EXHIBIT 2.1
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Agreement and Plan of Merger
Dated as of June 29, 2001
among
TMP Worldwide Inc.,
TMP Tower Corp.
and
XxxXxxx.xxx, Ltd.
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TABLE OF CONTENTS
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(e) Company SEC Documents.....................................................................11
(f) Information Supplied......................................................................12
(g) Absence of Certain Changes or Events......................................................13
(h) Litigation................................................................................13
(i) Contracts.................................................................................13
(j) Compliance with Laws......................................................................14
(k) Absence of Changes in Benefit Plans.......................................................15
(l) ERISA Compliance..........................................................................16
(m) Labor Relations...........................................................................18
(n) Taxes.....................................................................................19
(o) No Excess Parachute Payments; No Section 162(m) Payments..................................20
(p) Title to Properties.......................................................................20
(q) Intellectual Property.....................................................................21
(r) Voting Requirements.......................................................................22
(s) Brokers...................................................................................22
(t) Opinion of Financial Advisor..............................................................22
(u) Accounting Matters........................................................................22
(v) Certain Business Practices................................................................22
Section 3.2. Representations and Warranties of Parent and Sub..........................................22
(a) Organization, Standing and Corporate Power................................................23
(b) Subsidiaries..............................................................................23
(c) Capital Structure.........................................................................23
(d) Authority; Noncontravention...............................................................25
(e) Parent SEC Documents......................................................................26
(f) Information Supplied......................................................................27
(g) Absence of Certain Changes or Events......................................................27
(h) Litigation................................................................................27
(i) Compliance with Laws......................................................................28
(j) Accounting Matters........................................................................28
(k) Tax Matters...............................................................................29
(l) Brokers...................................................................................29
(m) Labor Relations............................................................................29
(n) No Stockholder Vote........................................................................29
(o) Ownership of Company Capital Stock........................................................30
(p) Intellectual Property.....................................................................30
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS...............................................................31
Section 4.1. Conduct of Business......................................................................31
(a) Conduct of Business by the Company........................................................31
(b) Conduct of Business by Parent.............................................................34
Section 4.2. No Solicitation...........................................................................35
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ARTICLE V
ADDITIONAL AGREEMENTS...................................................................................37
Section 5.1. Preparation of the Form S-4 and the Proxy Statement; Stockholders
Meetings.......................................................................................37
Section 5.2. Letters of the Company's Accountants......................................................38
Section 5.3. Letters of Parent's Accountants...........................................................39
Section 5.4. Access to Information; Confidentiality....................................................39
Section 5.5. Reasonable Best Efforts...................................................................40
Section 5.6. Stock Options; Employee Benefits..........................................................41
Section 5.7. Indemnification, Exculpation and Insurance................................................43
Section 5.8. Fees and Expenses.........................................................................46
Section 5.9. Public Announcements.....................................................................46
Section 5.10. Affiliates...............................................................................47
Section 5.11. Nasdaq Listing...........................................................................47
Section 5.12. Pooling of Interests.....................................................................47
Section 5.13. Tax Treatment............................................................................47
Section 5.14. Publication of Combined Financial Results.................................................48
Section 5.15. Notices of Certain Events................................................................48
Section 5.16. Conveyance Taxes.........................................................................48
Section 5.17. [RESERVED]...............................................................................48
Section 5.18. Voting Agreements........................................................................49
Section 5.19. Section 16 Matters.......................................................................49
ARTICLE VI
CONDITIONS PRECEDENT....................................................................................49
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger................................49
(a) Stockholder Approval......................................................................49
(b) Nasdaq Listing............................................................................49
(c) HSR Act...................................................................................49
(d) No Injunctions or Restraints..............................................................49
(e) Form S-4..................................................................................49
(f) Pooling Letters...........................................................................50
(g) No Governmental Litigation................................................................50
(h) Governmental and Regulatory Approvals.....................................................50
Section 6.2. Conditions to Obligations of Parent and Sub..............................................50
(a) Representations and Warranties............................................................50
