Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of December 20, 1999
by and between
The Interpublic Group of Companies, Inc.
and
NFO Worldwide, Inc.
ARTICLE I
THE MERGER
SECTION 1.1 The Merger .................................................... 1
SECTION 1.2 Effective Time ................................................ 1
SECTION 1.3 Closing of the Merger ......................................... 2
SECTION 1.4 Effects of the Merger ......................................... 2
SECTION 1.5 Certificate of Incorporation and Bylaws ....................... 2
SECTION 1.6 Directors ..................................................... 2
SECTION 1.7 Officers ...................................................... 2
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 Conversion of Securities ...................................... 2
SECTION 2.2 Stock Options and Other Stock Plans ........................... 4
SECTION 2.3 Exchange Fund ................................................. 5
SECTION 2.4 Exchange Procedures ........................................... 5
SECTION 2.5 Distributions with Respect to Unsurrendered Certificates ...... 6
SECTION 2.6 No Further Ownership Rights ................................... 6
SECTION 2.7 No Fractional Shares of Parent Common Stock ................... 6
SECTION 2.8 Termination of Exchange Fund .................................. 7
SECTION 2.9 No Liability .................................................. 7
SECTION 2.10 Investment of the Exchange Fund ............................... 7
SECTION 2.11 Lost Certificates ............................................. 7
SECTION 2.12 Withholding Rights ............................................ 7
SECTION 2.13 Stock Transfer Books .......................................... 8
SECTION 2.14 Affiliates .................................................... 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Organization and Qualification; Subsidiaries .................. 8
SECTION 3.2 Capitalization of the Company and Its Subsidiaries ............ 9
SECTION 3.3 Authority Relative to This Agreement ..........................10
SECTION 3.4 SEC Reports; Financial Statements .............................11
SECTION 3.5 No Undisclosed Liabilities ....................................11
SECTION 3.6 Absence of Changes ............................................11
SECTION 3.7 Information Supplied ..........................................13
SECTION 3.8 Consents and Approvals; No Violations .........................13
SECTION 3.9 No Default ....................................................14
SECTION 3.10 Real Property .................................................14
SECTION 3.11 Litigation ....................................................15
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SECTION 3.12 Company Permits; Compliance with Applicable Laws ..............16
SECTION 3.13 Employee Benefit Plans; ERISA .................................16
SECTION 3.14 Labor Matters .................................................19
SECTION 3.15 Environmental Matters .........................................20
SECTION 3.16 Taxes .........................................................21
SECTION 3.17 Absence of Questionable Payments ..............................22
SECTION 3.18 Material Contracts ............................................23
SECTION 3.19 Insurance Matters .............................................24
SECTION 3.20 Intellectual Property .........................................24
SECTION 3.21 Year 2000 .....................................................25
SECTION 3.22 Opinion of Financial Advisor ..................................26
SECTION 3.23 Brokers .......................................................26
SECTION 3.24 Accounting Matters; Tax Treatment .............................26
SECTION 3.25 Takeover Statutes, etc. .......................................26
SECTION 3.26 Amendment to the Company Rights Agreement .....................27
SECTION 3.27 InsightExpress, L.L.C. ........................................27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
SECTION 4.1 Organization ..................................................27
SECTION 4.2 Capitalization of Parent ......................................28
SECTION 4.3 Authority Relative to This Agreement ..........................28
SECTION 4.4 SEC Reports; Financial Statements .............................29
SECTION 4.5 No Undisclosed Liabilities ....................................29
SECTION 4.6 Absence of Certain Changes or Events ..........................30
SECTION 4.7 Information Supplied ..........................................30
SECTION 4.8 Consents and Approvals; No Violations .........................30
SECTION 4.9 Compliance with Applicable Laws ...............................31
SECTION 4.10 Brokers .......................................................31
SECTION 4.11 Accounting Matters; Tax Treatment .............................31
SECTION 4.12 Litigation ....................................................31
SECTION 4.13 Material Contracts ............................................32
ARTICLE V
COVENANTS RELATED TO CONDUCT OF BUSINESS
SECTION 5.1 Conduct of Business of the Company ............................32
SECTION 5.2 Conduct of Business of Parent .................................35
SECTION 5.3 Access to Information .........................................35
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Preparation of S-4 and the Proxy Statement ....................36
SECTION 6.2 Letter of Accountants .........................................36
SECTION 6.3 Meeting .......................................................37
SECTION 6.4 Reasonable Best Efforts .......................................37
SECTION 6.5 Acquisition Proposals .........................................38
SECTION 6.6 Public Announcements ..........................................40
SECTION 6.7 Indemnification; Directors' and Officers' Insurance ...........40
SECTION 6.8 Notification of Certain Matters ...............................40
SECTION 6.9 Pooling .......................................................41
SECTION 6.10 Employee Matters ..............................................41
SECTION 6.11 Affiliate Letters .............................................42
SECTION 6.12 SEC Filings ...................................................42
SECTION 6.13 Fees and Expenses .............................................43
SECTION 6.14 Listing of Stock ..............................................43
SECTION 6.15 Antitakeover Statutes .........................................43
SECTION 6.16 Rule 144 Reporting ............................................43
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 Conditions to Each Party's Obligations to Effect the Merger ...44
SECTION 7.2 Conditions to the Obligations of Parent .......................44
SECTION 7.3 Conditions to the Obligations of the Company ..................45
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1 Termination by Mutual Agreement ...............................46
SECTION 8.2 Termination by Either Parent or the Company ...................46
SECTION 8.3 Termination by the Company ....................................46
SECTION 8.4 Termination by Parent .........................................47
SECTION 8.5 Effect of Termination and Abandonment .........................47
SECTION 8.6 Amendment .....................................................48
SECTION 8.7 Extension; Waiver .............................................48
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Nonsurvival of Representations and Warranties .................49
SECTION 9.2 Entire Agreement; Assignment ..................................49
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SECTION 9.3 Notices .......................................................49
SECTION 9.4 Governing Law .................................................50
SECTION 9.5 Descriptive Headings ..........................................50
SECTION 9.6 Parties in Interest ...........................................50
SECTION 9.7 Severability ..................................................50
SECTION 9.8 Enforcement; Jurisdiction .....................................51
SECTION 9.9 Counterparts ..................................................51
SECTION 9.10 Interpretation ................................................51
SECTION 9.11 Definitions ...................................................52
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Glossary of Defined Terms
-------------------------
Defined Terms Section
------------- -------
Acquisition Proposal...............................................................................9.11(a)
Antitrust Law.......................................................................................6.4(b)
APB 16..............................................................................................6.9(a)
Assumed Stock Option................................................................................2.2(a)
Audit Date.............................................................................................3.6
Average Parent Stock Price..........................................................................2.1(c)
beneficial ownership...............................................................................9.11(b)
beneficially own...................................................................................9.11(b)
Capitalization Date.................................................................................3.2(a)
Certificate of Merger..................................................................................1.2
Certificates...........................................................................................2.4
Closing................................................................................................1.3
Closing Date...........................................................................................1.3
Code..............................................................................................Recitals
Company.....................................................................Preamble, Exhibit A, Exhibit B
Company Agreements..................................................................................3.8(b)
Company Benefit Plans..............................................................................3.13(a)
Company Board.......................................................................................3.3(a)
Company Common Stock................................................................................2.1(c)
Company Disclosure Schedule....................................................................Article III
Company Financial Advisor.............................................................................3.22
Company Option Plans................................................................................2.2(a)
Company Permits.......................................................................................3.12
Company Required Approvals..........................................................................3.8(a)
Company Rights Agreement............................................................................3.2(a)
Company SEC Reports.................................................................................3.4(a)
Company Shares........................................................................Exhibit A, Exhibit B
Company Stock Option................................................................................2.2(a)
Company Stockholder Meeting............................................................................6.3
Computer Programs.....................................................................................3.21
DGCL...................................................................................................1.1
DOJ.................................................................................................6.4(b)
Effective Time.........................................................................................1.2
Environmental Law..................................................................................3.15(a)
ERISA..............................................................................................3.13(a)
Exchange Act........................................................................................3.4(a)
Exchange Agent......................................................................................2.3(a)
Exchange Fund.......................................................................................2.3(b)
Exchange Ratio......................................................................................2.1(c)
Expenses..............................................................................................6.13
FTC.................................................................................................6.4(b)
GAAP................................................................................................3.4(b)
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Governmental Entity.................................................................................3.8(a)
Hazardous Material.................................................................................3.15(a)
HSR Act.............................................................................................3.8(a)
Indemnified Parties.................................................................................6.7(a)
Intellectual Property.................................................................................3.20
IX, LLC...............................................................................................3.27
know...............................................................................................9.11(c)
knowledge..........................................................................................9.11(c)
Law....................................................................................................3.9
Lien................................................................................................3.2(b)
Manager.............................................................................................3.6(i)
Master Investors Rights Agreement.....................................................................3.27
Material Adverse Effect............................................................................9.11(d)
Material Contracts.................................................................................3.18(a)
Measurement Period..................................................................................2.1(c)
Merger...........................................................................1.1, Exhibit A, Exhibit B
Merger Agreement......................................................................Exhibit A, Exhibit B
Merger Consideration................................................................................2.1(c)
Merger Sub.............................................................................................1.1
NYSE................................................................................................2.1(c)
Option Agreement..................................................................................Recitals
Parent...................................................................1. Preamble, Exhibit A, Exhibit B
Parent Board........................................................................................4.3(b)
Parent Common Stock.................................................................................2.1(c)
Parent Disclosure Schedule......................................................................Article IV
Parent Preferred Stock..............................................................................4.2(a)
Parent Required Approvals...........................................................................4.8(a)
Parent SEC Reports..................................................................................4.4(a)
Parent Shares.........................................................................Exhibit A, Exhibit B
PBGC...............................................................................................3.13(d)
person.............................................................................................9.11(e)
pooling of interests................................................................................6.9(a)
Preferred Stock.....................................................................................3.2(a)
Proxy Statement........................................................................................3.7
Real Property Leases...............................................................................3.10(b)
Release............................................................................................3.15(a)
Required Company Vote...............................................................................3.3(b)
Rights................................................................................................3.26
Rule 145.........................................................................................Exhibit A
S-4....................................................................................................3.7
SEC...............................................................................................Recitals
Securities Act.............................................................................2.14, Exhibit A
Share Issuance.........................................................................................3.7
Shares..............................................................................................2.1(c)
subsidiary.........................................................................................9.11(f)
Superior Proposal...................................................................................6.5(a)
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Surviving Corporation..................................................................................1.1
Takeover Statutes.....................................................................................3.25
Tax Returns........................................................................................3.16(h)
Taxes..............................................................................................3.16(h)
Termination Date....................................................................................8.2(a)
Termination Notice..................................................................................2.1(c)
Top-Up Intent Notice................................................................................2.1(c)
Voting Shares.......................................................................................3.3(b)
Walk-Away Price.....................................................................................2.1(c)
Year 2000 Plan.....................................................................................3.21(c)
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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of December 20, 1999 is
between The Interpublic Group of Companies, Inc., a Delaware corporation
("Parent"), and NFO Worldwide, Inc., a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent and the Company
have each determined that this Agreement and the transactions contemplated
hereby, including the Merger (as defined in Section 1.1), are advisable and fair
to, and in the best interests of, their respective stockholders;
WHEREAS, for United States federal income tax purposes, it is intended
that the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, for accounting purposes, it is intended that the Merger be
accounted for as a "pooling of interests" under APB 16 (as defined in Section
6.9(a)) and the applicable rules and regulations of the Securities and Exchange
Commission (the "SEC"); and
WHEREAS, in order to induce Parent to enter into this Agreement, and as
a condition to its doing so, the Company is simultaneously entering into a stock
option agreement (the "Option Agreement") with Parent, pursuant to which the
Company is granting Parent an option to purchase shares of Company Common Stock
(as hereinafter defined) exercisable under certain circumstances.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company and Parent hereby agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. At the Effective Time (as defined in Section
1.2), upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law (the "DGCL"), a newly
formed wholly owned subsidiary of Parent, to be incorporated in Delaware
("Merger Sub"), shall be merged with and into the Company (the "Merger").
Following the Merger, the Company shall continue as the surviving corporation
(the "Surviving Corporation") and shall continue its corporate existence under
the DGCL, and the separate corporate existence of Merger Sub shall cease. If
Parent so elects, and such election would not prevent satisfaction of the
conditions set forth in Section 7.2(d) or 7.3(d), the Merger shall instead be
structured so that the Company shall be merged with and into Merger Sub, with
Merger Sub continuing as the Surviving Corporation.
SECTION 1.2 Effective Time. Subject to the conditions of this
Agreement, Parent and the Company shall cause the Merger to be consummated by
filing a certificate of merger complying with the DGCL with the Secretary of
State of the State of Delaware (the "Certificate of Merger"), as soon as
practicable on or after the Closing Date (as defined in
Section 1.3). The Merger shall become effective upon such filing or at such time
thereafter as the parties shall agree and as shall be provided in the
Certificate of Merger (the "Effective Time").
SECTION 1.3 Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date (the "Closing Date") to be
specified by Parent, which shall be no later than the tenth business day after
satisfaction or waiver of the conditions set forth in Article VII (other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the fulfillment or waiver of those conditions), at the offices of
Cleary, Gottlieb, Xxxxx & Xxxxxxxx, Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
unless another time, date or place is agreed to in writing by the parties
hereto.
SECTION 1.4 Effects of the Merger. The Merger shall have the effects
set forth in the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights, privileges,
immunities, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities, obligations and duties of
the Company and Merger Sub shall become the debts, liabilities, obligations and
duties of the Surviving Corporation.
SECTION 1.5 Certificate of Incorporation and Bylaws. The Certificate of
Incorporation of the Company in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation, until
amended in accordance with such Certificate of Incorporation and the DGCL. The
Bylaws of Merger Sub in effect immediately prior to the Effective Time shall be
the Bylaws of the Surviving Corporation, until amended in accordance with such
Bylaws, the Certificate of Incorporation and the DGCL.
SECTION 1.6 Directors. The directors of Merger Sub immediately prior to
the Effective Time shall be the directors of the Surviving Corporation and the
board of the Surviving Corporation shall be expanded by one member, which
position will be filled by Xxxxxxx X. Xxxxxx, each director to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation until their respective death, resignation, or removal or until their
respective successors are duly elected and qualified.
SECTION 1.7 Officers. The officers of the Company immediately prior to
the Effective Time shall be the officers of the Surviving Corporation, each to
hold office in accordance with the Certificate of Incorporation and Bylaws of
the Surviving Corporation until successors are duly elected or appointed and
qualified.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of any of the parties hereto or
any holder of any securities of the Company or Merger Sub:
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(a) Securities of Merger Sub. The issued and outstanding securities of
Merger Sub shall remain issued, outstanding and unchanged as validly issued,
fully paid and nonassessable securities of the Surviving Corporation.
(b) Cancellation of Treasury Shares and Parent-Owned Shares. Each share
of Company Common Stock issued and outstanding immediately prior to the
Effective Time that is owned by the Company or Parent or any of their respective
wholly owned subsidiaries (other than shares in trust accounts, managed
accounts, custodial accounts and the like that are beneficially owned by third
parties) shall automatically be cancelled and shall cease to exist, and no
consideration shall be delivered or deliverable in exchange therefor.
(c) Conversion of Company Common Stock. Each share of common stock, par
value $.01 per share, of the Company ("Company Common Stock") (including the
associated Rights (as defined in the Company Rights Agreement referred to in
Section 3.2(a)) issued and outstanding immediately prior to the Effective Time
(individually, a "Share" and collectively, the "Shares") (other than Shares to
be cancelled in accordance with Section 2.1(b)), shall be converted into and be
exchangeable for the right to receive a fraction (rounded to the nearest ten
thousandth and rounded up in the case of five one-hundred thousandths) of a
fully paid and non-assessable share of common stock, par value $.01 per share,
of Parent ("Parent Common Stock"), such fraction to be in the ratio provided
below (the "Exchange Ratio"). If the Average Parent Stock Price (as hereinafter
defined) is:
(i) greater than $66.70, the Exchange Ratio shall be fixed at .3898;
(ii) equal to or greater than $49.30 but less than or equal to $66.70,
the Exchange Ratio shall be $26.00 divided by the Average Parent Stock Price; or
(iii) less than $49.30, the Exchange Ratio shall be fixed at .5274;
provided that if the Average Parent Stock Price is less than $46.40 (the
"Walk-Away Price"), the Company shall have the right to give telephonic notice
to Parent (a "Termination Notice"), followed promptly by written notice, that
the Company elects to terminate this Agreement in accordance with Section 8.3(b)
hereof. Any Termination Notice shall be delivered to Parent no later than 5:00
p.m. New York City time on the second business day following the last day of the
Measurement Period (as hereinafter defined). If the Company delivers a timely
Termination Notice, Parent shall have the right to give telephonic notice to the
Company (the "Top-Up Intent Notice"), followed promptly by written notice, that
Parent elects to increase the Exchange Ratio to equal $26.00 divided by the
Average Parent Stock Price. Any Top-Up Intent Notice shall be delivered to the
Company no later than 5:00 p.m. New York City time on the fourth business day
following the last day of the Measurement Period. As used herein, the "Average
Parent Stock Price" shall mean the average of the per share closing prices of
Parent Common Stock (rounded to the nearest ten thousandth and rounded up in the
case of five one-hundred thousandths) on The New York Stock Exchange, Inc.
("NYSE") (as reported in the New York City Edition of The Wall Street Journal
or, if not reported thereby, another nationally recognized source) during the
ten consecutive trading day period (the "Measurement Period") ending on the
sixth trading day prior to the Effective Time. All shares of Parent Common Stock
issued pursuant to this Section 2.1(c), together with any cash in lieu of
fractional shares of Parent
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Common Stock to be paid pursuant to Section 2.7, are referred to herein as the
"Merger Consideration".
