approvals under Foreign Antitrust
Laws applicable to the Merger shall have been obtained.
(c) No Restraints. No judgment, order, decree, statute, law,
ordinance, rule or regulation, entered, enacted, promulgated, enforced or
issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") shall be in effect preventing the consummation of the
Merger; provided, however, that each of the parties shall have used its
reasonable efforts to prevent the entry of any such Restraints and to
appeal as promptly as possible any such Restraints that may be entered.
(d) Form F-4. The Form F-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(e) NYSE Listing. The Parent ADSs issuable to the Company's
stockholders and optionholders as contemplated by this Agreement shall
have been approved for listing on the NYSE, subject to official notice of
issuance.
SECTION 6.02. Conditions to Obligations of Parent and Sub. The
obligation of Parent and Sub to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of the Company contained in Section 3.01(h) shall have been
true and correct in all material respects as of the date of this
Agreement and the representations and warranties of the Company contained
in Section 3.01(c) shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date as though made
on the Closing Date, except to the extent such representations and
warranties expressly speak as of an earlier date, in which case as of
such earlier date and (ii) each of the other representations and
warranties of the Company contained in this Agreement, disregarding all
qualifications and exceptions contained therein relating to materiality
or material adverse effect, shall be true and correct as of the date of
this Agreement and as of the Closing Date as
61
though made on the Closing Date (except to the extent such
representations and warranties expressly speak as of an earlier date, in
which case as of such earlier date), except to the extent that the facts
or matters as to which such representations and warranties are not so
true and correct as of such dates, individually or in the aggregate, have
not had and could not reasonably be expected to have a material adverse
effect on the Company. Parent shall have received a certificate signed on
behalf of the Company by the chief executive officer of the Company to
such effect.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date.
Parent shall have received a certificate signed on behalf of the Company
by the chief executive officer of the Company to such effect.
(c) Tax Opinion. Parent shall have received from Cravath, Swaine &
Xxxxx, counsel to Parent, an opinion dated as of the Closing Date,
stating that the Merger will qualify for U.S. Federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code. The
issuance of such opinion shall be conditioned upon the receipt by such
tax counsel of customary representation letters from each of the Company
and Parent, in each case, in form and substance reasonably satisfactory
to such tax counsel.
SECTION 6.03. Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Parent and Sub contained in this Agreement, disregarding
all qualifications and exceptions contained therein relating to
materiality or material adverse effect, shall be true and correct as of
the date of this Agreement and as of the Closing Date as though made on
the Closing Date (except to the extent such representations and
warranties expressly speak as of an earlier date, in which case as of
such earlier date), except to the extent that the facts or matters as to
which such representations and warranties are not so true and correct as
of such dates, individually or in the aggregate, have not had and could
not reasonably be expected to have a material adverse effect on Parent.
The Company shall have received a certificate signed on
62
behalf of Parent by an authorized signatory of Parent to such effect.
(b) Performance of Obligations of Parent and Sub. Parent and Sub
shall have performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the Closing
Date. The Company shall have received a certificate signed on behalf of
Parent by an authorized signatory of Parent to such effect.
(c) Tax Opinion. The Company shall have received from Ernst & Young
LLP, tax advisors to the Company, an opinion dated as of the Closing
Date, stating that the Merger will qualify for U.S. Federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the
Code. The issuance of such opinion shall be conditioned upon the receipt
by such tax advisor of customary representation letters from each of the
Company and Parent, in each case, in form and substance reasonably
satisfactory to such tax advisor.
SECTION 6.04. Frustration of Closing Conditions. None of Parent, Sub
or the Company may rely on the failure of any condition set forth in Section
6.01, 6.02 or 6.03, as the case may be, to be satisfied if such failure was
caused by such party's failure to use reasonable efforts to consummate the
Merger and the other transactions contemplated by this Agreement and the
Stockholder Agreement, as required by and subject to Section 5.03.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after receipt of
the Stockholder Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated by November
30, 2001; provided, however, that the right to terminate this
Agreement pursuant to this Section 7.01(b)(i) shall not be available
to any party whose failure to perform any of its obligations under
this
63
Agreement results in the failure of the Merger to be consummated
by such time;
(ii) if the Stockholder Approval shall not have been obtained
at the Stockholders Meeting duly convened therefor or at any
adjournment or postponement thereof; or
(iii) if any Restraint having any of the effects set forth in
Section 6.01(c) shall be in effect and shall have become final and
nonappealable; provided that the party seeking to terminate this
Agreement pursuant to this Section 7.01(b)(iii) shall have used
reasonable efforts to prevent the entry of and to remove such
Restraint;
(c) by Parent, if the Company shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach
or failure to perform (A) would give rise to the failure of a condition
set forth in Section 6.02(a) or (b), and (B) is incapable of being or has
not been cured by the Company within 30 calendar days after giving
written notice to the Company of such breach or failure to perform; or
(d) by the Company, if Parent shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach
or failure to perform (A) would give rise to the failure of a condition
set forth in Section 6.03(a) or (b), and (B) is incapable of being or has
not been cured by Parent within 30 calendar days after giving written
notice to Parent of such breach or failure to perform.