(b) Performance of Obligations of the Company.................................................51
(c) Letters from Company Affiliates...........................................................51
(d) Consents..................................................................................51
(e) Tax Opinion...............................................................................51
Section 6.3. Conditions to Obligation of the Company..................................................51
(a) Representations and Warranties............................................................51
(b) Performance of Obligations of Parent and Sub..............................................52
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(c) Tax Opinion...............................................................................52
Section 6.4. Frustration of Closing Conditions........................................................52
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER.......................................................................52
Section 7.1. Termination...............................................................................52
Section 7.2. Effect of Termination.....................................................................54
Section 7.3. Amendment.................................................................................54
Section 7.4. Extension; Waiver.........................................................................54
ARTICLE VIII
GENERAL PROVISIONS......................................................................................55
Section 8.1. Nonsurvival of Representations and Warranties.............................................55
Section 8.2. Notices...................................................................................55
Section 8.3. Definitions...............................................................................56
Section 8.4. Interpretation............................................................................58
Section 8.5. Counterparts..............................................................................58
Section 8.6. Entire Agreement; Third-Party Beneficiaries..............................................58
Section 8.7. Governing Law.............................................................................58
Section 8.8. Assignment................................................................................59
Section 8.9. Enforcement...............................................................................59
Section 8.10. Severability..............................................................................59
Exhibit 5.10(a) Form of Company Affiliate Letter
Exhibit 5.10(b) Form of Parent Affiliate Letter
Exhibit 5.18 Form of Company Voting Agreement
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INDEX OF DEFINED TERMS
DEFINED TERM SECTION
Adjusted Option 5.6(a)
Affiliate 8.3(a)
Agreement Preamble
Benefit Plans 3.1(l)(i)
Business Day 8.3(b)
Certificate of Merger 1.3
Certificates 2.2(b)
Closing 1.2
Closing Date 1.2
Code Preamble
Commonly Controlled Entity 3.1(l)(i)
Company Preamble
Company Common Stock Preamble
Company Disclosure Memorandum 3.1
Company Preferred Stock 3.1(c)
Company Recommendation 5.1(b)
Company SEC Documents 3.1(e)
Company Stock Plans 5.6(a)
Company Stockholder Approval 3.1(r)
Company Stockholders Meeting 5.1(b)
Company Voting Agreement 5.18
Confidentiality Agreement 5.4
DGCL 1.1
DOJ 5.5(c)
Dow Xxxxx News Release 3.1(e)
Effective Time 1.3
Employees 5.6(f)
Environmental Laws 3.1(j)(ii)
ERISA 3.1(l)(i)
Exchange Act 3.1(d)
Exchange Agent 2.2(a)
Exchange Fund 2.2(a)
Exchange Ratio 2.1(c)
Expenses 5.8(b)
Filed Company SEC Document 3.1(e)
Filed Parent SEC Document 3.2(e)
Form S-4 3.1(f)
FTC 5.5(c)
GAAP Preamble
Governmental Entity 3.1(d)
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DEFINED TERM SECTION
Hazardous Materials 3.1(j)(ii)
HSR Act 3.1(d)
Indemnified Party 5.7(a)
Intellectual Property Rights 3.1(q)
IRS 3.1(l)(i)
Knowledge 8.3(c)
Legal Provisions 3.1(j)(i)
Liens 3.1(d)
Material Adverse Effect 8.3(d)
Material Contracts 3.1(i)
Merger Preamble
Merger Consideration 2.1(c)
Parent Preamble
Parent Common Stock Preamble
Parent Disclosure Memorandum 3.2
Parent Preferred Stock 3.2(c)
Parent SEC Documents 3.2(e)
Parent Stock Issuance 3.2(p)
Parent Stock Plans 3.2(c)
Pension Plans 3.1(l)(i)
Permits 3.1(j)(i)
Person 8.3(e)
Proxy Statement 3.1(d)
Regulatory Law 5.5(b)
Release 3.1(j)(ii)
Restraints 6.1(d)
SEC 3.1(d)
Significant Subsidiary 8.3(f)
Securities Act 3.1(e)
Stock Option 5.6(a)
Sub Preamble
Subsidiary 8.3(g)
Superior Proposal 8.3(h)
Surviving Corporation 1.1
Takeover Proposal 4.2(a)
Tax Returns 3.1(n)
Taxes 3.1(n)
Termination Fee 5.8(b)
Welfare Plans 3.1(l)(i)
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AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of June 29,
2001, among
TMP Worldwide Inc., a
Delaware corporation ("PARENT"), TMP Tower
Corp., a
Delaware corporation and a newly formed, direct, wholly-owned
subsidiary of Parent ("SUB"), and XxxXxxx.xxx, Ltd., a
Delaware corporation (the
"COMPANY").
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved and declared advisable this Agreement and the merger of
Sub with and into the Company (the "MERGER"), upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
share of common stock, par value $0.01 per share, of the Company ("COMPANY
COMMON STOCK"), other than Company Common Stock owned by Parent, Sub or the
Company, will be converted into the right to receive common stock, par value
$0.001 per share, of Parent ("PARENT COMMON STOCK") as set forth herein;
WHEREAS, for U.S. Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "CODE"), and that this Agreement shall be, and is
hereby, adopted as a plan of reorganization for purposes of Sections 354 and 361
of the Code; and
WHEREAS, for financial accounting purposes, it is intended that the
Merger will be accounted for as a pooling of interests transaction under
generally accepted accounting principles ("GAAP").
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement and intending to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1. THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the
Delaware General
Corporation Law (the "DGCL"), Sub shall be merged with and into the Company at
the Effective Time. Following the Effective Time, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "SURVIVING CORPORATION") and shall succeed to and assume all
the rights and obligations of Sub in accordance with the DGCL.
Section 1.2. CLOSING. The closing of the Merger (the "CLOSING") will
take place at 10:00 a.m. on a date to be specified by the parties (the "CLOSING
DATE"), which shall be no later than the second Business Day after satisfaction
or waiver (subject to applicable law) of the conditions set forth in ARTICLE VI
(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of those conditions), at the
offices of Fulbright &
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Xxxxxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another date
or place is agreed to by the parties hereto.
Section 1.3. EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall file a
certificate of merger (the "CERTIFICATE OF MERGER") executed in accordance with
the relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL. The Merger shall become effective at such
time as the Certificate of Merger is duly filed with the Secretary of State of
the State of
Delaware, or at such other time as Parent and the Company shall
agree and specify in the Certificate of Merger (the time the Merger becomes
effective being the "EFFECTIVE TIME").