(d) Certain Adjustments. If between the date of this Agreement and the
Effective Time the outstanding shares of Parent Common Stock shall have been
changed into a different number of shares or a different class by reason of any
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares or any similar event, the amount of shares of
Parent Common Stock constituting the Exchange Ratio and the Walk-Away Price
shall be correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares or
such similar event.
SECTION 2.2 Stock Options and Other Stock Plans. (a) As soon as
practicable following the date of this Agreement, Parent and the Company (or, if
appropriate, the Board of Directors of the Company or any committee of the Board
of Directors of the Company administering Company's Stock Option Plan,
Directors' Stock Option Plan and Consultant's Plan (collectively, the "Company
Option Plans")) shall take such action as may be required or desirable
(including the obtaining of all applicable consents) to effect the following
provisions of this Section 2.2(a). As of the Effective Time (or, in the case of
any person subject to Section 16 of the Exchange Act (as hereinafter defined) as
of the later of the Effective Time and the first day after which such person
would have no liability under Section 16(b)) each option to purchase Shares
pursuant to the Company Stock Plans (a "Company Stock Option") which is then
outstanding shall be converted into an option (or a new substitute option shall
be granted) (an "Assumed Stock Option") to purchase the number of shares of
Parent Common Stock (rounded up to the nearest whole share) equal to (x) the
number of Shares subject to such option multiplied by (y) the Exchange Ratio, at
an exercise price per share of Parent Common Stock (rounded down to the nearest
xxxxx) equal to (A) the former exercise price per share of Company Common Stock
under such option immediately prior to the Effective Time divided by (B) the
Exchange Ratio; provided, however, that in the case of any Company Stock Option
to which Section 421 of the Code applies by reason of its qualification under
Section 422 of the Code, the conversion formula shall be adjusted, if necessary,
to comply with Section 424(a) of the Code. Except as provided above, the Assumed
Stock Option shall be subject to the same terms and conditions (including
expiration date, exercise, acceleration and vesting provisions) as were
applicable to the converted Company Stock Option immediately prior to the
Effective Time; provided, that the Parent Board (as hereinafter defined) or a
committee thereof shall succeed to the authority and responsibility of the
Company Board (as hereinafter defined) or any committee thereof. Parent shall
use its reasonable best efforts to cause the grant of the Assumed Stock Options
to be exempt acquisitions for purposes of Section 16 of the Exchange Act.
(b) As soon as practicable after the Effective Time, Parent shall
deliver to the holders of Company Stock Options appropriate notices setting
forth such holders' rights pursuant to the respective Company Option Plans and
the agreements evidencing the grants of such Company Stock Options and that such
Company Stock Options and agreements shall continue in effect on the same terms
and conditions (subject to the adjustments required by this Section 2.2). Parent
shall comply with the terms of the Company Option Plans and the agreements
evidencing the grants of such Company Stock Options.
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(c) Parent shall take such actions as are reasonably necessary for the
conversion of the Company Option Plans or the Company Stock Options pursuant to
this Section 2.2, including the reservation, issuance and listing of Parent
Common Stock as is necessary to effectuate the transactions contemplated by this
Section 2.2. Parent shall prepare and file with the SEC a registration statement
on Form S-8, to become effective within seven days following the Closing, or
other appropriate form with respect to shares of Parent Common Stock subject to
the Assumed Stock Options and to maintain the effectiveness of such registration
statement or registration statements covering such Assumed Stock Options (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such Assumed Stock Options remain outstanding.
SECTION 2.3 Exchange Fund. (a) Prior to the Effective Time, Parent
shall appoint a commercial bank or trust company reasonably acceptable to the
Company to act as exchange agent hereunder for the purpose of exchanging Shares
for the Merger Consideration (the "Exchange Agent").
(b) At or prior to the Effective Time, Parent shall deposit, or cause
to be deposited, with the Exchange Agent, in trust for the benefit of holders of
Shares, certificates representing the Parent Common Stock issuable pursuant to
Section 2.1 in exchange for outstanding Shares. Parent agrees to make available
to the Exchange Agent, from time to time as needed, cash sufficient to pay cash
in lieu of fractional shares pursuant to Section 2.7 and any dividends and other
distributions pursuant to Section 2.5. Any cash and certificates of Parent
Common Stock deposited with the Exchange Agent pursuant to this Section 2.3(b)
shall hereinafter be referred to as the "Exchange Fund."
SECTION 2.4 Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall cause the Exchange
Agent to mail to each holder of a certificate or certificates which immediately
prior to the Effective Time represented outstanding Shares (the "Certificates")
(i) a form of letter of transmittal (which shall specify that delivery shall be
effective, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent, and which letter shall be in
customary form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for effecting the surrender of such Certificates in
exchange for the applicable Merger Consideration. Upon surrender of a
Certificate to the Exchange Agent together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto, 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) shares
of Parent Common Stock representing, in the aggregate, the whole number of
shares that such holder has the right to receive pursuant to Section 2.1 (after
taking into account all Shares then held by such holder) and (B) a check in the
amount equal to the cash that such holder has the right to receive pursuant to
the provisions of this Article II, including cash in lieu of any fractional
shares of Parent Common Stock pursuant to Section 2.7 and any dividends and
other distributions pursuant to Section 2.5. No interest will be paid or will
accrue on any cash payable pursuant to this Article II. In the event of a
transfer of ownership of Company Common Stock which is not registered in the
transfer records of the Company, shares of Parent Common Stock evidencing, in
the aggregate, the proper number of shares of Parent Common Stock, a check in
the proper amount of cash in lieu of any fractional shares of Parent Common
Stock pursuant to Section 2.7 and any dividends
5
or other distributions to which such holder is entitled pursuant to Section 2.5,
may be issued with respect to such Shares to such a transferee if the
Certificate representing such Shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer Taxes (as hereinafter defined)
have been paid.
SECTION 2.5 Distributions with Respect to Unsurrendered Certificates.
From and after the Effective Time and until surrendered in accordance with the
provisions of this Article II, each Certificate (other than Certificates for
Shares to be cancelled pursuant to Section 2.1(b)) shall represent for all
purposes solely the right to receive, in accordance with the terms hereof, the
Merger Consideration. No dividends or other distributions declared or made with
respect to shares of Parent Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate representing
Shares of Company Common Stock with respect to the shares of Parent Common Stock
that such holder would be entitled to receive upon surrender of such Certificate
and no cash payment in lieu of fractional shares of Parent Common Stock shall be
paid to any such holder pursuant to Section 2.7 until such holder shall
surrender such Certificate in accordance with Section 2.4. Subject to the effect
of applicable Laws (as defined in Section 3.9), following surrender of any such
Certificate, there shall be paid to such holder of shares of Parent Common Stock
issuable in exchange therefor, without interest, (a) the amount of any cash
payable in lieu of fractional shares of Parent Common Stock to which such holder
is entitled pursuant to Section 2.7, to be paid promptly after the time of such
surrender, and (b) with respect to any dividends or other distributions payable
with respect to such whole number of shares with a record date after the
Effective Time, the amount of such dividends or other distributions to be paid
promptly after the later of (x) the time of such surrender and (y) the payment
date for such dividends or other distributions.
SECTION 2.6 No Further Ownership Rights. All shares of Parent Common
Stock issued and cash paid upon conversion of the Shares in accordance with the
terms of this Article II (including any cash paid pursuant to Sections 2.5 and
2.7) shall be deemed to have been issued or paid in full satisfaction of all
rights pertaining to the Shares.
SECTION 2.7 No Fractional Shares of Parent Common Stock. (a) No
certificates or scrip of shares of Parent Common Stock representing fractional
shares of Parent Common Stock or book-entry credit of the same shall be issued
upon the surrender for exchange of Certificates and such fractional share
interests will not entitle the owner thereof to vote or to have any rights of a
shareholder of Parent or a holder of shares of Parent Common Stock.
(b) Notwithstanding any other provision of this Agreement, each holder
of Shares exchanged pursuant to the Merger who would otherwise have been
entitled to receive a fraction of a share of Parent Common Stock (after taking
into account all Certificates delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount equal to the product of (i) such
fractional part of a share of Parent Common Stock multiplied by (ii) the closing
price (as reported in the New York City edition of The Wall Street Journal or,
if not reported thereby, another nationally recognized source) for a share of
Parent Common Stock on the date of the Effective Time. As promptly as
practicable after the determination of the aggregate amount of cash to be paid
to holders of fractional interests, the Exchange Agent shall notify Parent and
Parent shall deposit such amount with the Exchange Agent and shall cause the
6
Exchange Agent to forward payments to such holders of fractional interests
subject to and in accordance with the terms hereof.
SECTION 2.8 Termination of Exchange Fund. Any portion of the Exchange
Fund (including any income or proceeds thereof or of any investments thereof)
which remains undistributed to the holders of Certificates for one year after
the Effective Time shall be delivered to Parent or otherwise on the instruction
of Parent, and any holders of the Certificates who have not theretofore complied
with this Article II shall thereafter look only to the Surviving Corporation and
Parent (subject to abandoned property, escheat and similar laws) for the Merger
Consideration exchangeable for such Certificates to which such holders are
entitled, any cash in lieu of fractional shares of Parent Common Stock to which
such holders are entitled pursuant to Section 2.7 and any dividends or
distributions with respect to shares of Parent Common Stock to which such
holders are entitled pursuant to Section 2.5, without any interest on any
thereof. Any such portion of the Exchange Fund remaining unclaimed by holders of
Shares two years after the Effective Time (or such earlier date as shall be
immediately prior to such date as such securities or amounts would otherwise
escheat to or become property of any Governmental Entity (as defined in Section
3.8)) shall, to the extent permitted by Law, become the property of Parent, free
and clear of any claims or interest of any person previously entitled thereto.
SECTION 2.9 No Liability. None of Parent, Merger Sub, the Company, the
Surviving Corporation or the Exchange Agent shall be liable to any person in
respect of any Merger Consideration from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
SECTION 2.10 Investment of the Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund as directed by Parent on a daily
basis. Any interest and other income resulting from such investments shall
promptly be paid to Parent.
SECTION 2.11 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 the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration with respect to the Shares
formerly represented thereby, any cash in lieu of fractional shares of Parent
Common Stock and unpaid dividends and distributions on shares of Parent Common
Stock deliverable in respect thereof, pursuant to this Agreement.
SECTION 2.12 Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the Merger Consideration
otherwise payable pursuant to this Agreement to any holder of Shares of such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Code and the rules and regulations promulgated
thereunder, or any other Law. To the extent that amounts are so withheld by the
Surviving Corporation or Parent, as the case may be, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the holder
of the Shares in respect to which such deduction and withholding was made by the
Surviving Corporation or Parent, as the case may be.
7
SECTION 2.13 Stock Transfer Books. The stock transfer books of the
Company shall be closed immediately upon the Effective Time and there shall be
no further registration of transfers of Shares thereafter on the records of the
Company. On or after the Effective Time, any Certificates presented to the
Exchange Agent or Parent for any reason shall be converted into the Merger
Consideration with respect to the Shares formerly represented thereby, any cash
in lieu of fractional shares of Parent Common Stock to which the holders thereof
are entitled pursuant to Section 2.7 and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 2.5.
SECTION 2.14 Affiliates. Notwithstanding anything to the contrary
herein, no shares of Parent Common Stock or cash shall be delivered to a person
who may be deemed an "affiliate" of the Company in accordance with Section 6.11
hereof for purposes of Rule 145 under the Securities Act of 1933, as amended
(the "Securities Act"), or for purposes of qualifying the Merger for "pooling of
interests" under APB 16 and the applicable SEC rules and regulations, until such
person has executed and delivered to Parent the written agreement contemplated
by Section 6.11.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the section of the disclosure schedule delivered
by the Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule") that specifically relates to a specified section of this
Article III, the Company hereby represents and warrants to Parent as follows:
SECTION 3.1 Organization and Qualification; Subsidiaries. (a) Each of
the Company and its subsidiaries is a corporation or legal entity duly
organized, validly existing and, if applicable, in good standing under the Laws
of the jurisdiction of its incorporation and has all requisite corporate,
partnership or similar power and authority to own, lease and operate its
properties and to carry on its businesses as now conducted and proposed by the
Company to be conducted, except when the failure to be duly organized, validly
existing and in good standing or to have such power and authority has not had,
and should not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on the Company.
(b) Section 3.1 of the Company Disclosure Schedule sets forth a list of
all subsidiaries of the Company. Except as listed in Section 3.1 of the Company
Disclosure Schedule, the Company does not own, directly or indirectly,
beneficially or of record, any shares of capital stock or other security of any
other entity or any other investment in any other entity.
(c) Each of the Company and its subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing has not had, and would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
8
(d) The Company has heretofore made available to Parent accurate and
complete copies of the articles or certificate of incorporation and bylaws or
other similar organizational documents, as currently in effect, of each of the
Company and its U.S. subsidiaries.
SECTION 3.2 Capitalization of the Company and Its Subsidiaries. (a) The
authorized capital stock of the Company consists of (i) 60,000,000 shares of
Company Common Stock, and (ii) 5,000,000 shares of preferred stock, par value
$.01 per share (the "Preferred Stock"), of which 500,000 shares have been
designated Series A Preferred Stock. As of December 17, 1999 (the
"Capitalization Date"), (i) 22,355,201 shares of Company Common Stock were
issued and outstanding; (ii) 3,720,444 shares of Company Common Stock were
subject to outstanding options issued pursuant to the Company Option Plans (with
an average weighted exercise price of $12.76), options with respect to an
additional 539,384 shares of Company Common Stock were authorized, but not yet
issued and 4,259,828 shares, in the aggregate, were reserved for issuance upon
exercise of such outstanding options and such authorized, but not yet issued,
options; (iii) no shares of Company Common Stock were issued and held in the
treasury of the Company; and (iv) no shares of Preferred Stock were issued and
outstanding. All the outstanding Shares are, and the exercise of outstanding
options described in the second sentence of this Section 3.2 will be, when
issued in accordance with the terms thereof, duly authorized, validly issued,
fully paid and non-assessable. Except as set forth in Section 3.2 of the Company
Disclosure Schedule, since the Capitalization Date, there have been no issuances
of shares of the capital stock or other securities of the Company and of
options, warrants and rights with respect to shares of Company Common Stock or
other securities of the Company, other than issuances of shares of Company
Common Stock pursuant to options outstanding on the Capitalization Date as fully
reflected on Section 3.2 of the Company Disclosure Schedule. Except as set forth
in Section 3.2 of the Company Disclosure Schedule, and except as set forth above
and except for the Company's obligations under the Rights Agreement, dated as of
October 5, 1998 (the "Company Rights Agreement"), between the Company and State
Street Bank and Trust Company, as rights agent, and except for the transactions
contemplated by this Agreement and the Option Agreement, (1) there are no shares
of capital stock of the Company authorized, issued or outstanding, (2) there are
no authorized or outstanding options, warrants, calls, preemptive rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character (whether or not conditional) relating to the issued or unissued
capital stock of the Company or any of its subsidiaries, obligating the Company
or any of its subsidiaries to issue, transfer or sell or cause to be issued,
transferred or sold any shares of capital stock or other equity interest in the
Company or any of its subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company or
any of its subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment and (3)
there are no outstanding contractual obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares or other
capital stock of the Company or any of its subsidiaries, or to make any payments
based on the market price or value of shares or other capital stock of the
Company or any of its subsidiaries, or to provide funds to make any investment
(in the form of a loan, capital contribution or otherwise) in any subsidiary or
any other entity other than loans to subsidiaries in the ordinary course of
business.
9
(b) Except as set forth in Section 3.2 of the Company Disclosure
Schedule, all of the outstanding capital stock of the Company's subsidiaries is
owned by the Company, directly or indirectly, free and clear of any Lien (as
hereinafter defined) or any other limitation or restriction (including any
restriction on the right to vote or sell the same, except as may be provided as
a matter of Law), and there are no irrevocable proxies with respect to such
capital stock, in each case except for such failures to own and for such proxies
that have not had, and would not be reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company. For purposes of this
Agreement, "Lien" means, with respect to any asset (including, without
limitation, any security), any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset.
SECTION 3.3 Authority Relative to This Agreement. (a) The Company has
all necessary corporate power and authority to execute and deliver this
Agreement and the Option Agreement and to consummate the transactions
contemplated hereby and thereby. The Board of Directors of the Company (the
"Company Board") by unanimous vote of those present, has duly and validly
authorized the execution, delivery and performance of this Agreement and the
Option Agreement and approved the consummation of the transactions contemplated
hereby and thereby, and taken all corporate actions required to be taken by the
Company Board for the consummation of the transactions, including the Merger,
contemplated hereby and thereby and has (i) by resolution approved, and declared
advisable, the agreement of merger (within the meaning of Section 251 of the
DGCL) contained within this Agreement; (ii) determined that such transactions
are advisable and fair to, and in the best interests of, the Company and its
stockholders; and (iii) as of the date hereof, resolved to recommend that the
stockholders of the Company approve and adopt such agreement of merger. No other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement and the Option Agreement or to consummate the transactions
contemplated hereby and thereby (other than, with respect to the Merger and the
agreement of merger (within the meaning of Section 251 of the DGCL) contained
within this Agreement, the Required Company Vote (as hereinafter defined)). This
Agreement and the Option Agreement have each been duly and validly executed and
delivered by the Company and each constitutes a valid, legal and binding
agreement of the Company, enforceable against the Company in accordance with its
terms.