SECTION 7.02. Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent or the Company, other than the
provisions of Section 3.01(o), the last sentence of Section 5.02, Section
5.07, this Section 7.02 and Article VIII, which provisions survive such
termination, and except to the extent that such termination results from the
willful and material breach by a party of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
64
SECTION 7.03. Amendment. This Agreement may be amended by the
parties at any time prior to the Effective Time; provided, however, that after
the Stockholder Approval has been obtained, there shall not be made any
amendment that by law requires further approval by the stockholders of the
Company without the further approval of such stockholders. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties.
SECTION 7.04. Extension; Waiver. At any time prior to the Effective
Time, a party may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c)
subject to the proviso to the first sentence of Section 7.03, waive compliance
by the other party with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver
of such rights.
SECTION 7.05. Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 7.01, an amendment
of this Agreement pursuant to Section 7.03 or an extension or waiver pursuant
to Section 7.04 shall, in order to be effective, require, in the case of
Parent or the Company, action by its Board of Directors or, except with
respect to a termination of this Agreement, the duly authorized committee of
its Board of Directors to the extent permitted by law.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.02. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if
65
delivered personally, telecopied (which is confirmed) or sent by overnight
courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Sub, to
Vivendi Universal, S.A.
00, xxxxxx xx Xxxxxxxxx
00000 Xxxxx xxxxx 00
XXXXXX
Telecopy No.: x00-0-00-00-00-00
Attention: Xxxxxx Xxxx
with a copy to:
Xxxxxxx, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. Xxxxx; and
(b) if to the Company, to
XX0.xxx, Inc.
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, XX 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxx Xxxxxx
with a copy to:
Xxxxxx & Xxxxxxx
00000 Xxxx Xxxxx Xxxxx
Suite 300
San Diego, CA 92130
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. Xxxxx
66
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person, where
"control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of a person,
whether through the ownership of voting securities, by contract, as
trustee or executor, or otherwise;
(b) "business day" means any day other than Saturday, Sunday or any
other day on which banks are legally permitted to be closed in New York;
(c) "knowledge" of any person which is not an individual means
the knowledge of such person's executive officers after reasonable
inquiry;
(d) "material adverse change" or "material adverse effect" means,
when used in connection with the Company or Parent, any change, effect,
event, occurrence, condition or development or state of facts that is
materially adverse to the business, assets, or results of operations or
financial condition of such party and its subsidiaries taken as a whole,
other than any change, effect, event, occurrence, condition, development
or state of facts relating to (i) the economy or securities markets in
general, (ii) the industries in which such party operates in general and
not having a materially disproportionate effect on such party relative to
most other industry participants, (iii) the announcement or existence of
this Agreement, (iv) any claim, suit, action, proceeding or other
litigation in respect of copyright infringement matters instituted or
threatened against the Company following the announcement of this
Agreement, (v) any settlement or judgment with respect to any of the
matters set forth on Section 3.01(h) of the Company Disclosure Schedule
or (vi) the failure by the Company to meet or exceed any third-party or
internal, revenue, earnings or other financial estimates or projections,
in and of itself;
(e) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity; and
67
(f) a "subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person.
SECTION 8.04. Interpretation. (a) When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
All terms defined in this Agreement shall have the defined meanings when used
in any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.
(b) To the extent any matter contained in the Company Disclosure
Schedule or the Parent Disclosure Schedule expressly qualifies or modifies a
covenant or definition contained in this Agreement, such covenant or
definition shall be construed and interpreted as so qualified or modified.
Each covenant set forth in the Company Disclosure Schedule or the Parent
Disclosure Schedule shall be binding on Parent and the Company, as applicable,
to the same extent as if such covenant were set forth in full in this
Agreement.
68
SECTION 8.05. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein), the
Stockholder Agreement and the Confidentiality Agreement (a) constitute the
entire agreement, and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of this
Agreement and (b) except for the provisions of Article II and Section 5.06,
are not intended to confer upon any person other than the parties any rights
or remedies.
SECTION 8.07. 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 conflict of laws thereof.