Section 1.4. CERTIFICATE OF INCORPORATION AND BYLAWS.
(a) The Certificate of Incorporation of the Surviving Corporation shall
be amended in the Merger to read substantially as the Certificate of
Incorporation of Sub until thereafter amended as provided therein or by
applicable law.
(b) The Bylaws of Sub, as in effect immediately prior to the Effective
Time, shall be the Bylaws of the Surviving Corporation until thereafter amended
as provided therein or by applicable law.
Section 1.5. DIRECTORS AND OFFICERS.
(a) The directors of Sub immediately prior to the Effective Time shall
be the directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
(b) The officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
Section 1.6. EFFECTS OF THE MERGER. At and after the Effective Time,
the Merger shall have the effects set forth in the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall be vested in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
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ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.1. EFFECT ON CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Parent or Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock, par value
$.01 per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK.
Each share of Company Common Stock that is owned by the Company, Parent
or Sub shall automatically be canceled and retired and shall cease to
exist, and no Parent Common Stock or other consideration shall be
delivered in exchange therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Each share of Company
Common Stock issued and outstanding immediately prior to the Effective
Time (other than shares to be canceled in accordance with Section
2.1(b)) shall be converted into the right to receive a fraction of a
validly issued, fully paid and nonassessable share of Parent Common
Stock equal to 0.2195 (the "EXCHANGE RATIO" and, together with any cash
to be paid in lieu of fractional shares of Parent Common Stock to be
paid pursuant to Section 2.2(e), the "MERGER CONSIDERATION").
As of the Effective Time, all such shares of Company Common
Stock shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a
certificate which immediately prior to the Effective Time represented
any such shares of Company Common Stock shall cease to have any rights
with respect thereto, except the right to receive the Merger
Consideration upon surrender of such certificate in accordance with
Section 2.2, without interest.
Notwithstanding the foregoing, if between the date of this
Agreement and the Effective Time the outstanding shares of Parent
Common Stock or Company Common Stock shall have been changed into a
different number of shares or a different class, by reason of the
occurrence or record date of any stock dividend, subdivision,
reclassification, recapitalization, split, combination, exchange of
shares or similar transaction, the Exchange Ratio shall be
appropriately adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination, exchange or
similar transaction.
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Section 2.2. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time, Parent shall
deposit with The Bank of New York or such other bank or trust company
as may be designated by Parent (the "EXCHANGE AGENT") and which shall
be reasonably acceptable to the Company, for the benefit of the holders
of shares of Company Common Stock, for exchange in accordance with this
ARTICLE II, through the Exchange Agent, certificates representing the
shares of Parent Common Stock (such shares of Parent Common Stock,
together with any dividends or distributions with respect thereto with
a record date after the Effective Time and any cash payments in lieu of
any fractional shares of Parent Common Stock, being hereinafter
referred to as the "EXCHANGE FUND") issuable pursuant to Section 2.1 in
exchange for outstanding shares of Company Common Stock. Parent agrees
to make available to the Exchange Agent from time to time, as needed,
cash sufficient to pay cash in lieu of fractional shares pursuant to
Section 2.2(e) and any dividends and other distributions pursuant to
Section 2.2(c).
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, Parent shall cause the Exchange Agent to mail
to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding shares
of Company Common Stock (the "CERTIFICATES") whose shares were
converted into the right to receive the Merger Consideration pursuant
to Section 2.1(c), (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions
as Parent may reasonably specify and shall be reasonably acceptable to
the Company) and (ii) instructions for use in surrendering the
Certificates in exchange for certificates representing the Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required by the
Exchange Agent, the holder of such Certificate shall be entitled to
receive in exchange therefor (x) a certificate representing that number
of whole shares of Parent Common Stock which such holder has the right
to receive pursuant to the provisions of this ARTICLE II after taking
into account all the shares of Company Common Stock then held by such
holder under all such Certificates so surrendered, (y) cash in lieu of
fractional shares of Parent Common Stock to which such holder is
entitled pursuant to Section 2.2(e), and (z) any dividends or other
distributions to which such holder is entitled pursuant to Section
2.2(c) (in each case after giving effect to any required withholding
taxes), and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Company Common Stock which
is not registered in the transfer records of the Company, a certificate
representing the proper number of shares of Parent Common Stock may be
issued to a Person other than the Person in whose name the Certificate
so surrendered is registered, if, upon presentation to the Exchange
Agent, such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the Person requesting such issuance shall
pay any transfer or other taxes required by reason of the issuance of
shares of Parent Common Stock to a Person other than the registered
holder of such Certificate or establish to the reasonable
4
satisfaction of Parent that such tax has been paid or is not
applicable. Notwithstanding anything to the contrary contained herein,
no certificate representing Parent Common Stock or cash in lieu of a
fractional share interest shall be delivered to a Person who is a
"affiliate" (as contemplated by Section 5.10(a) hereof) of the Company
unless such affiliate has theretofore executed and delivered to Parent
the agreement referred to in Section 5.10(a). Until surrendered as
contemplated by this Section 2.2(b), each Certificate shall be deemed
at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration, cash in lieu of
any fractional shares of Parent Common Stock as contemplated by Section
2.2(e) and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.2(c). No interest will be paid or will
accrue on any cash payable to holders of Certificates pursuant to
Section 2.2(c) or Section 2.2(e).