(b) The Company Board has directed that the agreement of merger
contained within this Agreement be submitted to the stockholders of the Company
for their approval at a meeting to be held for that purpose. The affirmative
vote of the holders of a majority of the outstanding voting stock of the Company
(which is comprised solely of the Company Common Stock (the "Voting Shares"))
(voting as a single class) as of the record date for the Company Stockholders
Meeting (as hereinafter defined) (the "Required Company Vote") is the only vote
of the holders of any class or series of capital stock of the Company necessary
to adopt the agreement of merger contained within this Agreement and approve the
Merger. No other vote of the stockholders of the Company is required by law, the
articles of incorporation or the by-laws of the Company or otherwise in order
for the Company to approve and adopt the agreement of merger contained within
this Agreement or to consummate the transactions contemplated hereby, and no
vote of stockholders is required to approve the Option Agreement or to
consummate the transactions contemplated thereby.
10
SECTION 3.4 SEC Reports; Financial Statements. (a) Except as set forth
in Section 3.4 of the Company Disclosure Schedule, the Company has timely filed
all required forms, reports and documents with the SEC since January 1, 1997,
each of which has complied as to form in all material respects with all
applicable requirements of the Securities Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), each as in effect on the dates such
forms, reports and documents were filed. No subsidiary of the Company has filed,
or is required to file, any form, report or other document with the SEC. The
Company has heretofore made available to Parent, in the form filed with the SEC
(including any amendments thereto), (i) its Annual Reports on Form 10-K for each
of the fiscal years ended December 31, 1996, 1997 and 1998; (ii) all definitive
proxy statements relating to the Company's meetings of stockholders (whether
annual or special) held since January 1, 1996; and (iii) all other reports or
registration statements filed by the Company with the SEC since January 1, 1996
and prior to the date hereof (the "Company SEC Reports"). Except as set forth in
Section 3.4 of the Company Disclosure Schedule, none of such forms, statements,
reports or documents, including, without limitation, any financial statements,
exhibits or schedules included or incorporated by reference therein, contained,
when filed, any untrue statement of a material fact or omitted to state a
material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(b) The audited and unaudited consolidated financial statements of the
Company included (or incorporated by reference) in the Company SEC Reports
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto and fairly present in all material respects, in conformity with U.S.
generally accepted accounting principles applied on a consistent basis ("GAAP")
(except as specifically indicated in the notes thereto), the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and their consolidated results of operations and changes in
financial position for the periods then ended (subject, in the case of the
unaudited interim financial statements, to normal year-end adjustments that have
not been, and will not be, material in amount).
SECTION 3.5 No Undisclosed Liabilities. Except as set forth in Section
3.5 of the Company Disclosure Schedule or the Company SEC Reports and except for
such liabilities and obligations that have not had, and would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company, neither the Company nor any of its subsidiaries has any liabilities
or obligations of any nature, whether or not accrued, contingent or otherwise,
and whether or not required to be recorded or reflected on a balance sheet under
GAAP, and there is no existing condition, situation or set of circumstances that
could reasonably be expected to result in such a liability or obligation.
SECTION 3.6 Absence of Changes. Except as and to the extent publicly
disclosed in the Company SEC Reports or as set forth in Section 3.6 of the
Company Disclosure Schedule, since December 31, 1998 (the "Audit Date"), the
Company and its subsidiaries have conducted their business in the ordinary and
usual course consistent with past practice and there has not been:
11
(a) any event, occurrence or development which has had, or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company or any subsidiary of
any securities of the Company or of any of its subsidiaries;
(c) any amendment of (or agreement to amend) any term of any
outstanding equity securities of the Company or any subsidiary or any of the
securities of the Company or any subsidiary or agreements relating to any of the
following: the Revolving Credit Agreement, the Series A Senior Notes, the Series
B Senior Notes, the Subordinated Notes or the March 1998 Senior Notes (in each
case, as defined and described in the notes to the financial statements included
in the Company SEC Reports);
(d) (i) any incurrence or assumption (or agreement to incur or assume)
by the Company or any subsidiary of any indebtedness for borrowed money (A)
other than in the ordinary and usual course of business consistent with past
practice or (B) in connection with any acquisition or capital expenditure
permitted by Section 5.1, or (ii) any guarantee, endorsement or other incurrence
or assumption of (or agreement to guarantee, endorse, incur or assume) any
material liability (whether directly, contingently or otherwise) by the Company
or any subsidiary for the obligations of any other person (other than any wholly
owned subsidiary of the Company), other than in the ordinary and usual course of
business consistent with past practice;
(e) any creation or assumption by the Company or any subsidiary of any
Lien on any material asset of the Company or any subsidiary other than in the
ordinary and usual course of business consistent with past practice;
(f) any making of any loan, advance or capital contribution to or
investment in any person by the Company or any subsidiary other than (i) any
acquisition permitted by Section 5.1, (ii) loans, advances or capital
contributions to or investments in wholly owned subsidiaries of the Company or
(iii) loans or advances to employees of the Company or any subsidiary made in
the ordinary and usual course of business consistent with past practice;
(g) (i) any contract or agreement entered into by the Company or any
subsidiary on or prior to the date hereof relating to any material acquisition
or disposition of any assets or business or (ii) any modification, amendment,
assignment, termination or relinquishment by the Company or any subsidiary of
any contract, license or other right (including any insurance policy naming it
as a beneficiary or a loss payable payee) that has had or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company, other than, in the case of (i) and (ii), transactions, commitments,
contracts or agreements in the ordinary and usual course of business consistent
with past practice and those contemplated by this Agreement;
(h) any material change in any method of accounting or accounting
principles or practice by the Company or any subsidiary, except for any such
change required by reason of a change in GAAP or applicable Law (as hereinafter
defined); or
12
(i) any (i) grant of any severance or termination pay to any director
or officer of the Company or any of its subsidiaries or any employee of the
Company or any of its subsidiaries whose position is, or is equivalent or senior
to, that of a president or managing director ("Manager"), other than in the
ordinary course of business consistent with past practice; (ii) entering into of
any written employment, deferred compensation, consulting or other similar
agreement (or any amendment to any such existing agreement) with any director or
officer of the Company or any of its subsidiaries or any Manager, other than in
the ordinary course of business consistent with past practice; (iii) increase in
benefits payable to any director or officer of the Company or any of its
subsidiaries or any Manager under any existing severance or termination pay
policies or employment agreements, other than in the ordinary course of business
consistent with past practice; or (iv) increase in compensation, bonus or other
benefits payable to any director or officer of the Company or any of its
subsidiaries or any Manager, other than in the ordinary course of business
consistent with past practice or merit increases in salaries at regularly
scheduled times in customary amounts consistent with past practices.
SECTION 3.7 Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in (i)
the registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of Parent Common Stock as required by the terms of
this Agreement (the "Share Issuance") pursuant to the Merger (the "S-4"), at the
time the S-4 is filed with the SEC and at the time it becomes effective under
the Securities Act, will 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 relating to
the Company Stockholder Meeting (as hereinafter defined) to be held in
connection with the Merger (including any amendments thereto, the "Proxy
Statement") will, at the date mailed to stockholders and at the time of the
meeting of stockholders to be held in connection with the Merger, 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. If at any
time prior to the Effective Time, any event with respect to the Company, its
officers and directors or any of its subsidiaries should occur which is required
to be described in an amendment of, or a supplement to, the S-4 or the Proxy
Statement, the Company shall promptly so advise Parent and such event shall be
so described, and such amendment or supplement (which Parent shall have a
reasonable opportunity to review) shall be promptly filed with the SEC and, to
the extent required by Law, disseminated to the stockholders of the Company. The
Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
Notwithstanding the foregoing, no representation is made in this Section 3.7 as
to information provided by Parent for inclusion in the S-4 or the Proxy
Statement.
SECTION 3.8 Consents and Approvals; No Violations. (a) Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the NYSE, the Securities Act, the
Exchange Act, state securities or "blue sky" Laws, the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act") and applicable
non-U.S. laws with respect to competition, the filing of the Certificate of
Merger as required by the DGCL and as otherwise set forth in Section 3.8 to the
Company Disclosure Schedule (collectively, the "Company Required Approvals"), no
filing with or notice to, and no permit, authorization, consent or approval of,
any supranational, national, state, municipal or
13
local court or tribunal or administrative, governmental, quasi-governmental or
regulatory body, agency or authority (a "Governmental Entity") is necessary for
the execution and delivery by the Company of this Agreement or the Option
Agreement or the consummation by the Company of the transactions contemplated
hereby or thereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice does not have, and would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company.
(b) Neither the execution, delivery and performance of this Agreement
or the Option Agreement by the Company nor the consummation by the Company of
the transactions contemplated hereby or thereby will (i) conflict with or result
in any breach of any provision of the respective articles or certificate of
incorporation or bylaws (or similar governing documents) of the Company or any
of its subsidiaries, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration of any
obligation or the loss of any material benefit, or the creation of any Lien)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which any of
them or any of their respective properties or assets may be bound (collectively,
including all amendments, modifications, waivers, supplements and side letters,
the "Company Agreements") or (iii) (assuming receipt of all Company Required
Approvals) violate any Law applicable to the Company or any of its subsidiaries
or any of their respective properties or assets, except, in the case of (ii), as
set forth in Section 3.8 of the Company Disclosure Schedule and except, in the
case of (ii) or (iii), for violations, breaches or defaults that have not had,
and would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on the Company.
SECTION 3.9 No Default. Neither the Company nor any of its subsidiaries
is in violation in any material respect of any term of (i) its articles or
certificate of incorporation, bylaws or other organizational documents, (ii) any
agreement or instrument related to indebtedness for borrowed money or any other
agreement to which it is a party or by which it is bound, or (iii) any foreign
or domestic law, order, writ, injunction, decree, ordinance, award, stipulation,
statute, judicial or administrative doctrine, rule or regulation entered by a
Governmental Entity ("Law") applicable to the Company, any of its subsidiaries
or any of their respective properties or assets, except in the case of (ii) or
(iii), for violations that have not had and would not be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
SECTION 3.10 Real Property. (a) Each of the Company and its
subsidiaries has good and marketable title to each parcel of real property owned
by it free and clear of all Liens, except (i) Liens for Taxes and general and
special assessments not in default and payable without penalty and material
interest, (ii) other Liens which do not materially interfere with the Company's
or any of its subsidiaries' use and enjoyment of such real property or
materially detract from or diminish the value thereof and (iii) Liens that have
not had, and would not be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
14
(b) Each of the leases, subleases and other agreements (the "Real
Property Leases") under which the Company or any of its subsidiaries uses or
occupies or has the right to use or occupy, now or in the future, any real
property constitutes the valid and legally binding obligation of the Company or
its subsidiaries, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar Laws of general
applicability relating to or affecting creditors' rights or by general equity
principles), and is in full force and effect, except for such failures to be so
constituted and in full force and effect as have not had, and would not be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. All rent and other sums and charges payable by
the Company and its subsidiaries as tenants under each Real Property Lease are
current, except for such failures to be current that have not had, and would not
be reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company; and no termination event or condition or uncured
default on the part of the Company or any such subsidiary or, to the Company's
knowledge, the landlord, exists under any Real Property Lease, in each case
except as has not had, and would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company. Each
of the Company and its subsidiaries has a good and valid leasehold interest in
each parcel of material real property leased by it free and clear of all Liens,
except (i) Liens for Taxes and general and special assessments not in default
and payable without penalty and material interest, (ii) other Liens which do not
materially interfere with the Company's or any of its subsidiaries' use and
enjoyment of such real property or materially detract from or diminish the value
thereof and (iii) Liens that have not had, and would not be reasonably expected
to have, individually or in the aggregate, a Material Adverse Effect on the
Company.
(c) No party to any such Real Property Leases has given notice to the
Company or any of its subsidiaries of or made a claim against the Company or any
of its subsidiaries with respect to any breach or default thereunder, in each
case except as has not had, and would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
SECTION 3.11 Litigation. Except as and to the extent disclosed in the
Company SEC Reports or as set forth in Section 3.11 of the Company Disclosure
Schedule, and except for any suit, claim, action, proceeding or investigation
instituted by a non-Governmental Entity that questions the validity of this
Agreement or the Option Agreement or any action to be taken by the Company in
connection with the consummation of the transactions contemplated hereby or
thereby or could otherwise prevent or delay the consummation of the transactions
contemplated by this Agreement or the Option Agreement, there is no suit, claim,
action, proceeding or investigation pending or, to the Company's knowledge,
threatened against the Company or any of its subsidiaries or any of their
respective properties or assets which (a) involves a claim in excess of $1
million or (b) has had, or if decided adversely to the Company would reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company. Except as and to the extent disclosed in the Company SEC Reports
filed prior to the date hereof, none of the Company and its subsidiaries is
subject to any outstanding order, writ, injunction or decree which has had, or
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
15
SECTION 3.12 Company Permits; Compliance with Applicable Laws. The
Company and its subsidiaries hold all permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities necessary for the lawful
conduct of their respective businesses (the "Company Permits"), except for
failures to hold such permits, licenses, variances, exemptions, orders and
approvals which have not had, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company. The
Company and its subsidiaries are in compliance with the terms of the Company
Permits, except where the failure to so comply has not had, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. The businesses of the Company and its
subsidiaries are not being conducted in violation of any Law applicable to the
Company or its subsidiaries, except for violations which do not have, and would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. To the Company's knowledge, no investigation or
review by any Governmental Entity with respect to the Company or its
subsidiaries is pending or threatened, nor, to the Company's knowledge, has any
Governmental Entity indicated an intention to conduct the same except for such
investigations and reviews which have not had and would not be reasonably
expected to have individually or in the aggregate, a Material Adverse Effect on
the Company.
SECTION 3.13 Employee Benefit Plans; ERISA. (a) The term "Company
Benefit Plans" shall mean each employment, consulting, severance pay,
termination pay, retirement, deferred compensation, retention or change in
control plan, program, arrangement, agreement or commitment, or an executive
compensation, incentive bonus or other bonus, pension, stock option, restricted
stock or equity-based, profit sharing, savings, life, health, disability,
accident, medical, insurance, vacation, or other employee benefit plan, program,
arrangement, agreement, fund or commitment, including any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), which the Company or any of its subsidiaries
maintains or contributes to, or has any obligation to contribute to, or with
respect to which the Company or any of its subsidiaries has any liability,
direct or indirect, contingent or otherwise (including, without limitation, a
liability arising out of an indemnification, guarantee, hold harmless or similar
agreement). Except as disclosed in Section 3.13(a) of the Company Disclosure
Schedule or except as have not had, and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company, since the Audit Date (i) neither the Company nor any of its
subsidiaries has made any plan or commitment, whether legally binding or not, to
create any additional Company Benefit Plan or modify or change any existing
Company Benefit Plan that would materially increase the benefits provided to any
employee or former employee, consultant or director of the Company or any
subsidiary thereof and (ii) there has been no material change, amendment,
modification to, or adoption of, any Company Benefit Plan.
(b) With respect to each Company Benefit Plan: (i) if intended to
qualify under Section 401(a), 401(k) or 403(a) of the Code or under any law or
regulation of any foreign jurisdiction or Regulatory Agency, such plan so
qualifies, its trust (if any) is exempt from taxation under Section 501(a) of
the Code and it has received a favorable determination letter from the Internal
Revenue Service with respect to such matters and neither the consummation of the
transaction contemplated hereby nor any other event or circumstance since the
date of such letter has adversely affected or will adversely affect such
qualification or exemption; (ii) it has
16
been operated and administered in compliance in all material respects with its
terms and all applicable laws and regulations (including but not limited to
ERISA, the Code and any relevant foreign laws and regulations), except for such
non-compliance which has not had, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company;
(iii) there are no material pending or threatened claims against, by or on
behalf of any Company Benefit Plans (other than routine claims for benefits)
which could reasonably be expected to have a Material Adverse Effect on the
Company; (iv) to the knowledge of the Company no breaches of fiduciary duty have
occurred which could reasonably be expected to have a Material Adverse Effect on
the Company; (v) to the knowledge of the Company no non-exempt prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of the
Code has occurred which could reasonably be expected to have a Material Adverse
Effect on the Company; (vi) no Lien imposed under the Code, ERISA or any foreign
law exists which could reasonably be expected to have a Material Adverse Effect
on the Company; and (vii) all contributions, premiums and expenses to or in
respect of such Company Benefit Plan have been timely paid in full or, to the
extent not yet due, have been adequately accrued on the financial statements
included in the Company SEC Reports, except to the extent that the failure to
pay any such contributions, premiums and expenses has not had, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
(c) Neither the Company nor any of its subsidiaries has incurred or
reasonably expects to incur, either directly or indirectly (including as a
result of an indemnification obligation), any liability under Title I or IV of
ERISA or the penalty, excise tax or joint and several liability provisions of
the Code or any foreign law or regulation relating to employee benefit plans
(including, without limitation, Section 406, 409, 502(i), 502(l), 4069 or
4212(c) of ERISA, or Section 4971, 4975 or 4976 of the Code, or under any
agreement, instrument, statute, rule or legal requirement pursuant to or under
which the Company or any Subsidiary or any Company Benefit Plan has agreed to
indemnify or is required to indemnify any person against liability incurred
under, or for a violation or failure to satisfy the requirements of, any such
legal requirement), except for any such liability which has not had, and would
not reasonably be expected to have, a Material Adverse Effect on the Company,
and to the knowledge of the Company, no event, transaction or condition has
occurred, exists or is expected to occur which could result in any such
liability to the Company, any of its subsidiaries or, after the Closing, to
Parent, except for any such liability which has not had, and would not
reasonably be expected to have, a Material Adverse Effect on the Company.