SECTION 8.08. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties
hereto without the prior written consent of the other parties. Any assignment
in violation of the preceding sentence shall be void. Subject to the preceding
two sentences, this Agreement will be binding upon, inure to the benefit of,
and be enforceable by, the parties and their respective successors and
assigns.
SECTION 8.09. Enforcement. Each of the parties hereto agrees that
irreparable damage would occur and that the parties would not have any
adequate remedy at law in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
Federal court located in the State of Delaware or in Delaware state court,
this being in addition to any other remedy to which they are entitled at law
or in equity. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any Federal court located in the State
of Delaware or any Delaware state court in the event any dispute arises out of
this Agreement or any of the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such
69
personal jurisdiction by motion or other request for leave from any such
court, (c) agrees that it will not bring any action relating to this Agreement
or any of the transactions contemplated by this Agreement in any court other
than a Federal court sitting in the State of Delaware or a Delaware state
court and (d) waives any right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or any transaction
contemplated by this Agreement.
SECTION 8.10. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the extent possible.
70
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.
VIVENDI UNIVERSAL, S.A.,
by /s/ Xxxx-Xxxxx Xxxxxxx
---------------------------
Name: Xxxx-Xxxxx Xxxxxxx
Title: Chairman & CEO
METRONOME ACQUISITION SUB INC.,
by /s/ Xxxxxx X. Xxxxxxxx XXX
---------------------------
Name: Xxxxxx X. Xxxxxxxx XXX
Title: Vice President and Secretary
XX0.XXX, INC.,
by /s/ Xxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President
ANNEX I
TO THE MERGER AGREEMENT
Index of Defined Terms
Term Page Term Page
---- ---- ---- ----
Accounting Rules.........................20 Intellectual Property Rights.............32
Adjusted Option..........................53 knowledge................................66
Affected Employees.......................55 Liens....................................14
affiliate................................66 material adverse change..................66
Agreement..........................Preamble material adverse effect..................66
Appraisal Shares..........................5 Maximum Premium..........................56
Average Closing Price.....................5 Merger.............................Preamble
Benefit Agreements.......................25 Merger Consideration......................4
Benefit Plans............................24 Multiemployer Pension Plan...............26
business day.............................66 Non-Litigation Liabilities...............46
Cash Cap.................................12 NYSE......................................5
Cash Consideration........................4 Parent.............................Preamble
Cash Election.............................4 Parent ADSs........................Preamble
Certificate of Merger.....................3 Parent Disclosure Schedule...............38
Certificates..............................5 Parent SEC Documents.....................40
Closing...................................2 Parent Shares......................Preamble
Closing Date..............................2 Pension Plan.............................25
Code...............................Preamble Permits..................................23
Commonly Controlled Entity...............24 person...................................66
Company............................Preamble Primary Company Executives...............27
Company Common Stock...............Preamble Privacy Statement........................36
Company Disclosure Schedule............. 14 Prorated Cash Amount.....................13
Company Filed SEC Documents..............21 Prorated Share Amount....................13
Company Preferred Stock..................14 Proxy Statement..........................19
Company SEC Documents....................20 Release..................................24
Company Stockholders...............Preamble Requested Cash Amount....................13
Company Stock Plans .....................15 Requested Share Amount...................13
Confidentiality Agreement................51 Restraints...............................60
Contract.................................18 SARs.....................................15
control..................................66 SEC......................................19
Deposit Agreement.........................5 Section 262...............................5
Depositary................................4 Securities Act...........................20
D & O Insurance..........................56 Share Cap................................12
DGCL......................................2 Share Consideration.......................4
Effective Time............................3 Share Election............................4
Election Date............................11 Share Proration Factor...................13
Employment Agreement...............Preamble Special Committee........................17
Environmental Law........................24 Stockholder Agreement..............Preamble
ERISA....................................25 Stockholder Approval.....................31
ESPP.....................................15 Stockholders Meeting.....................51
Exchange Act.............................19 Stock Options............................15
Exchange Agent............................6 Sub................................Preamble
Exchange Fund.............................6 subsidiary...............................67
Exchange Ratio............................5 Superior Proposal........................48
Foreign Antitrust Laws...................19 Surviving Corporation.....................2
Form F-4.................................21 Takeover Proposal........................48
Form of Election.........................11 taxes....................................30
GAAP.....................................20 Terms and Conditions.....................37
Governmental Entity......................19 Warrants.................................15
Hazardous Materials......................24
HSR Act..................................19
EXHIBIT A
Form of Affiliate Letter
Dear Sirs:
The undersigned, a holder of shares of common stock, par value
$0.001 per share ("Company Common Stock"), of XX0.xxx, Inc., a Delaware
corporation (the "Company"), is entitled to receive in connection with the
merger (the "Merger") of the Company with and into a subsidiary of Parent, a
societe anonyme organized under the laws of France ("Parent"), securities of
Parent, as the parent of the surviving corporation in the Merger (the "Parent
Securities"). The undersigned acknowledges that the undersigned may be deemed
an "affiliate" of the Company within the meaning of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933 (the "Securities Act") by the
Securities and Exchange Commission (the "SEC"), although nothing contained
herein should be construed as an admission of such fact.