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions with respect to Parent Common Stock
with a record date after the Effective Time shall be paid to the holder
of any unsurrendered Certificate with respect to the shares of Parent
Common Stock represented thereby, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section
2.2(e) until the holder of record of such Certificate shall surrender
such Certificate in accordance with this ARTICLE II. Subject to the
effect of applicable escheat or similar laws, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificate representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender,
the amount of any cash payable in lieu of a fractional share of Parent
Common Stock to which such holder is entitled pursuant to Section
2.2(e) and the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such
whole shares of Parent Common Stock, less the amount of any withholding
taxes which may be required thereon, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to such surrender and a
payment date subsequent to such surrender payable with respect to such
whole shares of Parent Common Stock, less the amount of any withholding
taxes which may be required thereon.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
shares of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this ARTICLE II (including
any cash paid pursuant to Section 2.2(c) or Section 2.2(e)) shall be
deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to the shares of Company Common Stock previously
represented by such Certificates, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may
have been declared or made by the Company on such shares of Company
Common Stock in accordance with the terms of this Agreement or prior to
the date of this Agreement and which remain unpaid at the Effective
Time.
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(e) NO FRACTIONAL SHARES.
(i) No certificates or scrip representing fractional shares of
Parent Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution of Parent shall relate to
such fractional share interests and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a
stockholder of Parent.
(ii) Notwithstanding any other provision of this Agreement,
each holder of shares of Company Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of
a share of Parent Common Stock (after taking into account all
Certificates delivered by such holder) shall receive, in lieu thereof,
cash (without interest) in an amount, less the amount of any
withholding taxes, as contemplated by Section 2.2(f) below, which may
be required thereon, equal to such fractional part of a share of Parent
Common Stock multiplied by the per share closing price of Parent Common
Stock on the Nasdaq National Market on the Closing Date, as such price
is reported by THE WALL STREET JOURNAL (or, if not reported thereby,
any other authoritative source).
(f) WITHHOLDING RIGHTS. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of
Company Common Stock such amounts as it is required to deduct and
withhold with respect to the making of such payment under the Code and
the rules and regulations promulgated thereunder, or any provision of
state, local or foreign tax law. To the extent that amounts are so
withheld by the Surviving Corporation or Parent, as the case may be,
such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company
Common Stock in respect of which such deduction and withholding was
made by the Surviving Corporation or Parent, as the case may be.
(g) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of the Certificates for
six months after the Effective Time shall be delivered to Parent, upon
demand, and any holders of the Certificates who have not theretofore
complied with this ARTICLE II shall thereafter look only to Parent for,
and Parent shall remain liable for, payment of their claim for Merger
Consideration, any cash in lieu of fractional shares of Parent Common
Stock and any dividends or distributions with respect to Parent Common
Stock. Any such portion of the Exchange Fund remaining unclaimed by
holders of shares of Company Common Stock immediately prior to such
time as such amounts would otherwise escheat to or become property of
any Governmental Entity shall, to the extent permitted by law, become
the property of the Surviving Corporation free and clear of any claims
or interest of any Person previously entitled thereto.
(h) NO LIABILITY. None of Parent, Sub, the Company or the
Exchange Agent shall be liable to any Person in respect of any shares
of Parent Common Stock (or dividends or distributions with respect
thereto) or cash in lieu of fractional shares of Parent Common
6
Stock or cash from the Exchange Fund, in each case delivered to a
public official pursuant to any applicable abandoned property, escheat
or similar law.
(i) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by Parent,
on a daily basis, provided that no such investment or loss thereon
shall affect the amounts payable or the timing of the amounts payable
pursuant to the provisions of this Article II. Any interest and other
income resulting from such investments shall be paid to Parent.
(j) LOST CERTIFICATES. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact
by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by the Surviving Corporation, the posting by such
Person of a bond in such reasonable amount as the Surviving Corporation
may direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger
Consideration and any cash in lieu of fractional shares, and unpaid
dividends and distributions on shares of Parent Common Stock
deliverable in respect thereof, in each case pursuant to this
Agreement.
(k) STOCK TRANSFER BOOKS. The stock transfer books of the
Company shall be closed immediately upon the Effective Time and there
shall be no further registration of transfers of shares of Company
Common Stock thereafter on the records of the Company. On or after the
Effective Time, any Certificates presented to the Exchange Agent or the
Surviving Corporation for any reason shall be converted into the Merger
Consideration with respect to the shares of Company Common Stock
formerly represented thereby (including any cash in lieu of fractional
shares of Parent Common Stock to which the holders thereof are entitled
pursuant to Section 2.2(e)) and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 2.2(c).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as
expressly set forth in the Filed Company SEC Documents filed since December 31,
2000 or on the disclosure memorandum delivered by the Company to Parent
immediately prior to the execution of this Agreement and initialed on behalf of
Parent and the Company, which disclosure memorandum specifies the section or
subsection of this Agreement to which the exception relates (the "COMPANY
DISCLOSURE MEMORANDUM"), the Company represents and warrants to Parent and Sub
as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of the
Company and each of its Significant Subsidiaries is a corporation duly
organized, validly existing and, to the extent applicable, in good
standing under the laws of the jurisdiction in which it is organized
and
7
has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted. Each of the Company and each of its Significant Subsidiaries
is duly qualified or licensed to do business and, to the extent
applicable, is in good standing in each jurisdiction in which the
nature of its business or the ownership, leasing or operation of its
properties makes such qualification or licensing necessary, other than
in such jurisdictions where the failure to be so qualified or licensed
individually or in the aggregate would not reasonably be expected to
have a Material Adverse Effect on the Company. The Company has made
available to Parent prior to the execution of this Agreement complete
and correct copies of its Certificate of Incorporation and Bylaws, and
the comparable organizational documents of each of its Significant
Subsidiaries, in each case as amended to the date hereof.