(d) With respect to each "employee pension benefit plan" (within the
meaning of Section 3(2) of ERISA) as to which either the Company or any
subsidiary may incur any liability under Section 302 or Title IV of ERISA or
Section 412 of the Code:
(i) no such plan is a "multiemployer plan" (within the meaning
of Section 3(37) of ERISA) or a "multiple employer plan" (within the
meaning of Section 413(c) of the Code);
(ii) no such plan has been terminated, other than in a
standard termination under Section 4041(b) of ERISA, so as to result,
directly or indirectly, in any material liability, contingent or
otherwise, of either the Company or any subsidiary under Title IV of
ERISA;
17
(iii) no proceeding has been initiated by any Person
(including the Pension Benefit Guaranty Corporation (the "PBGC")) to
terminate any such plan or to appoint a trustee for any such plan;
(iv) no condition or event currently exists or currently is
expected to occur that could result, directly or indirectly, in any
liability of the Company or any subsidiary under Title IV of ERISA,
whether to the PBGC or otherwise, which would reasonably be expected to
have a Material Adverse Effect on the Company, on account of the
termination of any such plan;
(v) if any such plan were to be terminated as of the Closing
Date or if any Person were to withdraw from such plan, neither the
Company nor any subsidiary would incur, directly or indirectly, any
liability under Title IV of ERISA which would reasonably be expected to
have a Material Adverse Effect on the Company;
(vi) no "reportable event" (as defined in Section 4043 of
ERISA other than any such event with respect to which the notice
requirement has been waived by applicable regulations) has occurred
with respect to any such plan, nor has any notice of such event or
similar notice to any foreign Regulatory Agency been required to be
filed for any Company Benefit Plan within the past 12 months;
(vii) no such plan which is subject to Section 302 of ERISA or
Section 412 of the Code has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA and section 412 of the
Code, respectively), whether or not waived, and neither the Company nor
any of its Subsidiaries has provided, or is required to provide,
security to any Company Benefit Plan pursuant to Section 401(a)(29) of
the Code; and
(viii) the transactions contemplated hereby will not result in
any event described in section 4062(e) of ERISA, except for any such
event which would not reasonably be expected to have a Material Adverse
Effect on the Company.
(e) Except as set forth in Section 3.13 of the Company Disclosure
Schedule, or except as would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company, neither the
execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, either alone or in combination with another
event (whether contingent or otherwise) will (i) entitle any current or former
employee, consultant or director of the Company or any Subsidiary or any group
of such employees, consultants or directors to any payment; (ii) increase the
amount of compensation due to any such employee, consultant or director; (iii)
accelerate the vesting or funding of any compensation, stock incentive or other
benefit; (iv) result in any "parachute payment" under Section 280G of the Code
(whether or not such payment is considered to be reasonable compensation for
services rendered); or (v) cause any compensation to fail to be deductible under
Section 162(m), or any other provision of the Code or any similar foreign law or
regulation.
(f) Under each Company Benefit Plan which is a single-employer plan and
any foreign plan that is a defined benefit plan, as of the last day of the most
recent plan year
18
ended prior to the date hereof, the actuarially determined present value of all
"benefit liabilities", within the meaning of Section 4001(a)(16) of ERISA or,
with respect to any foreign plan, as determined under any equivalent law or
practice (in each case as determined on the basis of the actuarial assumptions
contained in Company Benefit Plan's most recent actuarial valuation), did not
exceed the then current value of the assets of such Company Benefit Plan by an
amount which would reasonably be expected to have a Material Adverse Effect on
the Company, and there has been no adverse change in the financial condition of
such Company Benefit Plan (with respect to either assets or benefits) since the
last day of the most recent plan year, except for such changes which have not
had, and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
(g) No Company Benefit Plan, or Company or any Subsidiary with respect
to such Company Benefit Plan, is under audit or is the subject of an audit or
investigation by the Internal Revenue Service, the U.S. Department of Labor, the
PBGC or any other federal or state governmental agency, nor to the knowledge of
the Company is any such audit or investigation pending or threatened, in any
case which could reasonably be expected to have a Material Adverse Effect on the
Company.
SECTION 3.14 Labor Matters. (a) Except as set forth in Section 3.14 of
the Company Disclosure Schedule, neither the Company nor any of its subsidiaries
is a party to any labor or collective bargaining agreement, and there are no
labor or collective bargaining agreements which pertain to employees of the
Company or any of its subsidiaries. As of the date hereof, no labor organization
or group of employees of the Company or any of its subsidiaries has made a
pending demand against the Company or any of its subsidiaries for recognition,
and there are no representation proceedings or petitions seeking a
representation proceeding pending against the Company or any of its subsidiaries
or, to the knowledge of the Company, threatened to be brought or filed against
the Company or any of its subsidiaries with the National Labor Relations Board
or any other labor relations tribunal.
(b) There are no (i) strikes, work stoppages, slowdowns, lockouts or
arbitrations or (ii) material grievances or other labor disputes pending or, to
the knowledge of the Company, threatened against or involving the Company or any
of its subsidiaries, except as have not had, and would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company. There are no unfair labor practice charges, grievances or
complaints pending or, to the knowledge of the Company, threatened by or on
behalf of any employee or group of employees of the Company or any of its
subsidiaries, in each case except as has not had, and would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company.
(c) There are no complaints, charges or claims against the Company or
any of its subsidiaries or, to the knowledge of the Company, threatened to be
brought or filed with any Governmental Entity based on, arising out of, in
connection with or otherwise relating to the employment by the Company or any of
its subsidiaries of any individual, including any claim relating to employment
discrimination, equal pay, employee safety and health, wages and hours or
workers' compensation and neither the Company nor any of its subsidiaries has
violated any Law respecting such matter, in each case except as has not had, and
would not be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
SECTION 3.15 Environmental Matters. (a) For purposes of this Agreement:
19
(i) "Environmental Law" means any applicable federal, state,
local or foreign Law (including common Law), statute, rule, regulation,
ordinance, decree or other legal requirement relating to the protection of
natural resources, the environment and public and employee health and safety or
pollution or the release or exposure to Hazardous Materials (as hereinafter
defined) and shall include, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act 42 U.S.C. ss.9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C.ss.1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C.ss.6901 et seq.), the Clean Water Act
(33 U.S.C.ss.1251 et seq.), the Clean Air Act (33 U.S.C.ss.7401 et seq.), the
Toxic Substances Control Act (15 U.S.C.ss.7401 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.ss.136 et seq.), and the
Occupational Safety and Health Act (29 U.S.C.ss.651 et seq.), and the
regulations promulgated pursuant thereto, and any such applicable state or local
statutes, and the regulations promulgated pursuant thereto, as such Laws have
been and may be amended or supplemented through the Closing Date;
(ii) "Hazardous Material" means any substance, material or
waste which is regulated, classified or otherwise characterized as hazardous,
toxic, pollutant, contaminant or words of similar meaning or regulatory effect
by any Governmental Entity or the United States, and includes, without
limitation, petroleum, petroleum by-products and wastes, asbestos and
polychlorinated biphenyls; and
(iii) "Release" means any release, spill, effluent, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching,
or migration into the indoor or outdoor environment, or into or out of any
property owned, operated or leased by the applicable party or its subsidiaries.
(b) Except as set forth in Section 3.15 of the Company Disclosure
Schedule:
(i) Each of the Company and its subsidiaries is in compliance
with each applicable Environmental Law, except for such non-compliance which has
not had, and would not reasonably be expected to have, a Material Adverse Effect
on the Company.
(ii) Each of the Company and its subsidiaries has obtained,
and is in compliance with the conditions of, all Company Permits required under
any applicable Environmental Law, except for such failures to obtain and
non-compliance which have not had, and would not reasonably be expected to have,
a Material Adverse Effect on the Company.
(iii) None of the Company or any of its subsidiaries has
received any notice, request for information, complaints or administrative or
judicial order, and there is no investigation, action, suit or proceeding
pending, or to the knowledge of the Company, threatened, alleging or asserting
liability or potential liability against the Company or any of its subsidiaries
in connection with any Environmental Law, except for such threats,
20
allegations and assertions which have not had, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company.
(iv) To the knowledge of the Company, there are no past or
present conditions or circumstances at, or arising out of, the operations of the
Company and its Subsidiaries, including, but not limited to, on-site or off-site
disposal or Release of Hazardous Material, that are reasonably likely to result
in: (A) liabilities or obligations for any cleanup, remediation, or corrective
action under any Environmental Law, (B) claims arising under any Environmental
Law for personal injury, property damage or damage to natural resources, or (C)
fines or penalties arising under any Environmental Law, except, in the case of
clauses (A), (B) and (C), for those which have not had, and are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
the Company.
SECTION 3.16 Taxes.
(a) All Tax Returns required to be filed by the Company or its
subsidiaries on or prior to the Effective Time have been or will be prepared in
good faith and timely filed with the appropriate Governmental Entity on or prior
to the Effective Time or by the due date thereof including extensions and all
such Tax Returns are (or, as to Tax Returns not filed on the date hereof, will
be) complete and accurate, except where the failure to so file or for such
returns to be complete and accurate has not had, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company.
(b) All material Taxes that are required to be paid, either (i) have
been fully paid or (ii) are adequately reflected as a liability on the Company's
or its subsidiaries' books and records, except for where the failure to fully
pay such taxes or reflect them as a liability on the Company's or its
subsidiaries' books has not had, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company. All
Taxes required to be collected or withheld from third parties have been
collected or withheld, except where the failure to collect or withhold such
Taxes from third parties has not had, and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
(c) With respect to any period for which Tax Returns have not yet been
filed, or for which Taxes are not yet due or owing, the Company and its
subsidiaries have made due and sufficient accruals for such Taxes in their
respective books and records and financial statements, except where the failure
to make such accruals has not had, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
(d) Except as set forth on Section 3.16 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has waived any statute
of limitations, or agreed to any extension of time, (i) with respect to U.S.
Federal income Taxes or (ii) where the payment of the relevant state or foreign
Taxes has had, or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company, with respect to state or
foreign Taxes.
21
(e) Except as set forth on Section 3.16 of the Company Disclosure
Schedule, as of this date, (i) there are no pending or, to the knowledge of the
Company, threatened audits, examinations, investigations or other proceedings in
respect of Taxes or Tax matters and (ii) there are not any unresolved questions
or claims concerning the Company's or any of its subsidiaries' Tax liability
that (x) were raised by any Taxing authority in a communication to the Company
or any subsidiary and (y) has had, or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company,
after taking into account any reserves for Taxes set forth on the most recent
balance sheet contained in the Company SEC Reports filed prior to the date
hereof.
(f) The Company has made available (or as soon as practicable from the
date hereof will make available) to Parent (i) correct and complete copies of
the United States Federal income and all material state income or franchise Tax
Returns filed by the Company and its subsidiaries for the preceding three
Taxable years, and (ii) all audit reports issued by any Taxing authorities
within the last three years (or otherwise with respect to any audit or
proceeding in progress) relating to material Taxes of the Company or any
subsidiary.
(g) Neither the Company nor any subsidiary 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 since the effective date of
Section 355(e) of the Code.
(h) For purposes of this Agreement:
"Taxes" (including, with correlative meaning, "Taxing" and "Taxable")
includes all forms of taxation, whenever created or imposed, and whether of the
United States or elsewhere, and whether imposed by a local, municipal,
governmental, state, foreign, Federal or other Governmental Entity, or in
connection with any agreement with respect to Taxes including all interest,
penalties and additions imposed with respect to such amounts.
"Tax Returns" means all Federal, state, local, provincial and foreign
Tax returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax return relating to Taxes.
SECTION 3.17 Absence of Questionable Payments. Neither the Company or
any of its subsidiaries nor, to the Company's knowledge, any director, officer,
agent, employee or other person acting on behalf of the Company or any of its
subsidiaries, has used any corporate or other funds for unlawful contributions,
payments, gifts, or entertainment, or made any unlawful expenditures relating to
political activity to government officials or others or established or
maintained any unlawful or unrecorded funds in violation of Section 30A of the
Exchange Act, in each case except as has not had, and would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company. Neither the Company or any of its subsidiaries nor, to the
Company's knowledge, any director, officer, agent, employee or other person
acting on behalf of the Company or any of its subsidiaries, has accepted or
received any unlawful contributions, payments, gifts, or expenditures, in each
case except as has not had, and would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company. To
the Company's knowledge, the
22
Company and each of its subsidiaries which is required to file reports pursuant
to Section 12 or 15(d) of the Exchange Act is in compliance with the provisions
of Section 13(b) of the Exchange Act, in each case except as has not had, and
would not be reasonably expected to have, a Material Adverse Effect on the
Company.
SECTION 3.18 Material Contracts. (a) As used herein "Material
Contracts" means, with respect to any entity, each note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which such entity or any of its subsidiaries is a party or by which any of
them or any of their respective properties or assets may be bound, including all
amendments, modifications, waivers, supplements and side letters thereto, that
is material to the business, properties or assets of such entity and its
subsidiaries taken as a whole, including, without limitation, to the extent any
of the following are, individually or in the aggregate, material to the
business, properties or assets of such entity and its subsidiaries taken as a
whole, all: (i) employment, severance, product design or development, personal
services, consulting, non-competition or indemnification contracts (including,
without limitation, any contract to which such entity or any of its subsidiaries
is a party involving employees of such entity); (ii) licensing, merchandising or
distribution agreements; (iii) contracts granting a right of first refusal or
first negotiation; (iv) partnership or joint venture agreements; (v) agreements
for the acquisition, sale or lease (including leases in connection with
financing transactions) of material properties or assets of such entity (by
merger, purchase or sale of assets or stock or otherwise) entered into since
January 1, 1996 or, if prior to that date, have representations, warranties or
indemnities that remain in effect or as to which claims are pending; (vi)
contracts or agreements with any Governmental Entity; (vii) loan or credit
agreements, mortgages, indentures or other agreements or instruments evidencing
indebtedness for borrowed money by such entity or any of its subsidiaries or any
such agreement pursuant to which indebtedness for borrowed money may be
incurred; (viii) agreements or arrangements, including but not limited to
xxxxxx, options, swaps, caps and collars, designed to protect such entity or any
of its subsidiaries against fluctuations in interest rates, currency exchange
rates or the prices of certain commodities and raw materials; (ix) contracts or
agreements that would be required to be filed as an exhibit to a Form 10-K filed
by such entity with the SEC on the date hereof; and (x) commitments and
agreements to enter into any of the foregoing. The Material Contracts of the
Company also include all agreements that purport to limit, curtail or restrict
the ability of the Company or any of its subsidiaries or affiliates to compete
in any geographic area or line of business.
(b) Each of the Material Contracts of the Company constitutes a valid
and legally binding obligation of the Company or its subsidiaries, and to the
knowledge of the Company, a valid and legally binding obligation of each other
party thereto, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar Laws of general
applicability relating to or affecting creditors' rights or by general equity
principles), and is in full force and effect, in each case except for such
failures that have not had, and would not be reasonably expected to have, a
Material Adverse Effect on the Company. There is no default under any Material
Contract of the Company either by the Company or, to the Company's knowledge, by
any other party thereto, and no event has occurred that with the lapse of time
or the giving of notice or both would constitute a default thereunder by the
Company or, to the Company's knowledge, any other party, in each case except as
has not had, and would not
23
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
(c) No party to any such Material Contract of the Company has given
notice to the Company of or made a claim against the Company with respect to any
breach or default thereunder, in each case except as has not had, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. (d) None of the existing Material Contracts of
the Company will restrict, in any material respect, the ability of Parent or any
of its subsidiaries, to conduct, from and after the Closing, the advertising,
public relations, media planning and media buying businesses of Parent and its
subsidiaries, as currently conducted.
SECTION 3.19 Insurance Matters. The insurance policies of the Company
and its subsidiaries have been issued by insurers, which, to the Company's
knowledge, are reputable and financially sound and provide coverage for the
operations conducted by the Company and its subsidiaries of a scope and coverage
consistent with customary industry practice.
SECTION 3.20 Intellectual Property. (a) The Company and its
subsidiaries own or possess, in all material respects, adequate licenses or
other valid rights to use (in each case, free and clear of any Liens), all
Intellectual Property used or held for use in connection with the business of
the Company and its subsidiaries as currently conducted or as contemplated to be
conducted, in each case except for such failures that have not had, and would
not be reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
(b) The use of any Intellectual Property by the Company and its
subsidiaries does not infringe on, or otherwise violate the rights of any person
and is in accordance with each applicable license pursuant to which the Company
or any of its subsidiaries acquired the right to use such Intellectual Property,
in each case except as has not had, and would not be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
(c) No person is challenging or, to the knowledge of the Company,
infringing on or otherwise violating any right of the Company or any of its
subsidiaries with respect to any Intellectual Property owned by or licensed to
the Company or any of its subsidiaries, in each case except as has not had, and
would not be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
(d) Neither the Company nor any of its subsidiaries has received any
notice (written or otherwise) of any assertion or claim, pending or not, with
respect to any Intellectual Property used by the Company or any of its
subsidiaries, in each case except as has not had, and would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company.
(e) No Intellectual Property owned or licensed by the Company or any of
its subsidiaries is being used or enforced in a manner that would result in the
abandonment, cancellation or unenforceability of such Intellectual Property,
other than as does not have, and
24
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
For purposes of this Agreement, "Intellectual Property" means (i) all
trademarks, trademark rights, trade names, trade name rights, trade dress and
other indications of origin, corporate names, brand names, logos, certification
rights, service marks, applications for trademarks and for service marks,
know-how and other proprietary rights and information, the goodwill associated
with the foregoing and registration in any jurisdiction of, and applications in
any jurisdictions to register, the foregoing, including any extension,
modification or renewal of any such registration or application; (ii) all
inventions, discoveries and ideas (whether patentable or unpatentable and
whether or not reduced to practice), in any jurisdiction, all improvements
thereto, and all patents, patent rights, applications for patents (including,
without limitation, divisions, continuations, continuations in part and renewal
applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; (iii) all licenses (whether the Company is licensor or licensee)
and other agreements relating to any Intellectual Property described in (i) or
(ii); (iv) nonpublic information, trade secrets and confidential information and
rights in any jurisdiction to limit the use or disclosure thereof by any person;
(v) writings and other works, whether copyrightable or not, in any jurisdiction,
and all registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; (vi) all mask works and
all applications, registrations and renewals in connection therewith, in any
jurisdiction; (vii) all computer software (including data and related
documentation); (viii) any similar intellectual property or proprietary rights;
and (ix) all copies and tangible documentation thereof and any claims or causes
of action arising out of or relating to any infringement or misappropriation of
any of the foregoing.