If in fact the undersigned were an affiliate under the Securities
Act, the undersigned's ability to sell, assign or transfer the Parent
Securities received by the undersigned in exchange for any shares of Company
Common Stock in connection with the Merger may be restricted unless such
transaction is registered under the Securities Act or an exemption from such
registration is available. The undersigned understands that such exemptions
are limited and the undersigned has obtained or will obtain advice of counsel
as to the nature and conditions of such exemptions, including information with
respect to the applicability to the sale of such securities of Rules 144 and
145(d) promulgated under the Securities Act. The undersigned understands that
Parent will not be required to maintain the effectiveness of any registration
statement under the Securities Act for the purposes of resale of Parent
Securities by the undersigned.
The undersigned hereby represents to and covenants with Parent that
the undersigned will not sell, assign or transfer any of the Parent Securities
received by the undersigned in exchange for shares of Company Common Stock in
connection with the Merger except (i) pursuant to an effective registration
statement under the Securities Act, (ii) in conformity with the volume and
other limitations of Rule 145 or (iii) in a transaction which, in the opinion
of counsel to Parent or the undersigned reasonably acceptable to Parent or as
described in a "no-action" or interpretive letter from the Staff of the SEC
specifically issued with respect to a transaction to be engaged in by the
undersigned, is not required to be registered under the Securities Act.
In the event of a sale or other disposition by the undersigned of
Parent Securities pursuant to Rule 145, the undersigned will supply Parent
with evidence of compliance with such Rule, in the form of a letter in the
form of Xxxxx X
2
hereto or the opinion of counsel or no-action letter referred to above. The
undersigned understands that Parent may instruct its transfer agent to
withhold the transfer of any Parent Securities disposed of by the undersigned,
but that (provided such transfer is not prohibited by any other provision of
this letter agreement) upon receipt of such evidence of compliance, Parent
shall cause the transfer agent to effectuate the transfer of the Parent
Securities sold as indicated in such letter.
Parent covenants that it will take all such actions as may be
reasonably available to it to permit the sale or other disposition of Parent
Securities by the undersigned under Rule 145 in accordance with the terms
thereof.
The undersigned acknowledges and agrees that the legends set forth
below will be placed on certificates representing Parent Securities received
by the undersigned in connection with the Merger or held by a transferee
thereof, which legends will be removed by delivery of substitute certificates
upon receipt of an opinion in form and substance reasonably satisfactory to
Parent from independent counsel reasonably satisfactory to Parent to the
effect that such legends are no longer required for purposes of the Securities
Act.
There will be placed on the certificates for Parent Securities
issued to the undersigned, or any substitutions therefor, a legend stating in
substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933 (the "Securities Act") applies. The shares have not been acquired by
the holder with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act. The shares
may not be sold, pledged or otherwise transferred except (i) pursuant to
an effective registration under the Securities Act, (ii) in conformity
with the volume and other limitations of Rule 145 or (iii) in accordance
with an exemption from the registration requirements of the Securities
Act."
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of Parent
Securities and (ii) the receipt by Parent of this letter is an inducement to
Parent's obligations to consummate the Merger.
Very truly yours,
Dated:
ANNEX I
TO EXHIBIT A
[Name] [Date]
On , the undersigned sold the securities of Parent, a
societe anonyme organized under the laws of France ("Parent"), described below
in the space provided for that purpose (the "Securities"). The Securities were
received by the undersigned in connection with the merger of XX0.xxx, Inc., a
Delaware corporation, with and into a subsidiary of Parent.
Based upon the most recent report or statement filed by Parent with
the Securities and Exchange Commission, the Securities sold by the undersigned
were within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933 (the "Securities Act").
The undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Securities
Act or in transactions directly with a "market maker" as that term is defined
in Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents that the undersigned has not solicited or
arranged for the solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer or sale of
the Securities to any person other than to the broker who executed the order
in respect of such sale.
Very truly yours,
[Space to be provided for description of the Securities.]
SCHEDULE A
Employment Agreement Signatories
Xxxxxxx Xxxx
Xxxx Xxxxxxxx
Xxxxx Xxxxxxx