(b) SUBSIDIARIES. All the outstanding shares of capital stock
of, or other equity interests in, each Subsidiary have been validly
issued and are fully paid and nonassessable and are owned directly or
indirectly by the Company free and clear of all Liens, and free of any
restriction on the right to vote, sell or otherwise dispose of such
capital stock or other ownership interests. Other than such
Subsidiaries of the Company, neither the Company nor any Subsidiary
owns a greater than 20% equity interest or similar interest in, or any
interest convertible into or exchangeable or exercisable for a greater
than 20% equity or similar interest in, any Person. Neither the Company
nor any of its Subsidiaries is subject to any obligation or requirement
to make any material loan, capital contribution investment or similar
expenditure to or in any Person in excess of $500,000 individually or
$1,000,000 to all Persons, except for loans, capital contributions,
investments or similar expenditures by the Company or any Company
Subsidiary to any Company Subsidiary. Except as provided by applicable
law, there are no restrictions of any kind which prevent the payment of
dividends by any Subsidiary.
(c) CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 100,000,000 shares of Company Common Stock and
10,000,000 shares of preferred stock, par value $.01 per share
("COMPANY PREFERRED STOCK"). At the close of business on June 25, 2001,
(i) 37,653,461 shares of Company Common Stock were issued and
outstanding, none of which shares are subject to restrictions (other
than with respect to Rule 144 of the Securities Act) or forfeiture
risks, (ii) no shares of Company Common Stock were held by the Company
in its treasury, (iii) 7,080,696 shares of Company Common Stock were
issuable pursuant to outstanding Company Stock Options, and (iv) no
shares of Company Preferred Stock were issued or outstanding. Since
June 25, 2001, except as permitted by Section 4.1(a)(ii) of this
Agreement, (i) there have been no issuances of capital stock of the
Company (or securities convertible into or exchangeable or exercisable
for such capital stock) other than issuances of Company Common Stock
pursuant to the exercise of options outstanding on June 25, 2001 under
Company Stock Plans, and (ii) no options, warrants, securities
convertible into, or commitments with respect to the issuance of shares
of Company Common Stock have been issued, granted or made. All
outstanding shares of capital stock of the Company are, and all shares
which may be issued pursuant to the Company Stock
8
Plans will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are no bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to
vote) on any matters on which stockholders of the Company may vote.
Except (i) as set forth above in this Section 3.1(c), and (ii) for
shares of Company Common Stock reserved for issuance under any plan or
arrangement providing for the grant of options to purchase shares of
Company Common Stock to current or former officers, directors,
employees or consultants of the Company or its Subsidiaries or
resulting from the issuance of shares of Company Common Stock pursuant
to Stock Options outstanding as of the close of business on June 25,
2001, (x) there are not issued, issuable, reserved for issuance or
outstanding (A) any shares of capital stock or other voting securities
of the Company, (B) any securities of the Company convertible into or
exchangeable or exercisable for shares of capital stock or voting
securities of the Company, (C) any warrants, calls, options or other
rights to acquire from the Company or any Subsidiary of the Company,
and no obligation of the Company or any Subsidiary of the Company to
issue, any capital stock, voting securities or securities convertible
into or exchangeable or exercisable for capital stock or voting
securities of the Company or (D) stock appreciation rights or rights to
receive shares of Company Common Stock on a deferred basis granted
under the Company Stock Plans or otherwise; and (y) there are not any
outstanding obligations of the Company or any Subsidiary of the Company
to repurchase, redeem or otherwise acquire any such securities or to
issue, deliver or sell, or cause to be issued, delivered or sold, any
such securities. Neither the Company nor any Subsidiary is a party to
any voting agreement with respect to the voting of any such securities.
Except as set forth in this Section 3.1(c), there are no issued,
issuable, reserved for issuance or outstanding (A) securities of the
Company or any Subsidiary of the Company convertible into or
exchangeable or exercisable for shares of capital stock or other voting
securities or ownership interests in any Subsidiary of the Company, (B)
warrants, calls, options or other rights to acquire from the Company or
any Subsidiary of the Company, and no obligation of the Company or any
Subsidiary of the Company to issue, any capital stock, voting
securities or other ownership interests in, or any securities
convertible into or exchangeable or exercisable for any capital stock,
voting securities or ownership interests in, any Subsidiary of the
Company or (C) obligations of the Company or any Subsidiary of the
Company to repurchase, redeem or otherwise acquire any such outstanding
securities of Subsidiaries of the Company or to issue, deliver or sell,
or cause to be issued, delivered or sold, any such securities. Except
as set forth above in this Section 3.1(c), neither the Company nor any
Subsidiary is a party to or bound by any agreement regarding any
securities of the Company or any Subsidiary of the Company.