SECTION 3.21 Year 2000. (a) All of the Computer Programs (as
hereinafter defined), computer firmware, computer hardware (whether general or
special purpose) and other similar or related items of automated, computerized
and/or software system(s) that are used or relied on by the Company or by any of
its subsidiaries in the conduct of their respective businesses will not
malfunction, cease to function, generate incorrect data, or provide incorrect
results when processing, providing or receiving (i) date-related data into and
between the twentieth and twenty-first centuries or (ii) date-related data in
connection with any valid date in the twentieth and twenty-first centuries, in
each case except for such failures that have not had, and would not be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
(b) All of the products and services sold, licensed, rendered or
otherwise provided by the Company or by any of its subsidiaries in the conduct
of their respective businesses will not, in any material respect, malfunction,
cease to function, generate incorrect data or produce incorrect results when
processing, providing or receiving (i) date-related data into and between the
twentieth and twenty-first centuries or (ii) date-related data in connection
with any valid date in the twentieth and twenty-first centuries, in each case
except for such failures that have not had, and would not be reasonably expected
to have, individually or in the aggregate, a Material Adverse Effect on the
Company; and neither the Company nor any of its subsidiaries is or will be
subject to any material claims or liabilities arising from their failure to do
so, except for such claims and liabilities that have not had, and would not be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
25
(c) The Company and its subsidiaries have developed and are executing a
plan with respect to Year 2000 readiness (the "Year 2000 Plan"). The Year 2000
Plan addresses the Year 2000 issues, all internal information systems and
process control risks, embedded circuitry risks and third party risks, except
for those which, if not addressed, would not be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
For the purposes of this Agreement, "Computer Programs" means (i) any
and all computer software programs, including all source and object code; (ii)
databases and compilations, including any and all data and collections of data,
whether machine readable or otherwise; (iii) billing, reporting, and other
management information systems; (iv) all descriptions, flow-charts and other
work product used to design, plan, organize and develop any of the foregoing;
(v) all content contained on Internet sites; and (vi) all documentation,
including user manuals and training materials, relating to any of the foregoing.
SECTION 3.22 Opinion of Financial Advisor. Xxxxxxxxx & Co., L.L.C. (the
"Company Financial Advisor") has delivered to the Company Board its oral opinion
that, as of the date hereof, the Exchange Ratio is fair to the holders of Shares
from a financial point of view, which opinion will be confirmed in writing. A
true and correct copy of such written opinion will be furnished to Parent
promptly following its receipt by the Company.
SECTION 3.23 Brokers. No broker, finder or investment banker (other
than the Company Financial Advisor, a true, correct and complete copy of whose
engagement agreement has been provided to Parent) is entitled to any brokerage,
finder's or other fee or commission or expense reimbursement in connection with
the transactions contemplated by this Agreement based upon arrangements made by
and on behalf of the Company or any of its affiliates.
SECTION 3.24 Accounting Matters; Tax Treatment. Neither the Company nor
any of its affiliates has taken or agreed to take any action, or after
consultation with Xxxxxx Xxxxxxxx LLP, its independent auditors, is aware of any
fact or circumstance relating to the Company or any of its subsidiaries, that
would (i) prevent the Merger from qualifying as a "pooling of interests" under
APB 16 and the applicable SEC rules and regulations or (ii) prevent the Merger
from qualifying as a reorganization within the meaning of Section 368 of the
Code. The Company has not failed to bring to the attention of Parent any
actions, agreements or understandings, whether written or oral, that could be
asserted to prevent Parent from accounting for the Merger as a "pooling of
interests" under APB 16 and the applicable SEC rules and regulations.
SECTION 3.25 Takeover Statutes, etc. The Company Board has approved,
for purposes of Section 203 of the DGCL, (i) the Option Agreement and the
transactions contemplated thereby, and (ii) the Merger. The Company has taken
all action required to be taken by it in order to exempt this Agreement and the
Option Agreement and the transactions contemplated hereby and thereby from the
requirements of any applicable "moratorium", "control share", "fair price",
"affiliate transaction", "business combination" or other antitakeover Laws and
regulations of any state (collectively, "Takeover Statutes").
26
SECTION 3.26 Amendment to the Company Rights Agreement. The Company
Board has taken all necessary action (including any amendment thereof) under the
Company Rights Agreement so that (a) none of the execution or delivery of this
Agreement and the Option Agreement, the exercise of the option contained in the
Option Agreement, the exchange of the shares of Parent Common Stock for the
Shares in accordance with Article II or any other transaction contemplated
hereby or thereby will cause (i) the rights (the "Rights") issued pursuant to
the Company Rights Agreement to become exercisable under the Company Rights
Agreement, (ii) a Separation Date or Share Acquisition Date (each as defined on
the Company Rights Agreement) to occur, (iii) Parent or the Merger Sub to be
deemed an Acquiring Person (as defined in the Company Rights Agreement) or (iv)
a Triggering Event (as defined in the Company Rights Agreement) to occur upon
any such event; and (b) the execution and delivery of this Agreement and the
Option Agreement, the exercise of the option contained in the Option Agreement
and the other transactions contemplated hereby or thereby will be exempt from
the Company Rights Agreement. The Company has furnished Parent with true and
correct copies of all such actions of the Company Board.
SECTION 3.27 InsightExpress, L.L.C. As of the date hereof, if
InsightExpress, L.L.C. ("IX, LLC") were to cause (which action may be caused by
the three designees of IX, Inc. on the Board of Representatives of IX, LLC) the
occurrence of the mergers referred to in Section 8 of the Master Investors
Rights Agreement in connection with an initial public offering (specifically,
the merger of IX Holding Co., Inc. with and into IX, Inc., to be followed by the
merger of Greenhill 1999 Equity Holdings Corporation with and into the surviving
corporation of such initial merger), the pro forma fully diluted ownership
interest of the Company in the surviving corporation of the mergers referred to
above would be 50%. For purposes hereof, "Master Investors Rights Agreement"
shall mean the Master Investors Rights Agreement, dated October 18, 1999, by and
among IX, Inc., IX Holding Co., Inc., IX, LLC and the other persons named
herein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT
Except as set forth in the section of the disclosure schedule delivered
by Parent to the Company prior to the execution of this Agreement (the "Parent
Disclosure Schedule") that specifically relates to a specified Section of this
Article IV, Parent hereby represents and warrants to the Company as follows:
SECTION 4.1 Organization. (a) Each of Parent and its subsidiaries is a
corporation duly organized, validly existing and if applicable in good standing
under the Laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its businesses as now conducted and proposed by Parent to be conducted,
except where the failure to be duly organized, existing and in good standing or
to have such power and authority has not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Parent.
27
(b) Each of Parent and its subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing has not had, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent.
(c) Parent has heretofore delivered to the Company accurate and
complete copies of the articles of incorporation and bylaws of Parent as
currently in effect.
SECTION 4.2 Capitalization of Parent. (a) The authorized capital stock
of the Parent consists of 550,000,000 shares of Parent Common Stock, par value
$.10 per share, and 20,000,000 shares of preferred stock, no par value ("Parent
Preferred Stock"). As of September 30, 1999, (i) 281,006,318 shares of Parent
Common Stock were issued and outstanding (as of October 30, 1999, 280,651,942
shares of Parent Common Stock were issued and outstanding); (ii) 21,011,801
shares of Parent Common Stock were subject to outstanding options issued
pursuant to Parent's 1986, 1988, 1996 and 1997 Stock Option Plans; and at least
a like number of shares of Parent Common Stock were reserved for issuance in
respect of such options; and (iii) 15,275,947 shares of Parent Common Stock were
issued and held in the treasury of the Parent. As of the date hereof, no shares
of Parent Preferred Stock are issued and outstanding. Since the Capitalization
Date, there have been no (A) issuances of shares of Parent Common Stock, other
than issuances pursuant to options outstanding on the Capitalization Date. All
the outstanding shares of Parent Common Stock are, and all shares to be issued
as part of the Merger Consideration will be, when issued in accordance with the
terms hereof, duly authorized, validly issued, fully paid and non-assessable.
Except as set forth above, and except as disclosed in the Parent SEC reports,
(1) there are no shares of capital stock of Parent authorized, issued or
outstanding, (2) there are no authorized or outstanding options, warrants,
calls, preemptive rights, subscriptions or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Parent, obligating Parent to issue, transfer or sell or
cause to be issued, transferred or sold any shares of capital stock or other
equity interest in Parent or securities convertible into or exchangeable for
such shares or equity interests, or obligating Parent to grant, extend or enter
into any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment, and (3) there are no outstanding contractual
obligations of Parent to repurchase, redeem or otherwise acquire any capital
stock of Parent.
(b) Except as set forth in the Parent SEC Reports, all of the
outstanding capital stock of Parent's subsidiaries (including, as of the Closing
Date, Merger Sub) is owned by Parent, directly or indirectly, free and clear of
any Lien or any other limitation or restriction (including any restriction on
the right to vote or sell the same, except as may be provided as a matter of
Law), except for such failures to own that have not had, and would not be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent.
SECTION 4.3 Authority Relative to This Agreement. (a) Parent has all
necessary corporate power and authority to execute and deliver this Agreement
and the Option Agreement and to consummate the transactions contemplated hereby
and thereby. No other corporate proceedings on the part of Parent are necessary
to authorize this Agreement or to consummate the transactions contemplated
hereby and thereby. This Agreement and the Option
28
Agreement have each has been duly and validly executed and delivered by Parent
and each constitutes a valid, legal and binding agreement of Parent, enforceable
against Parent in accordance with its terms.
(b) The Boards of Directors of Parent (the "Parent Board") has duly and
validly authorized the execution and delivery of this Agreement and the Option
Agreement and the consummation of the transactions contemplated hereby and
thereby, and taken all corporate actions required to be taken by the Parent
Board, for the consummation of the transactions contemplated hereby and thereby.
(c) As of the Closing Date, Merger Sub will have all necessary
corporate power and authority, and will be duly and validly authorized, to
consummate the Merger.
SECTION 4.4 SEC Reports; Financial Statements. (a) Parent has timely
filed all required forms, reports and documents with the SEC since January 1,
1997, each of which has complied as to form in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, each as in
effect on the dates such forms, reports and documents were filed. Parent has
heretofore made available to the Company, in the form filed with the SEC
(including any amendments thereto); (i) its Annual Reports on Form 10-K for the
fiscal year ended December 31, 1996, 1997 and 1998, (ii) all definitive proxy
statements relating to Parent's meetings of stockholders (whether annual or
special) held since January 1, 1996; and (iii) all other reports or registration
statements filed by Parent with the SEC since January 1, 1996 and prior to the
date hereof (the "Parent SEC Reports"). None of such forms, statements, reports
or documents, including, without limitation, any financial statements, exhibits
or schedules included or incorporated by reference therein, contained, when
filed, any untrue statement of a material fact or omitted to state a material
fact required to be stated or incorporated by reference therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(b) The audited and unaudited consolidated financial statements of
Parent included (or incorporated by reference) in the Parent SEC Reports
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto and fairly present in all material respects, in conformity with GAAP
applied on a consistent basis (except as specifically indicated in the notes
thereto), the consolidated financial position of Parent and its consolidated
subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended
(subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments that have not been, and will not be, material in amount).
SECTION 4.5 No Undisclosed Liabilities. Except as set forth in Section
4.5 of the Parent Disclosure or Schedule the Parent SEC Reports, and except for
such liabilities and obligations that have not had, and would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on
Parent, neither Parent nor any of its subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, and
whether or not required to be recorded or reflected on a balance sheet under
GAAP, and there is
29
no existing condition, situation or set of circumstances which could reasonably
be expected to result in such a liability or obligation.
SECTION 4.6 Absence of Certain Changes or Events. Except as and to the
extent disclosed in the Parent SEC Reports or as set forth in Section 4.6 of the
Parent Disclosure Schedule, since the Audit Date (a) the businesses of the
Parent and its Subsidiaries have been conducted in the ordinary course
consistent with past practice, and (b) there has not been any event, occurrence,
development or state of circumstance or facts that has had, or would reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the Parent.
SECTION 4.7 Information Supplied. None of the information supplied or
to be supplied by Parent or Merger Sub for inclusion or incorporation by
reference in (i) the S-4 will, at the time the S-4 is filed with the SEC and at
the time it becomes effective under the Securities Act, will 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 mailed to stockholders and at the
time of the Company Stockholder Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If, at any time prior
to the Effective Time, any event with respect to Parent, its officers and
directors or any of its subsidiaries should occur which is required to be
described in an amendment of, or a supplement to, the S-4 or the Proxy
Statement, Parent shall promptly so advise the Company and such event shall be
so described, and such amendment or supplement (which the Company shall have a
reasonable opportunity to review) shall be promptly filed with the SEC. The S-4
will comply as to form in all material respects with the provisions of the
Securities Act and the rules and regulations thereunder. Notwithstanding the
foregoing, no representation is made in this Section 4.7 as to information
provided by the Company for inclusion in the S-4 or the Proxy Statement.
SECTION 4.8 Consents and Approvals; No Violations. (a) Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the Exchange
Act, state securities or "blue sky" Laws, the HSR Act and applicable non-U.S.
Laws with respect to competition, the filing and recordation of a Certificate of
Merger as required by the DGCL and as otherwise set forth in Section 4.8 to the
Parent Disclosure Schedule (the "Parent Required Approvals"), no filing with or
notice to, and no permit, authorization, consent or approval of, any
Governmental Entity is necessary for the execution and delivery by Parent of
this Agreement or the Option Agreement or the consummation by Parent of the
transactions contemplated hereby or thereby, except where the failure to obtain
such permits, authorizations, consents or approvals or to make such filings or
give such notice does not have, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent.
(b) Neither the execution, delivery and performance of this Agreement
or the Option Agreement, by Parent nor the consummation by Parent or Merger Sub
of the transactions contemplated hereby and thereby will (i) conflict with or
result in any breach of any provision of the respective certificates of
incorporation or bylaws (or similar governing documents) of Parent or any of
Parent's subsidiaries, (ii) result in a violation or breach of, or constitute
(with or
30
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration of an obligation
or the loss of any material benefit, or the creation of any Lien) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
Parent or any of Parent's subsidiaries is a party or by which any of them or any
of their respective properties or assets may be bound or (iii) (assuming receipt
of all Parent Required Approvals) violate any Law applicable to Parent or any of
Parent's subsidiaries or any of their respective properties or assets, except in
the case of (ii) or (iii) for violations, breaches or defaults that have not
had, and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Parent.
SECTION 4.9 Compliance with Applicable Laws. Except as and to the
extent disclosed by Parent in the Parent SEC Reports, the businesses of Parent
and its subsidiaries are not being conducted in violation of any applicable Law
except for violations that have not had, and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Parent. To
Parent's knowledge, no investigation or review by any Governmental Entity with
respect to Parent or its subsidiaries is pending or threatened, nor, to Parent's
knowledge, has any Governmental Entity indicated an intention to conduct the
same except for such investigations and reviews which have not had and would not
be reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent.
SECTION 4.10 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by and on behalf of Parent or any of its affiliates.
SECTION 4.11 Accounting Matters; Tax Treatment. Neither Parent nor any
of its affiliates, has taken or agreed to take any action or, after consultation
with PriceWaterhouseCoopers, its independent auditors, is aware of any fact or
circumstance relating to Parent or its subsidiaries that would (a) prevent the
Merger from qualifying as a "pooling of interests" under APB 16 and the
applicable SEC rules and regulations, or (b) prevent the Merger from qualifying
as a re-organization within the meaning of Section 368 of the Code. Parent has
not failed to bring to the attention of the Company any actions, agreements or
understandings, whether written or oral, that would be reasonably likely to
prevent Parent from accounting for the Merger as a "pooling of interests" under
APB 16 and the applicable SEC rules and regulations.
SECTION 4.12 Litigation. Except as and to the extent disclosed in the
Parent SEC Reports or as set forth in Section 4.12 of the Company Disclosure
Schedule, there is no suit, claim, action, proceeding or investigation pending
or, to Parent's knowledge, threatened against Parent or any of its subsidiaries
or any of their respective properties or assets which has had, or if decided
adversely to Parent would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Parent. Except as and to the extent
disclosed in the Parent SEC Reports filed prior to the date hereof, none of
Parent and its subsidiaries is subject to any outstanding order, writ,
injunction or decree which has had, or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent.
31
SECTION 4.13 Material Contracts
(a) Each of the Material Contracts of Parent constitutes a valid and
legally binding obligation of Parent or its subsidiaries, and to the knowledge
of Parent, a valid and legally binding obligation of each other party thereto,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar Laws of general applicability relating to or
affecting creditors' rights or by general equity principles), and is in full
force and effect, in each case except for such failures that have not had, and
would not be reasonably expected to have, a Material Adverse Effect on Parent.
There is no default under any Material Contract of Parent either by Parent or,
to Parent's knowledge, by any other party thereto, and no event has occurred
that with the lapse of time or the giving of notice or both would constitute a
default thereunder by Parent or, to Parent's knowledge, any other party, in each
case except as has not had, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent.