(d) AUTHORITY; NONCONTRAVENTION. The Company has the requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action
on the part of the Company and no
9
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby, subject, in the case of the Merger, to receipt of the Company
Stockholder Approval and the filing of the Certificate of Merger. The
Board of Directors of the Company has approved this Agreement,
determined that this Agreement and the transactions contemplated hereby
are fair to and in the best interests of the Company and its
stockholders and declared that the Merger is advisable, provided that
after the date hereof, the Board of Directors of the Company may
withdraw its recommendation as provided in Section 4.2 hereof. Assuming
that the representation of Parent contained in Section 3.2(n) is
correct, the Board of Directors of the Company has taken all action
necessary to render inapplicable, as it relates to the execution,
delivery and performance of this Agreement and the Company Voting
Agreements and the consummation of the Merger and the other
transactions contemplated hereby and thereby, Section 203 of the DGCL.
To the Company's Knowledge, except for Section 203 of the DGCL (the
restrictions of which have been rendered inapplicable), no state
takeover statute is applicable to this Agreement, the Merger, or the
other transactions contemplated hereby or thereby. This Agreement has
been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by each of the other parties
thereto, constitutes legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with its terms
(except insofar as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally or by principles governing
availability of equitable remedies).
The execution and delivery of this Agreement does not, and the
consummation of the Merger and the other transactions contemplated by
this Agreement and compliance with the provisions of this Agreement
will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any
obligation or to loss of a benefit under, or result in the creation of
any pledge, claim, lien, charge, encumbrance or security interest of
any kind or nature whatsoever (collectively, "LIENS") in or upon any of
the properties or assets of the Company or any Subsidiary of the
Company under, (i) the Company's Certificate of Incorporation or Bylaws
or the comparable organizational documents of any of its Subsidiaries,
(ii) any loan or credit agreement, bond, note, mortgage, indenture,
lease or other contract, agreement, obligation, commitment,
arrangement, understanding, instrument, permit or license applicable to
the Company or any of its Subsidiaries or their respective properties
or assets or (iii) subject to the governmental filings and other
matters referred to in the following paragraph, any (A) statute, law,
ordinance, rule or regulation or (B) judgment, order or decree, in each
case applicable to the Company or any of its Subsidiaries or their
respective properties or assets, other than, in the case of clauses
(ii) and (iii), any such conflicts, violations, defaults, rights,
cancellations, accelerations, losses or Liens that individually or in
the aggregate would not reasonably be expected to have a Material
Adverse Effect on the Company or to prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
10
No consent, approval, order or authorization of, action by or
in respect of, or registration, declaration or filing with, any
supranational, national, state, municipal, local or foreign government,
any instrumentality, subdivision, court, administrative agency or
commission or other authority thereof, or any quasi-governmental or
private body exercising any regulatory, taxing, importing or other
governmental or quasi-governmental authority (each, a "GOVERNMENTAL
ENTITY") is required by or with respect to the Company or any of its
Subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
Merger or the other transactions contemplated by this Agreement, except
for (1) the filing of a premerger notification and report form by the
Company under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR ACT") and any applicable filings and approvals
under similar foreign antitrust laws and regulations, (2) the filing
with the Securities and Exchange Commission (the "SEC") of (A) a proxy
statement relating to the meeting of the Company's stockholders to be
held in connection with the Merger (as amended or supplemented from
time to time, the "PROXY STATEMENT") and (B) such reports under Section
13(a), 13(d), 15(d) or 16(a) of the Securities Exchange Act of 1934 as
amended, and the rules and regulations promulgated thereunder (the
"EXCHANGE ACT"), as may be required in connection with this Agreement
and the transactions contemplated by this Agreement, (3) the filing of
the Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business, (4) such
filings with Governmental Entities to satisfy the applicable
requirements of state securities or "blue sky" law and (5) such other
consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made
individually or in the aggregate would not reasonably be expected to
have a Material Adverse Effect on the Company or to prevent or
materially delay the consummation of the transactions contemplated by
this Agreement.
(e) COMPANY SEC DOCUMENTS. The Company has timely filed all
reports, schedules, forms, statements and other documents (including
exhibits and other information incorporated therein) with the SEC
required to be filed by the Company since January 1, 1999 (the "COMPANY
SEC DOCUMENTS"). No Company Subsidiary is required to file any form,
report, registration statement, prospectus or other document with the
SEC. As of their respective dates (and, if amended or superseded by a
filing prior to the date of this Agreement or the Closing Date, then on
the date of such filing), (i) the Company SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder (the
"SECURITIES ACT") or the Exchange Act, as the case may be, applicable
to such Company SEC Documents, and none of the Company SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company SEC Documents filed since
December 31, 2000, together with any public announcements in a news
release issued by the Dow Xxxxx news service, PR Newswire or any
equivalent service (collectively, a "DOW XXXXX NEWS RELEASE")
11
made by the Company after the date hereof taken as a whole, as of the
Effective Time will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
existing as of the Effective Time, not misleading. The financial
statements (including the related notes) of the Company included in the
Company SEC Documents, as of their respective dates, complied in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, were
prepared in accordance with GAAP, applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto)
and (except as amended or superseded by a filing prior to the date of
this Agreement) fairly presented the financial position of the Company
and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments not material in amount). Except (i) as set
forth in the Filed Company SEC Documents filed since December 31, 2000
or (ii) for the transactions contemplated by this Agreement, neither
the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the Company. For purposes
of this Agreement, a "FILED COMPANY SEC DOCUMENT" shall mean a Company
SEC Document filed by the Company and publicly available prior to the
date of this Agreement.
(f) INFORMATION SUPPLIED. None of the information to be
supplied by the Company specifically for inclusion or incorporation by
reference in the registration statement on Form S-4 to be filed with
the SEC by Parent in connection with the issuance of Parent Common
Stock in the Merger (the "FORM S-4") will, at the time the Form S-4 is
filed with the SEC, at any time it is supplemented or amended or at the
time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading and the Proxy Statement will not, on the date it is first
mailed to the Company's stockholders and at the time of the Company
Stockholders Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on
information supplied by Parent or Sub specifically for inclusion or
incorporation by reference in the Proxy Statement. The Proxy Statement
will comply in all material respects with the requirements of the
Exchange Act, as applicable to the Company, except that no
representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on
information supplied by Parent or Sub specifically for inclusion or
incorporation by reference in the Proxy Statement.
12
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in the Filed Company SEC Documents filed after December 31, 2000 and
for transactions expressly contemplated or permitted by this Agreement,
since December 31, 2000 (i) the Company and its Subsidiaries have
conducted their businesses in the ordinary course consistent with past
practice and (ii) there has not been a Material Adverse Effect on the
Company. Except as set forth in the Filed Company SEC Documents and for
actions in the ordinary course of business, since December 31, 2000,
neither the Company nor any Company Subsidiary has taken any action, or
failed to take any action, which if such action or failure occurred
during the period from the date of this Agreement to the Effective Time
would constitute a breach or violation of Section 4.1(a) (i), (ii),
(iv), (vi), (viii), (ix), (xi), (xii), (xiii) or (xiv), and neither the
Company nor any Company Subsidiary has authorized, or committed or
agreed, to take any of such actions.
(h) LITIGATION. There is no suit, action or proceeding pending
or, to the Knowledge of the Company, overtly threatened against or
affecting the Company or any of its Subsidiaries or any of their
respective properties that individually or in the aggregate would
reasonably be expected to have a Material Adverse Effect on the
Company, nor is there any judgment, decree, injunction, rule, order,
action, demand or requirement of any Governmental Entity or arbitrator
outstanding against, or, to the Knowledge of the Company, any
investigation by any Governmental Entity involving, the Company or any
of its Subsidiaries that individually or in the aggregate would
reasonably be expected to have a Material Adverse Effect on the
Company.
(i) CONTRACTS. Except as set forth in Section 3.1(i) of the
Company Disclosure Memorandum or listed as an exhibit to the Company's
Annual Report on Form 10-K for the year ended December 31, 2000,
neither the Company nor any Company Subsidiary is a party to, and none
of their respective properties or assets are bound by, any "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K
of the SEC) (the contracts listed in Section 3.1(i) of the Company
Disclosure Memorandum being referred to as the "MATERIAL CONTRACTS").
Each such Material Contract is a valid, binding and enforceable
obligation of the Company or its Subsidiaries and, to the Company's
Knowledge, of the other party or parties thereto, in accordance with
its terms, and in full force and effect, except where the failure to be
valid, binding, enforceable and in full force and effect would not
reasonably be expected to have a Material Adverse Effect on the Company
and to the extent as may be limited by applicable bankruptcy,
insolvency, moratorium or other laws affecting the enforcement of
creditors' rights generally or by general principles of equity. The
Company has not received any notice from any other party to any such
Material Contract, and otherwise has no Knowledge that such third party
intends to terminate, or not renew, any such Material Contract. As of
the date hereof, the Company has made available to Parent true and
correct copies of all such contracts. Neither the Company nor any of
its Subsidiaries, and, to the Knowledge of the Company, no other party
thereto, is in violation of or in default under (nor does there exist
any condition which upon the passage of time or the giving of notice or
both would cause such a violation of or default under) any loan or
13
credit agreement, bond, note, mortgage, indenture, lease or other
contract, agreement, obligation, commitment, arrangement,
understanding, instrument, permit or license to which it is a party or
by which it or any of its properties or assets is bound, except for
violations or defaults that individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect on the
Company. Neither the Company nor any of its Subsidiaries is a party to
or otherwise bound by any agreement or covenant not to compete or by
any agreement or covenant restricting the development, marketing or
distribution of the Company's or its Subsidiaries' products or services
or the conduct of their businesses in a manner that would be materially
adverse to the business of the Company and its Subsidiaries taken as a
whole.
(j) COMPLIANCE WITH LAWS.