(b) No party to any such Material Contract has given notice to Parent
of or made a claim against Parent with respect to any breach or default
thereunder, in each case except as has not had, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Parent.
ARTICLE V
COVENANTS RELATED TO CONDUCT OF BUSINESS
SECTION 5.1 Conduct of Business of the Company. Except as contemplated
by this Agreement, during the period from the date hereof to the Effective Time,
the Company will, and will cause each of its subsidiaries to, conduct its
operations in the ordinary and usual course of business consistent with past
practice and, to the extent consistent therewith, with no less diligence and
effort than would be applied in the absence of this Agreement, seek to preserve
intact its current business organizations, seek to keep available the service of
its current officers and employees and seek to preserve its relationships with
customers, suppliers and others having business dealings with it to the end that
goodwill and ongoing businesses shall be unimpaired at the Effective Time.
Without limiting the generality of the foregoing, and except as otherwise
expressly provided in this Agreement, the Option Agreement or Section 5.1 of the
Company Disclosure Schedule, prior to the Effective Time, neither the Company
nor any of its subsidiaries will, without the prior written consent of Parent,
(a) amend its certificate of incorporation or bylaws (or other similar
governing instrument) or amend, modify, terminate or waive any application of
the Company Rights Agreement;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities convertible into or exchangeable for any
stock or any equity equivalents (including, without
32
limitation, any stock options or stock appreciation rights), except for the
issuance or sale of Shares pursuant to Company Stock Options outstanding on the
date of this Agreement;
(c) (i) split, combine or reclassify any shares of its capital stock;
(ii) declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock; (iii) make any other actual, constructive or deemed distribution in
respect of any shares of its capital stock or otherwise make any payments to
stockholders in their capacity as such; or (iv) redeem, repurchase or otherwise
acquire any of its securities or any securities of any of its subsidiaries
(including redeeming any Rights);
(d) adopt a plan of, or alter through, complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries (other than the Merger
and other than a merger solely involving wholly owned Subsidiaries of the
Company that does not result in any restructuring costs);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities, except for borrowings under existing lines of credit in the
ordinary and usual course of business consistent with past practice and in
amounts not material to the Company and its subsidiaries taken as a whole; (ii)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person,
except in the ordinary and usual course of business consistent with past
practice and in amounts not material to the Company and its subsidiaries, taken
as a whole, and except for guarantees of obligations of wholly owned
subsidiaries of the Company; (iii) except for loans to employees who are not
Managers and advances in the ordinary course of business consistent with past
practice, make any loans, advances or capital contributions to, or investments
in, any other person (other than to wholly owned subsidiaries of the Company);
(iv) pledge or otherwise encumber shares of capital stock of the Company or its
subsidiaries; or (v) mortgage or pledge any of its material assets, tangible or
intangible, or create or suffer to exist any material Lien thereupon;
(f) except as may be required by Law, enter into, adopt, amend, extend
or terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, labor, collective bargaining, employment, severance or other
employee benefit agreement, trust, plan, fund, award or other arrangement for
the benefit or welfare of any director, officer or employee in any manner, or
(except as required under agreements existing on the date hereof) increase in
any manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any plan and arrangement as in
effect as of the date hereof, including, without limitation, the granting of
stock appreciation rights or performance units, but excluding increases in
compensation, bonus or other benefits payable to employees of the Company or any
of its subsidiaries who are not members of the executive committee of the
Company in the ordinary and usual course of business consistent with past
practice or merit increases in salaries of such employees at regularly scheduled
times in customary amounts consistent with past practices;
33
(g) acquire, sell, lease or dispose of any assets outside the ordinary
and usual course of business consistent with past practice or any assets which
in the aggregate are material to the Company and its subsidiaries taken as a
whole, or enter into any commitment or transaction outside the ordinary and
usual course of business consistent with past practice;
(h) except as may be required as a result of a change in Law or in
GAAP, change any of the accounting principles or practices used by it;
(i) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary and usual course of business
consistent with past practice or as required by GAAP;
(j) acquire (by merger, consolidation, or acquisition of stock or
assets or otherwise) any corporation, partnership or other business organization
or division thereof or any equity interest therein; (ii) enter into any contract
or agreement, other than in the ordinary and usual course of business consistent
with past practice or amend in any material respect any of the Material
Contracts or (iii) authorize any new capital expenditure or expenditures which,
individually or in the aggregate, are, or would reasonably be expected to be
material to the Company;
(k) make or revoke any material Tax election, or settle or compromise
any material Tax liability, or change (or make a request to any Taxing authority
to change) any material aspect of its method of accounting for Tax purposes;
(l) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
and usual course of business consistent with past practice of liabilities
reflected or reserved against in the Company's consolidated balance sheet as of
September 30, 1999 (or the notes thereto) as included in the Company SEC
Reports, or incurred subsequent to such date in the ordinary and usual course of
business consistent with past practice;
(m) waive the benefits of, agree to modify in any manner or refrain
from enforcing any confidentiality, standstill or similar agreement to which the
Company or any of its subsidiaries is a party;
(n) settle or compromise any pending or threatened suit, action or
claim relating to the transactions contemplated hereby;
(o) take any action (including any action otherwise permitted by this
Section 5.1) that would prevent or impede the Merger from qualifying as a
"pooling of interests" under APB 16 and the applicable SEC rules and regulations
or as a reorganization under Section 368(a) of the Code;
(p) enter into any agreement or arrangement that limits or otherwise
restricts the Company or any of its subsidiaries or any successor thereto or
that would, after the Effective Time, limit or restrict the Surviving
Corporation and its affiliates (including Parent) or any
34
successor thereto, from engaging or competing in any line of business or in any
geographic area; or
(q) take, propose to take, or agree in writing or otherwise to take,
any of the actions described in Sections 5.1(a) through 5.1(p) or any action
which would (y) make any of the representations or warranties of the Company
contained in this Agreement (i) which are qualified as to materiality, untrue or
incorrect or (ii) which are not so qualified, untrue or incorrect in any
material respect or (z) would be reasonably likely to result in any of the
conditions to the Merger set forth in Article VII hereof not being satisfied.
SECTION 5.2 Conduct of Business of Parent. Except as otherwise
expressly provided in this Agreement or as set forth in the Parent Disclosure
Schedule, prior to the Effective Time, neither Parent nor any of its
subsidiaries will, without the prior written consent of the Company:
(a) amend its certificate of incorporation (or other similar governing
instrument) in any manner that would be adverse in any material respect to the
holders of Parent Common Stock;
(b) declare, set aside or pay any dividend or other distribution in
respect of its capital stock except the declaration and payment of quarterly
cash dividends in amounts consistent with past practice;
(c) liquidate or dissolve Parent;
(d) take any action (including any action otherwise permitted by this
Section 5.2) that would prevent or impede the Merger from qualifying as a
"pooling of interests" under APB 16 and the applicable SEC rules and regulations
or as a reorganization under Section 368(a) of the Code; or
(e) take, propose to take, or agree in writing or otherwise to take,
any of the actions described in Sections 5.2(a) through 5.2(d) or any action
which (y) would make the representations or warranties of Parent in this
Agreement (i) which are qualified as to materiality, untrue or incorrect or (ii)
which are not so qualified, untrue in any material respect or (z) would be
reasonably likely to result in any of the conditions to the Merger set forth in
Article VII hereof not being satisfied.
SECTION 5.3 Access to Information. (a) Between the date hereof and the
Effective Time, the Company will give Parent and its authorized representatives
(including counsel, financial advisors and auditors) reasonable access during
normal business hours to all employees, plants, offices, warehouses and other
facilities and to all books and records, including all Tax returns and audits,
of the Company and its subsidiaries, will permit Parent to make such inspections
as Parent may reasonably require and will cause the Company's officers and those
of its subsidiaries to furnish Parent with such financial and operating data and
other information with respect to the business, properties and personnel of the
Company and its subsidiaries as Parent may from time to time reasonably request,
provided that no investigation
35
pursuant to this Section 5.3(a) shall affect or be deemed to modify any of the
representations or warranties made by the Company.
(b) Between the date hereof and the Effective Time, the Company shall
furnish to Parent, (i) concurrently with the delivery thereof to management,
such monthly financial statements and data as are regularly prepared for
distribution to Company management and (ii) at the earliest time they are
available, such quarterly and annual financial statements as are prepared for
the Company's SEC filings, which (in the case of this clause (ii)) shall be in
accordance with the books and records of the Company.
(c) Between the date hereof and the Effective Time, in response to
reasonable requests from the Company, Parent will give the Company and its
authorized representatives (including counsel, financial advisors and auditors)
reasonable access during normal business hours to appropriate members of
management and books and records of Parent.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Preparation of S-4 and the Proxy Statement. Parent and the
Company will, as promptly as practicable, jointly prepare and file with the SEC
the Proxy Statement in connection with the vote of the stockholders of the
Company with respect to the Merger. Promptly following receipt of notification
from the SEC that it has no further comments on the Proxy Statement, or at such
earlier time as Parent may elect, Parent shall prepare and file with the SEC the
S-4, containing a proxy statement/prospectus, and forms of proxy, in connection
with the registration under the Securities Act of the shares of Parent Common
Stock issuable upon conversion of the Shares and the other transactions
contemplated hereby. Parent and the Company will, and will cause their
accountants and lawyers to, use all reasonable best efforts to have or cause the
S-4 declared effective as promptly as practicable after filing with the SEC,
including, without limitation, causing their accountants to deliver necessary or
required instruments such as opinions, consents and certificates, and will take
any other action required or necessary to be taken under federal or state
securities Laws or otherwise in connection with the registration process (other
than qualifying to do business in any jurisdiction which it is not now so
qualified or to file a general consent to service of process in any
jurisdiction). The Company and Parent shall, as promptly as practicable after
the receipt thereof, provide to the other party copies of any written comments
and advise the other party of any oral comments, with respect to the Proxy
Statement or the S-4 received from the staff of the SEC. The Company will
provide Parent with a reasonable opportunity to review and comment on any
amendment or supplement to the Proxy Statement prior to filing with the SEC and
will provide Parent with a copy of all such filings with the SEC. The Company
will use its reasonable best efforts to cause the Proxy Statement to be mailed
to its stockholders at the earliest practicable date.
SECTION 6.2 Letter of Accountants. (a) The Company shall use all
reasonable best efforts to cause to be delivered to Parent a letter of Xxxxxx
Xxxxxxxx LLP, the Company's independent auditors, dated a date within two
business days before the date on which the S-4 shall become effective and
addressed to Parent, in form and substance reasonably
36
satisfactory to Parent and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the S-4.
(b) Parent shall use all reasonable best efforts to cause to be
delivered to the Company a letter of PriceWaterhouseCoopers, Parent's
independent auditors, dated a date within two business days before the date on
which the S-4 shall become effective and addressed to the Company, in form and
substance reasonably satisfactory to the Company and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the S-4.
SECTION 6.3 Meeting. The Company shall take all lawful action to (a)
cause a special meeting of its stockholders (the "Company Stockholder Meeting")
to be duly called and held as soon as practicable after the date of this
Agreement for the purpose of voting on the approval and adoption of the
agreement of merger (within the meaning of Section 251 of the DGCL) contained in
this Agreement, and the Merger, and (b) solicit proxies from its stockholders to
obtain the Required Company Vote with respect to such approval and adoption. The
Company Board shall recommend approval and adoption of this Agreement and the
Merger by the Company's stockholders and, except as permitted by Section 6.5(b),
the Company Board shall not withdraw, amend or modify in a manner adverse to
Parent such recommendation (or announce publicly its intention to do so). The
Company Board shall comply with its obligations under clause (a) above,
notwithstanding (A) the making of any Acquisition Proposal (as hereinafter
defined), including any Superior Proposal (as hereinafter defined) or (B) any
determination by the Company Board, at any time subsequent to declaring the
advisability of the Agreement and of the Merger, that this Agreement or the
Merger is no longer advisable or any recommendation that the shareholders of the
Company reject this Agreement or the Merger.
SECTION 6.4 Reasonable Best Efforts. (a) Subject to the terms and
conditions of this Agreement, each party will use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws promptly to
consummate the Merger and the other transactions contemplated by this Agreement.
In furtherance and not in limitation of the foregoing, each party hereto agrees
to make an appropriate filing of a Notification and Report Form pursuant to the
HSR Act with respect to the transactions contemplated hereby as promptly as
practicable and to supply as promptly as practicable any additional information
and documentary material that may be requested pursuant to the HSR Act and use
its reasonable best efforts to take, or cause to be taken, all other actions
consistent with this Section 6.4 necessary to cause the expiration or
termination of the applicable waiting periods under the HSR Act as soon as
practicable.
(b) Each of Parent and the Company shall, in connection with the
efforts referenced in Section 6.4(a) to obtain all requisite approvals and
authorizations for the transactions contemplated by this Agreement under the HSR
Act or any other Antitrust Law (as hereunder defined), use its reasonable best
efforts to (i) cooperate in all respects with each other in connection with any
filing or submission and in connection with any investigation or other inquiry,
including any proceeding initiated by a private party; and (ii) keep the other
party informed in all material respects of any material communication received
by such party from, or given by such party to, the Federal Trade Commission (the
"FTC"), the Antitrust Division of the Department of Justice (the "DOJ") or any
other Governmental Entity and of any material
37
communication received or given in connection with any proceeding by a private
party, in each case regarding any of the transactions contemplated hereby and
(iii) permit the other party to review any material communication given by it
to, and consult with each other in advance of any meeting or conference with,
the FTC, the DOJ or any such other Governmental Entity or, in connection with
any proceeding by a private party, with any other person, and to the extent
permitted by the FTC, the DOJ or such other applicable Governmental Entity or
other person, give the other party the opportunity to attend and participate in
such meetings and conferences. For purposes of this Agreement, "Antitrust Law"
means the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, the EC Merger Regulation, and all
other Laws that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition.
(c) In furtherance and not in limitation of the covenants of the
parties contained in Sections 6.4(a) and 6.4(b), each of Parent and the Company
shall use its reasonable best efforts to resolve such objections if any, as may
be asserted a Governmental Entity or other person with respect to the
transactions contemplated hereby under any Antitrust Law. In connection with the
foregoing, if any administrative or judicial action or proceeding, including any
proceeding by a private party, is instituted (or threatened to be instituted)
challenging any transaction contemplated by this Agreement as violative of any
Antitrust Law, each of Parent and the Company shall cooperate in all respects
with each other and use its respective reasonable best efforts to contest and
resist any such action or proceeding and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents or
restricts consummation of the transactions contemplated by this Agreement.
Notwithstanding the foregoing or any other provision of this Agreement, nothing
in this Section 6.4 shall (i) limit a party's right to terminate this Agreement
pursuant to Section 8.2(a) or 8.2(c) so long as such party has theretofore
complied in all material respects with its obligations under this Section 6.4,
or (ii) require Parent to (x) enter into any "hold-separate" agreement or other
agreement with respect to the disposition of any assets or businesses of the
Parent or any of its subsidiaries or the Company or any of its subsidiaries in
order to obtain clearance from the Federal Trade Commission or the Antitrust
Division of the Department of Justice or any other antitrust or competition
authorities to proceed with the consummation of the transactions contemplated
hereby or (y) consummate the transactions contemplated hereby in the event that
any consent, approval or authorization of any Governmental Entity obtained or
sought to be obtained in connection with this Agreement is conditioned upon the
imposition of any other significant restrictions upon, or the making of any
material accommodation (financial or otherwise) in respect of the transactions
contemplated hereby or the conduct of the business of the Surviving Corporation
or the Parent (including any agreement not to compete in any geographic area or
line of business) or results, or would result in, the abrogation or diminishment
of any authority or license granted by any Governmental Entity.
SECTION 6.5 Acquisition Proposals. (a) The Company will not, nor will
it permit any of its subsidiaries to, nor will it authorize or permit any
officer, director or employee of or any investment banker, attorney, accountant
or other advisor or representative of, the Company or any of its subsidiaries
to, directly or indirectly, (i) solicit, initiate or encourage the submission of
any Acquisition Proposal (as hereinafter defined), (ii) participate in any
38
discussions or negotiations regarding, or furnish to any person any non-public
information with respect to the Company or any of its subsidiaries, or take any
other action to facilitate, any Acquisition Proposal or any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal, (iii) (A) amend or grant any waiver or release
under any confidentiality, standstill or similar agreement with respect to the
Company or any class of equity securities of the Company, or (B) amend (except
as expressly contemplated by this Agreement) or grant any waiver or release or
approve any transaction or redeem rights under the Company Rights Agreement or
(iv) subject to Section 8.3(b), enter into any agreement with respect to an
Acquisition Proposal; provided, however, that nothing contained in this Section
6.5(a) shall prohibit the Company Board from furnishing information to, or
entering into discussions or negotiations with, any person that makes an
unsolicited bona fide written Acquisition Proposal if, and only to the extent
that (A) the Company Board, after consultation with and based upon the advice of
independent legal counsel, determines in good faith that such action is
necessary for the Company Board to act in a manner consistent with its fiduciary
duties to the Company's stockholders under applicable Law, (B) such Acquisition
Proposal is not subject to any financing contingencies, or copies of bona fide
customary commitments from reputable financial institutions for all necessary
financing shall have been furnished to the Company, (C) the Company Board
determines in good faith that such Acquisition Proposal, if accepted, is
reasonably likely to be consummated taking into account all legal, financial,
regulatory and other aspects of the proposal and the person making the proposal,
and believes in good faith, after consultation with and based upon the written
opinion of an independent, nationally recognized financial advisor and after
taking into account the strategic benefits to be derived from the Merger and the
long-term prospects of Parent and its subsidiaries and after consideration of
other matters it deems relevant, would, if consummated, result in a transaction
more favorable to the Company's stockholders from a financial point of view than
the Merger (any such more favorable Acquisition Proposal being referred to
herein as a "Superior Proposal"), and (D) prior to taking such action, the
Company (x) provides prior written notice to Parent to the effect that it is
proposing to take such action and (y) receives from such person an executed
confidentiality agreement in reasonably customary form. The Company shall notify
Parent of any Acquisition Proposal (or request for nonpublic information by any
person who is considering making an Acquisition Proposal) (including, without
limitation, all material terms and conditions thereof and the identity of the
person making it) as promptly as practicable (but in no case later than 24
hours) after its receipt thereof, and shall provide Parent with a copy of any
written Acquisition Proposal or amendments or supplements thereto, and shall
thereafter inform Parent on a reasonably prompt basis of any material changes to
the terms and conditions of such Acquisition Proposal, and shall promptly give
Parent a copy of any information delivered to such person which has not
previously been reviewed by Parent. Immediately after the execution and delivery
of this Agreement, the Company will, and will cause its subsidiaries and
affiliates, and their respective officers, directors, employees, investment
bankers, attorneys, accountants and other agents to, cease and terminate any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any possible Acquisition Proposal.
(b) The Company Board will not withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent, its recommendation that
stockholders vote in favor of the Merger unless (i) the Company has fully
complied with the terms of Section 6.5(a), (ii) a
39
Superior Proposal is pending at the time the Company Board determines to take
any such action, (iii) the Company Board after consultation with and based upon
the advice of independent legal counsel, determines in good faith that such
action is necessary for the Company Board to act in a manner consistent with the
fiduciary duties to the Company's stockholders under applicable Law and (iv) the
Company shall have delivered to Parent a prior written notice advising Parent
that it intends to take such action (such notice to be delivered not less than
two business days prior to the time such action is taken). Nothing contained in
this Section 6.5(b) shall prohibit the Company from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act.
(c) Nothing in this Section 6.5 shall (i) permit the Company to
terminate this Agreement (except as provided in Article VIII hereof) or (ii)
affect any other obligations of the Company under this Agreement.
SECTION 6.6 Public Announcements. Each of Parent and the Company will
consult with one another before issuing any press release or otherwise making
any public statements with respect to the transactions contemplated by this
Agreement, including, without limitation, the Merger, and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by applicable Law or by obligations pursuant to any
listing agreement with the NYSE, as determined by Parent or the Company, as the
case may be.
SECTION 6.7 Indemnification; Directors' and Officers' Insurance. (a)
The Parent agrees that all rights to exculpation and indemnification for acts or
omissions occurring prior to the Effective Time now existing in favor of the
current or former directors or officers (the "Indemnified Parties") of the
Company as provided in its certificate of incorporation or by-laws or in any
agreement in effect as of the date hereof between the Company and any of the
Indemnified Parties shall survive the Merger and shall continue in full force
and effect in accordance with their terms for a period of six years following
the Effective Time.
(b) For a period of six (6) years after the Effective Time, Parent
shall cause to be maintained in effect the policies of directors' and officers'
liability insurance maintained by the Company for the benefit of those persons
who are covered by such policies at the Effective Time (or Parent may substitute
therefor policies of at least the same coverage with respect to matters
occurring prior to the Effective Time), to the extent that such liability
insurance can be maintained at a cost to Parent not greater than 175 percent of
the annual premium for the current Company directors' and officers' liability
insurance as set forth in Section 6.7 of the Disclosure Schedule; provided that
if such insurance cannot be so maintained or obtained at such costs, Parent
shall maintain or obtain as much of such insurance as can be so maintained or
obtained at a cost equal to 175 percent of the current annual premiums of the
Company for such insurance.
SECTION 6.8 Notification of Certain Matters. The Company shall, upon
obtaining knowledge of any of the following, give prompt notice to Parent, and
Parent shall, upon obtaining knowledge of any of the following, give prompt
notice to the Company, of (i) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause any representation
or warranty of such
40
party contained in this Agreement, which is qualified as to materiality, to be
untrue or inaccurate, or any representation or warranty of such party not so
qualified, to be untrue or inaccurate in any material respect, at or prior to
the Effective Time, (ii) any material failure of the Company or Parent, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder, (iii) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would be
likely to cause any condition to the obligations of any party to the effect of
the transactions contemplated hereby not to be satisfied, (iv) any notice of, or
other communication relating to, a default or event which, with notice or lapse
of time or both, would become a default, received by it or any of its
subsidiaries subsequent to the date of this Agreement and prior to the Effective
Time, under any contract or agreement material to the financial condition,
properties, businesses, results of operations or prospects of it and its
subsidiaries taken as a whole to which it or any of its subsidiaries is a party
or is subject, (v) any notice or other communication from any Governmental
Entity in connection with the Merger, (vi) any actions, suits, claims,
investigations or other proceedings (or communications indicating that the same
may be contemplated) commenced or threatened against the Company or any of its
subsidiaries which, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 3.11 or which relate to the
consummation of the Merger, (vii) any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement, or (viii)
any event or occurrence that is, or would reasonably be likely to be, a Material
Adverse Effect with respect to it; provided, however, that the delivery of any
notice pursuant to this Section 6.8 shall not cure such breach or non-compliance
or limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
SECTION 6.9 Pooling. (a) The Company shall use its reasonable best
efforts to cause to be delivered to Parent letters from its independent
auditors, Xxxxxx Xxxxxxxx LLP, dated as of the date the S-4 is declared
effective and dated as of the Closing Date, stating that the accounting of the
Merger as a "pooling of interests" under Opinion 16 of the Accounting Principles
Board ("APB 16") and the applicable SEC rules and regulations is appropriate if
the Merger is consummated as contemplated by this Agreement (it being understood
and agreed that the delivery of such letters shall not constitute a condition to
the parties' obligation to consummate the transaction contemplated by this
Agreement).
(b) Parent shall use its reasonable best efforts to cause to be
delivered to the Company letters from its independent auditors,
PriceWaterhouseCoopers, dated as of the date the S-4 is declared effective and
dated as of the Closing Date, stating that the accounting of the Merger as a
"pooling of interests" under APB 16 and the applicable SEC rules and regulations
is appropriate if the Merger is consummated as contemplated by this Agreement
(it being understood and agreed that the delivery of such letters shall not
constitute a condition to the parties' obligation to consummate the transaction
contemplated by this Agreement).
SECTION 6.10 Employee Matters. (a) For a period of one year after the
Effective Time, the Surviving Company and its subsidiaries will provide benefits
(other than equity-based benefits) to those of its employees who were employed
by the Company and its subsidiaries immediately prior to the Effective Time
substantially comparable in the aggregate to those generally provided by the
Company and its subsidiaries to such employees immediately prior to the
Effective Time.
41
(b) Parent agrees to assume or to cause the Surviving Corporation to
assume the obligations of the Company under the Change in Control Severance
Agreements entered into on or prior to the date hereof with Xxxxxxx X. Xxxxxx,
Xxxxxxx X. Xxxxx, Xxxxxxx Kiock, and Xxxxxx X. Xxxxxxxx. Parent agrees to treat
and to cause the Surviving Corporation to treat the transactions contemplated
hereby as a change of control for purposes of the employment agreements,
severance agreements, and stock option agreements entered into on or prior to
the date hereof with Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxx, Xxxxxxx Kiock, Xxxxxx
X. Xxxxxxxx, Xxxxxxx Xxxxxx and Xxxxxx Xxxxx.
SECTION 6.11 Affiliate Letters. Section 6.11 of the Company Disclosure
Schedule sets forth a list of all persons who are, and all persons who to the
Company's knowledge will be at the Closing Date, "affiliates" of the Company for
purposes of Rule 145 under the Securities Act or for purposes of qualifying the
Merger for "pooling of interests" accounting treatment under APB 16 and
applicable SEC rules, and Section 6.11 of the Parent Disclosure Schedule sets
forth a list of all persons who are, and all persons who to Parent's knowledge
will be at the Closing Date, "affiliates" of Parent for purposes of qualifying
the Merger for "pooling of interests" under APB 16 and the applicable SEC rules
and regulations. The Company and Parent will each respectively cause such lists
to be updated promptly through the Closing Date. Not later than the date of the
initial mailing of the Proxy Statement, the Company shall use its reasonable
best efforts to cause its "affiliates" to deliver to Parent a written agreement
substantially in the form attached as Exhibit A, and Parent shall use its
reasonable best efforts to cause its "affiliates" to deliver to the Company a
written agreement substantially in the form attached as Exhibit B.
SECTION 6.12 SEC Filings
(a) The Company shall furnish to Parent copies of all reports, proxy
statements and prospectuses of the type referred to in Section 3.4 which it
files with the SEC on or after the date hereof, and the Company represents and
warrants that as of the respective dates thereof, such reports will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and the unaudited consolidated interim
financial statements included in such reports (including any related notes and
schedules) will fairly present in all material respects the financial position
of the Company and its consolidated Subsidiaries as of the dates thereof and the
results of operations and cash flows or other information included therein for
the periods or as of the date then ended (subject, in the case of the interim
financial statements, to normal, recurring year-end adjustments which will not
be material in amount), in each case in accordance with past practice and GAAP
consistently applied during the periods involved (except as otherwise disclosed
in the notes thereto.)
(b) Parent shall furnish to the Company copies of all reports, proxy
statements and prospectuses of the type referred to in Section 4.4 which it
files with the SEC on or after the date hereof, and Parent represents and
warrants that as of the respective dates thereof, such reports will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial
42
statements and the unaudited consolidated interim financial statements included
in such reports (including any related notes and schedules) will fairly present
in all material respects the financial position of the Parent and its
consolidated Subsidiaries as of the dates thereof and the results of operations
and cash flows or other information included therein for the periods or as of
the date then ended (subject, in the case of the interim financial statements,
to normal, recurring year-end adjustments which will not be material in amount),
in each case in accordance with past practice and GAAP consistently applied
during the periods involved (except as otherwise disclosed in the notes
thereto).
SECTION 6.13 Fees and Expenses. Subject to Section 8.5, whether or not
the Merger is consummated, all Expenses (as hereinafter defined) incurred in
connection with this Agreement, and the transactions contemplated hereby shall
be paid by the party incurring such Expenses, except Expenses (including filing
fees) incurred in connection with the filing, printing and mailing of the Proxy
Statement and the S-4, which shall be shared equally by the Company and Parent.
As used in this Agreement, "Expenses" includes all out-of-pocket expenses
(including, without limitation, all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and its
affiliates) incurred by a party or on its behalf in connection with, or related
to, the authorization, preparation, negotiation, execution and performance of
this Agreement and the transactions contemplated hereby, including the
preparation, filing, printing and mailing of the Proxy Statement and the S-4 and
the solicitation of stockholder approvals and all other matters related to the
transactions contemplated hereby.
SECTION 6.14 Listing of Stock. Parent shall use its best efforts to
cause the shares of Parent Common Stock to be issued in connection with the
Merger to be approved for listing on the NYSE on or prior to the Closing Date,
subject to official notice of issuance.
SECTION 6.15 Antitakeoveer Statutes. If any Takeover Statute is or may
become applicable to the Merger, each of Parent and Company shall take such
actions as are necessary so that the transactions contemplated by this Agreement
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise act to eliminate or minimize the effects of any Takeover Statute
on the Merger.
SECTION 6.16 Rule 144 Reporting. From and after the Effective Time,
unless and until each "affiliate" of the Company (as such term is defined for
purposes of paragraphs (c) and (d) of Rule 145 under the Securities Act) has
disposed of all the shares of Parent Stock received by it as Merger
Consideration, such shares are permitted to be resold pursuant to Rule 145(d)(3)
under the Securities Act or such shares are covered by an effective registration
statement under Section 5 of the Securities Act, Parent shall use all reasonable
best efforts to make and keep "available adequate current public information"
(as those terms are understood and defined in Rule 144 under the Securities Act)
with respect to Parent and, upon any reasonable request by such an affiliate,
provide a statement as to such availability.
43
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following conditions, any or all of which may be
waived in whole or in part by the party being benefited thereby, to the extent
permitted by applicable Law:
(a) The agreement of merger (within the meaning of Section 251 of the
DGCL) contained within this Agreement shall have been approved and adopted by
the Required Company Vote;
(b) Any waiting period applicable to the Merger under the HSR Act shall
have expired or early termination thereof shall have been granted;
(c) There shall not be in effect any Law of any Governmental Entity of
competent jurisdiction, restraining, enjoining or otherwise preventing
consummation of the transactions contemplated by this Agreement and no
Governmental Entity shall have instituted any judicial or administrative
proceeding which continues to be pending seeking any such Law;
(d) The S-4 shall have been declared effective by the SEC and shall be
effective at the Effective Time, and no stop order suspending effectiveness
shall have been issued, no action, suit, proceeding or investigation by the SEC
to suspend the effectiveness thereof shall have been initiated and be
continuing, and all necessary approvals under state securities Laws or the
Securities Act or Exchange Act relating to the issuance or trading of the Parent
Common Stock shall have been received; and
(e) The Parent Common Stock required to be issued hereunder shall have
been approved for listing on the NYSE, subject only to official notice of
issuance.
SECTION 7.2 Conditions to the Obligations of Parent. The obligations of
Parent to consummate the transactions contemplated by this Agreement are subject
to the fulfillment at or prior to the Effective Time of each of the following
additional conditions, any or all of which may be waived in whole or part by
Parent to the extent permitted by applicable Law:
(a) The representations and warranties of the Company contained herein
or otherwise required to be made after the date hereof in a writing expressly
referred to herein by or on behalf of the Company pursuant to this Agreement, to
the extent qualified by materiality or Material Adverse Effect, shall have been
true and, to the extent not so qualified, shall have been true in all material
respects, in each case when made and on and as of the Closing Date as though
made on and as of the Closing Date (except for representations and warranties
made as of a specified date, which need be true, or true in all material
respects, as the case may be, only as of the specified date).
44
(b) The Company shall have performed or complied in all material
respects with all agreements and conditions contained herein required to be
performed or complied with by it prior to or at the time of the Closing.
(c) The Company shall have delivered to Parent a certificate, dated the
date of the Closing, signed by the President or any Vice President of the
Company, certifying as to the fulfillment of the conditions specified in
Sections 7.2(a) and 7.2(b).
(d) Parent shall have received an opinion of its counsel, Cleary,
Gottlieb, Xxxxx & Xxxxxxxx, dated as of the Closing Date, in form and substance
reasonably satisfactory to it, substantially to the effect that, on the basis of
the facts and assumptions described in the opinion, the Merger constitutes a
tax-free reorganization within the meaning of Section 368 of the Code. In
rendering this opinion, counsel may require and rely upon representations and
covenants including those contained herein and in certificates of officers of
the Parent, the Company and others.
(e) All authorizations, consents or approvals of a Governmental Entity
(other than those specified in Section 7.1(b) hereof) required in connection
with the execution and delivery of this Agreement and the performance of the
obligations hereunder shall have been made or obtained, without any limitation,
restriction or condition that has or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company (or
an effect on Parent and its subsidiaries that, were such effect applied to the
Company and its subsidiaries, would have or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company), except for such authorizations, consents or approvals, the failure of
which to have been made or obtained does not and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company (or an effect on Parent and its subsidiaries that, were such effect
applied to the Company and its subsidiaries, would have or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company).
SECTION 7.3 Conditions to the Obligations of the Company. The
obligations of the Company to consummate the transactions contemplated by this
Agreement are subject to the fulfillment at or prior to the Effective Time of
each of the following conditions, any or all of which may be waived in whole or
in part by the Company to the extent permitted by applicable Law:
(a) The representations and warranties of Parent contained herein or
otherwise required to be made after the date hereof in a writing expressly
referred to herein by or on behalf of Parent pursuant to this Agreement, to the
extent qualified by a materiality or Material Adverse Effect, shall have been
true and, to the extent not so qualified, shall have been true in all material
respects, in each case when made and on and as of the Closing Date as though
made on and as of the Closing Date (except for representations and warranties
made as of a specified date, which need be true, or true in all material
respects, as the case may be, only as of the specified date).
(b) Parent shall have performed or complied in all material respects
with all agreements and conditions contained herein required to be performed or
complied with by it prior to or at the time of the Closing.
45
(c) Parent shall have delivered to the Company a certificate, dated the
date of the Closing, signed by the President or any Vice President of Parent,
certifying as to the fulfillment of the conditions specified in Section 7.3(a)
and 7.3(b).
(d) The Company shall have received an opinion of its counsel, Xxxx,
Weiss, Rifkind, Xxxxxxx and Xxxxxxxx, dated as of the Closing Date, in form and
substance reasonably satisfactory to it, substantially to the effect that, on
the basis of the facts and assumptions described in the opinion, the Merger
constitutes a tax-free reorganization within the meaning of Section 368 of the
Code. In rendering this opinion, counsel may require and rely upon
representations and covenants including those contained herein and in
certificates of officers of the Parent, the Company and others.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1 Termination by Mutual Agreement. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval of the Merger by the Required Company
Vote, by mutual written consent of the Company and Parent by action of their
respective Boards of Directors.
SECTION 8.2 Terminations by Either Parent or the Company. This
Agreement may be terminated and the Merger may be abandoned at any time prior to
the Effective Time by action of the Board of Directors of either Parent or the
Company if:
(a) the Merger shall not have been consummated by June 30, 2000 (the
"Termination Date"); provided, however, that if either Parent or the Company
determines that additional time is necessary in connection with obtaining any
consent, registration, approval, permit or authorization required to be obtained
from any Governmental Entity, the Termination Date may be extended by Parent or
the Company from time to time by written notice to the other party to a date not
beyond September 30, 2000 if it in good faith believes such consent,
registration, approval, permit or authorization can be obtained by such date;
(b) the Required Company Vote shall not have been obtained at the
Company Stockholder Meeting or at any adjournment or postponement thereof;
(c) any Law permanently restraining, enjoining or otherwise prohibiting
consummation of the Merger shall become final and non-appealable;
provided, that the right to terminate this Agreement pursuant to this Section
8.2 shall not be available to any party that has breached in any material
respect its obligations under this Agreement in any manner that shall have
proximately contributed to the failure of the Merger to be consummated.
SECTION 8.3 Termination by the Company. (a) This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the Company Board if (i) there is a breach by Parent of any
representation, warranty, covenant or agreement contained in this Agreement that
would give rise to a failure of a condition set forth
46
in Section 7.3(a) or 7.3(b), which has not been cured (or is not capable of
being cured) within 10 business days following receipt by Parent of written
notice of such breach or (ii) pursuant to Section 2.1(c) if, under the
circumstances set forth in such Section, the Company has delivered a timely
Termination Notice, provided that termination in accordance with this clause
(ii) shall not be effective unless and until Parent has failed to deliver a
timely Top-Up Intent Notice in accordance with Section 2.1(c).
(b) This Agreement may be terminated and the Merger may be abandoned by
the Company at any time before the Required Company Vote has been obtained if
the Company Board shall elect to terminate this Agreement in order to recommend
or approve a Superior Proposal; provided that (i) the Company has complied with
all the terms of Section 6.5(b) and notified Parent in writing that it intends
to terminate this Agreement in order to recommend or approve a Superior
Proposal, attaching the most current version of such proposal to such notice,
(ii) at any time after the third business day following written notification by
the Company to Parent of the Company's intention to enter into a binding
agreement with respect to such proposal, after taking into account any
modifications to the transactions contemplated by the Agreement that Parent has
then proposed in writing and not withdrawn, the Company Board has determined
that such proposal is and continues to be a Superior Proposal and (iii)
concurrently with the effectiveness of such termination, pays to Parent the
termination fee due under Section 8.5(b) (unless Parent has previously notified
the Company of its election to defer such payment pursuant to Section 8.5(b)),
it being understood that on the date of the effectiveness of such termination,
whether or not prior to such effectiveness, the Company may enter into an
agreement with respect to such Superior Proposal which agreement, if entered
into prior to such effectiveness, must be conditioned upon the payment of the
termination fee on the same date as provided herein. The termination under this
Section 8.3(b) shall not be effective unless and until the termination fee has
been paid in accordance with Section 8.5(b).
SECTION 8.4 Termination by Parent. This Agreement may be terminated by
Parent and the Merger may be abandoned by Parent at any time prior to the
Effective Time if:
(a) the Company Board, whether or not permitted to do so by this
Agreement, shall have withdrawn or adversely modified its approval, or
recommendation of this Agreement or the Merger, or shall have failed to call the
Company Stockholders Meeting or to solicit proxies from its stockholders in
connection therewith; or
(b) there is a breach by the Company (i) of any of its obligations
under Section 6.5, or (ii) a breach by the Company of any representation,
warranty, covenant or agreement contained in this Agreement would give rise to a
failure of a condition set forth in Section 7.2(a) or 7.2(b), which (in the case
of this clause (ii)) has not been cured (or is not capable of being cured)
within 10 business days following receipt by the Company of written notice of
such breach.
SECTION 8.5 Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, this Agreement (other than this Section 8.5 and Sections 5.3(c),
6.13 and Article IX) shall become void and of no effect with no liability on the
part of any party hereto (or of any of its directors, officers, employees,
agents, legal and financial advisors or other representatives);
47
provided, however, no such termination shall relieve any party hereto of any
liability or damages resulting from any willful breach of any representation,
warranty, covenant or agreement contained in this Agreement.
(b) In the event that (i) this Agreement is terminated by the Company
pursuant to Section 8.3(b) or (ii) an Acquisition Proposal shall have been made
to the Company or any of its subsidiaries or any of its stockholders or any
person shall have publicly announced an intention (whether or not conditional)
to make an Acquisition Proposal with respect to the Company or any of its
subsidiaries and thereafter this Agreement is terminated by either Parent or the
Company pursuant to Section 8.2(a), 8.2(b), 8.4(a), 8.4(b)(i) or, in the case of
a willful breach of covenant or agreement by the Company, 8.4(b)(ii) and within
12 months of such termination of this Agreement, any Acquisition Proposal by a
third party is consummated by the Company, then, in the case of (i) or (ii), the
Company shall pay Parent a termination fee of $25,000,000 in same-day funds,
together with interest accrued thereon at a rate equal to the prime rate, as
announced by Citibank, N.A. from time to time, plus 2% during the period
commencing on the date the termination fee is first payable hereunder. The
termination fee required to be paid pursuant to subsection (b)(i) shall be paid
by the Company to Parent no later than (and as a condition to the effectiveness
of) such termination or such later date to which Parent elects to defer payment
hereunder. The termination fee required to be paid pursuant to subsection
(b)(ii) shall be paid by the Company to Parent not later than concurrently with
such consummation of such Acquisition Proposal and such consummation shall be
preceded by at least three business days advance notice by the Company to
Parent. Notwithstanding the foregoing, (A) Parent may elect, by notice to the
Company, to defer the payment of the termination fee from time to time for a
period or periods of up to an aggregate of twelve months after the date such fee
would otherwise be payable and (B) the termination fee shall cease to be payable
immediately following any exercise by Parent of the Option under the Option
Agreement.
(c) The Company acknowledges that the agreements contained in Section
8.5(b) are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Parent would not have entered into this
Agreement; accordingly, if the Company fails to promptly pay the amount due
pursuant to Section 8.5(b) and, in order to obtain such payment, Parent
commences a suit which results in a judgment against the Company for the fee set
forth in this Section 8.5, the Company shall pay to Parent its costs and
expenses (including attorneys' fees) in connection with such suit.
SECTION 8.6 Amendment. This Agreement may be amended by action taken by
the Company and Parent at any time before or after approval of the Merger by the
Required Company Vote but, after any such approval, no amendment shall be made
which requires the approval of such stockholders under applicable Law without
such approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of the parties hereto.
SECTION 8.7 Extension; Waiver. At any time prior to the Effective Time,
each party hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document, certificate or writing delivered pursuant hereto
48
or (iii) waive compliance by the other party with any of the agreements or
conditions contained herein. Any agreement on the part of either party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of either party hereto to
assert any of its rights hereunder shall not constitute a waiver of such rights.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Nonsurvival of Representations and Warranties. None of the
representations, warranties, covenants and agreements in this Agreement or in
any exhibit, schedule or instrument delivered pursuant to this Agreement shall
survive beyond the Effective Time. This Section 9.1 shall not limit any covenant
or agreement of the parties which by its terms contemplates performance after
the Effective Time.
SECTION 9.2 Entire Agreement; Assignment. (a) This Agreement (including
the schedules) constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all other prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by operation of Law (including, but not
limited to, by merger or consolidation) or otherwise; provided, however, that
Parent may assign, in its sole discretion, any or all of its rights, interests
and obligations under this Agreement to Merger Sub or any direct wholly owned
subsidiary of Parent, but no such assignment shall relieve Parent of its
obligations hereunder if such assignee does not perform such obligations. Any
assignment in violation of the preceding sentence shall be void. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 9.3 Notices. All notices, requests, instructions or other
documents to be given under this Agreement shall be in writing and shall be
deemed given, (i) five business days following sending by registered or
certified mail, postage prepaid, (ii) when sent if sent by facsimile; provided
that the fax is promptly confirmed by telephone confirmation thereof, (iii) when
delivered, if delivered personally to the intended recipient and (iv) one
business day following sending by overnight delivery via a national courier
service, and in each case, addressed to a party at the following address for
such party:
if to Parent to: The Interpublic Group of Companies, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Camera
Facsimile: (000) 000-0000
49
with a copy to: Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxx
Facsimile: (000) 000-0000
if to the Company, to: NFO Worldwide, Inc.
0 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to: Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 9.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of New York (except to the
extent that provisions of the DGCL are mandatorily applicable), without giving
effect to the choice of Law principles thereof.
SECTION 9.5 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.6 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
SECTION 9.7 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
50
SECTION 9.8 Enforcement; Jurisdiction. The parties agree that
irreparable damage would occur 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 court of
the United States located in the State of New York or in New York 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 New
York or any New York state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated hereby, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated hereby
in any court other than a federal or state court sitting in the State of New
York.
SECTION 9.9 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 9.10 Interpretation. (a) The words "hereof," "herein" and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." All terms defined in
this Agreement shall have the defined meanings contained herein 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 terms. 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, qualified or supplemented, including (in
the case of agreements and instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and all attachments
thereto and instruments incorporated therein. References to a person are also to
its permitted successors and assigns.
(b) The phrase "made available" in this agreement shall mean that the
information referred to has been actually delivered to the party to whom such
information is to be made available.
(c) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
51
SECTION 9.11 Definitions. (a) "Acquisition Proposal" means an inquiry,
offer or proposal regarding any of the following (other than the transactions
contemplated by this Agreement) involving the Company or any of its
subsidiaries: (i) any merger, consolidation, share exchange, recapitalization,
business combination or other similar transaction; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of all or
substantially all the assets of the Company and its subsidiaries, taken as a
whole, in a single transaction or series of related transactions; (iii) any
tender offer or exchange offer for 20 percent or more of the outstanding Shares
or the filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
(b) "beneficial ownership" or "beneficially own" shall have the meaning
provided in Section 13(d) of the Exchange Act and the rules and regulations
thereunder.
(c) "know" or "knowledge" means, with respect to any party, the
knowledge of such party's executive officers after due inquiry, including
inquiry of such party's counsel and other officers or employees of such party
responsible for the relevant matter.
(d) "Material Adverse Effect" means with respect to any entity, any
change, circumstance or effect that, individually or in the aggregate with all
other changes, circumstances and effects, is or is reasonably likely to be
materially adverse to (i) the assets, properties, condition (financial or
otherwise), or results of operations of such entity and its subsidiaries taken
as a whole or (ii) the ability of such party to consummate the transactions
contemplated by this Agreement; provided that, with respect to the Company, the
occurrence of the events or circumstances referenced in Section 9.11(d) of the
Company Disclosure Schedule shall not constitute a Material Adverse Effect; and
provided further that any changes, circumstances or effects resulting solely
from, and consistent with, changes in the economy generally shall not constitute
a Material Adverse Effect. For the avoidance of doubt, a Material Adverse Effect
shall not include any action, suit or proceeding instituted by a
non-Governmental Entity that seeks to, but does not actually, restrain, enjoin
or otherwise prevent consummation of any transaction contemplated by this
Agreement.
(e) "person" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
(f) "subsidiary" means, when used with reference to any entity, any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other subsidiary of such party is a general or
managing partner or (ii) the outstanding voting securities or interests of,
which having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation or other organization, is directly or indirectly owned or controlled
by such party or by any one or more of its subsidiaries (for the avoidance of
doubt, the Company acknowledges and agrees that InsightExpress, L.L.C. is a
subsidiary of the Company for purposes of this Agreement).
[signature page follows]
52
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: /s/ Xxxxxxxx X. Camera
--------------------------------
Name: Xxxxxxxx X. Camera
Title: Vice President
NFO WORLDWIDE, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Financial Officer
Exhibit A
[FORM OF COMPANY AFFILIATE LETTER TO PARENT]
[Date]
[Parent]
[Address]
Dear Sir/Madam:
Reference is made to the provisions of the Agreement and Plan of
Merger, dated as of ______ (together with any amendments thereto, the "Merger
Agreement"), between [insert name], a Delaware corporation (the "Company"), and
[insert name], a Delaware corporation ("Parent"), pursuant to which Merger Sub
will be merged with and into the Company, with the Company continuing as the
surviving corporation (the "Merger"). This letter constitutes the undertakings
of the undersigned contemplated by the Merger Agreement, as is being furnished
pursuant to Section 6.12 thereto.
I understand that I may be deemed to be an "affiliate" of the Company,
as such term is defined for purposes of paragraphs (c) and (d) of Rule 145
("Rule 145") promulgated under the Securities Act of 1933, as amended (the
"Securities Act"). Execution of this letter shall not be construed as an
admission of "affiliate" status nor as a waiver of any rights that I may have to
object to any claim that I am an "affiliate" on or after the date of this
letter.
If in fact I were to be deemed an "affiliate" of the Company under
paragraphs (c) and (d) of Rule 145, my ability to sell, transfer or otherwise
dispose of any shares of the common stock, par value $0.01 per share, of Parent
(the "Parent Shares") received by me in exchange for any shares of common stock,
par value $0.01 per share, of the Company (the "Company Shares") pursuant to the
Merger may be restricted.
I hereby represent, warrant and covenant to Parent that:
I will not sell, pledge, transfer or otherwise dispose of any of the
Parent Shares except (i) pursuant to an effective registration statement under
the Securities Act, or (ii) as permitted by, and in accordance with, Rule 145 or
another applicable exemption under the Securities Act and the rules and
regulations promulgated thereunder;
I will not (i) sell, pledge, transfer or otherwise dispose of any
Company Shares during the 30-day period prior to the Effective Time (as defined
in the Merger Agreement) or (ii) sell or otherwise reduce my risk (within the
meaning of the Securities and Exchange Commission's Financial Reporting Release
No. 1., "Codification of Financial Reporting Policies", Section 201.01 47 F.R.
21028 (April 15, 1982)) relative to any Parent Shares until after such time as
consolidated financial results (including combined sales and net income)
covering at least 30 days of post-merger combined operations of Parent and the
Company have been published by Parent, except as permitted by Staff Accounting
Bulletin No. 76 issued by the Securities and Exchange Commission; and
I have not knowingly taken and will not knowingly take or agree to take
any action that would prevent the Merger from qualifying, or being accounted
for, as a "pooling of interests."
A-1
I hereby acknowledge that Parent is under no obligation to register the
sale, transfer, pledge or other disposition of the Parent Shares or to take any
other action necessary for the purpose of making an exemption from registration
available.
I understand that Parent will issue stop transfer instructions to its
transfer agents with respect to the Parent Shares and that a restrictive legend
will be placed on certificates delivered to me evidencing the Parent Shares in
substantially the following form:
"This certificate and the shares represented hereby have been issued
pursuant to a transaction governed by Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), and
may not be sold or otherwise disposed of unless registered under the
Securities Act pursuant to a Registration Statement in effect at the time
or unless the proposed sale or disposition can be made in compliance with
Rule 145 or without registration in reliance on another exemption
therefrom. Reference is made to that certain letter agreement, dated
[Date], between the holder of this certificate and the issuer of this
security (a copy of which is on file in the principal office of such
issuer) which contains further restrictions on the transferability of the
shares represented hereby."
The term Parent Shares as used in this letter shall mean and include
not only the common stock of Parent as presently constituted, but also any other
stock which may be issued in exchange for, in lieu of, or in addition to, all or
any part of such Parent Shares.
I agree that, from time to time, at Parent's reasonable request and
without further consideration, I shall execute and deliver such additional
documents and shall use my reasonable best efforts to take all such further
lawful action as may be reasonably necessary or desirable to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by the Merger Agreement.
I hereby acknowledge that Parent and its independent public accountants
will be relying upon this letter in connection with the determination that the
Merger will qualify and be accounted for as a "pooling of interests", and that I
understand the requirements of this letter and the limitations imposed upon the
transfer, sale or other disposition of the Company Shares and the Parent Shares.
Very truly yours,
Name:
A-2
Exhibit B
[FORM OF PARENT AFFILIATE LETTER TO COMPANY]
[Date]
[Company]
[Address]
Dear Sir/Madam:
Reference is made to the provisions of the Agreement and Plan of
Merger, dated as of ______(together with any amendments thereto, the "Merger
Agreement"), between [insert name], a Delaware corporation (the "Company"), and
[insert name], a Delaware corporation ("Parent"), pursuant to which Merger Sub
will be merged with and into the Company, with the Company continuing as the
surviving corporation (the "Merger"). This letter constitutes the undertakings
of the undersigned contemplated by the Merger Agreement, as is being furnished
pursuant to Section 6.12 thereto.
I hereby represent, warrant and covenant to the Company that:
I will not (i) sell, pledge, transfer or otherwise dispose of any
shares of common stock, par value $0.01 per share, of the Company ("Company
Shares") during the 30-day period prior to the Effective Time (as defined in the
Merger Agreement) or (ii) sell or otherwise reduce my risk (within the meaning
of the Securities and Exchange Commission's Financial Reporting Release No. 1.,
"Codification of Financial Reporting Policies", Section 201.01 47 F.R. 21028
(April 15, 1982)) relative to any shares of common stock, par value $0.01 per
share, of Parent ("Parent Shares") until after such time as consolidated
financial results (including combined sales and net income) covering at least 30
days of post-merger combined operations of Parent and the Company have been
published by Parent, except as permitted by Staff Accounting Bulletin No. 76
issued by the Securities and Exchange Commission; and
I have not knowingly taken and will not knowingly take or agree to take
any action that would prevent the Merger from qualifying, or being accounted
for, as a "pooling of interests".
The term Parent Shares as used in this letter shall mean and include
not only the common stock of Parent as presently constituted, but also any other
stock which may be issued in exchange for, in lieu of, or in addition to, all or
any part of such Parent Shares.
I agree that, from time to time, at Parent's reasonable request and
without further consideration, I shall execute and deliver such additional
documents and shall use my reasonable best efforts to take all such further
lawful action as may be reasonably necessary or desirable to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by the Merger Agreement.
B-1
I hereby acknowledge that the Company and its independent public
accountants will be relying upon this letter in connection with the
determination that the Merger will qualify and be accounted for as a "pooling of
interests", and that I understand the requirements of this letter and the
limitations imposed upon the transfer, sale or other disposition of Parent
Shares.
Very truly yours,
Name:
B-2