(i) Each of the Company and its Subsidiaries is in compliance
with all statutes, laws, ordinances, rules, regulations, judgments,
orders and decrees of any Governmental Entity (other than Environmental
Laws) (collectively, "LEGAL PROVISIONS") applicable to its business or
operations, except for instances of noncompliance that individually or
in the aggregate would not reasonably be expected to have a Material
Adverse Effect on the Company. Since January 1, 1998, neither the
Company nor any of its Subsidiaries has received any written notice
from any Governmental Entity regarding any actual or possible violation
of, or failure to comply with, any Legal Provisions, except for such
violations or failures to comply that individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect on
the Company. Each of the Company and its Subsidiaries has in effect all
approvals, authorizations, certificates, filings, franchises, licenses,
notices, permits and rights of or with all Governmental Entities,
including all authorizations under Environmental Laws ("PERMITS"),
necessary for it to own, lease or operate its properties and assets and
to carry on its business and operations as now conducted, except for
the failure to have such Permits that individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect on
the Company. There has occurred no default under, or violation of, any
such Permit, except for defaults under, or violations of, Permits that
individually or in the aggregate would not reasonably be expected to
have a Material Adverse Effect on the Company. The Merger, in and of
itself, would not cause the revocation or cancellation of any such
Permit that individually or in the aggregate is reasonably likely to
have a Material Adverse Effect on the Company.
(ii) Except for those matters that individually or in the
aggregate would not reasonably be expected to have a Material Adverse
Effect on the Company: (A) each of the Company and its Subsidiaries is,
and has been, in compliance with all applicable Environmental Laws; (B)
during the period of ownership or operation by the Company or its
Subsidiaries of any of its currently or previously owned, leased or
operated properties, no Hazardous Material has been treated or disposed
of, and there have been no Releases or threatened Releases of Hazardous
Material at, in, on, under or affecting such properties or any
contiguous site; (C) prior to the period of ownership or operation by
the Company or its
14
Subsidiaries of any of its currently or previously owned, leased or
operated properties, to the Knowledge of the Company, no Hazardous
Material was treated, stored or disposed of, and there were no Releases
of Hazardous Material at, in, on, under or affecting any such property
or any contiguous site; and (D) neither the Company nor its
Subsidiaries have received any written notice of, or entered into or
assumed by contract, judicial or administrative settlement, or
operation of law any indemnification obligation, order, settlement or
decree relating to: (1) any violation of any Environmental Laws or the
institution or pendency of any suit, action, claim, proceeding or
investigation by any Governmental Entity or any third party in
connection with any alleged violation of Environmental Laws or any
Release of Hazardous Materials, (2) the response to or remediation of
Hazardous Material at or arising from any of the Company's or its
Subsidiaries' activities or properties or any other properties or (3)
payment for any response action relating to or remediation of Hazardous
Material at or arising from any of the Company's or its Subsidiaries'
properties, activities, or any other properties. The term
"ENVIRONMENTAL LAWS" means all applicable U.S., state, local and
foreign laws, statutes, treaties, rules, codes, ordinances,
regulations, certificates, orders, directives, interpretations,
licenses, permits and other authorizations of any Governmental Entity
and judgments, decrees, injunctions, writs, orders or like action of
any court, arbitrator or other administrative, judicial or
quasi-judicial tribunal or agency of competent jurisdiction, including
any thereof of the European Community or the European Union having the
force of law and being applicable to the Company or any of its
Subsidiaries, dealing with the protection of health, welfare or the
environment, including, without limitation, flood, pollution or
disaster laws and health and environmental protection laws and
regulations, and all other rules and regulations promulgated thereunder
and any provincial, municipal, water board or other local statute, law,
rule, regulation or ordinance relating to public or employee health,
safety or the environment; including all laws relating to Releases to
air, water, land or groundwater, relating to the withdrawal or use of
groundwater, and relating to the use, handling, transportation,
manufacturing, introduction into the stream of commerce or disposal of
Hazardous Materials.
The term "HAZARDOUS MATERIALS" means any chemical, material,
liquid, gas, substance or waste, whether naturally occurring or
man-made, that is prohibited, limited or regulated by or pursuant to an
Environmental Law applicable to the Company, any Company Subsidiary or
their respective properties.
The term "RELEASE" means the spilling, leaking, discharging,
injecting, emitting and/or disposing and placement of a Hazardous
Material in any location that poses a threat thereof.
(k) ABSENCE OF CHANGES IN BENEFIT PLANS. There has not been,
since December 31, 2000, any adoption or amendment in any material
respect by the Company or any of its Subsidiaries of any collective
bargaining agreement or any Benefit Plan, or any material change in any
actuarial or other assumption used to calculate funding obligations
with
15
respect to any Pension Plans, or any change in the manner in which
contributions to any Pension Plans are made or the basis on which such
contributions are determined.
(l) ERISA COMPLIANCE.
(i) Section 3.1(l)(i) of the Company Disclosure Memorandum
contains a list of each pension, retirement, savings, profit sharing,
medical, dental, health, disability, life, death benefit, group
insurance, deferred compensation, fringe, change in control, retiree,
stock option, stock purchase, restricted stock, bonus or incentive,
vacation, sick leave, severance pay, employment or termination, and
other material employee benefit or compensation plan, arrangement,
contract, agreement (including pursuant to any collective bargaining
agreement), policy, practice or commitment, whether formal or informal,
written or oral, in each case that are binding commitments of the
Company and its Subsidiaries (but, for purposes hereof, excluding any
non-material plan or program maintained by the Company or its
Subsidiaries for the benefit of non-U.S. employees), under which (1)
current or former employees, officers, directors or independent
contractors of the Company or any of its Subsidiaries (or their
beneficiaries) participate or are entitled to participate by reason of
their relationship with the Company or any of its Subsidiaries, (2) to
which the Company or any of its Subsidiaries is a party or a sponsor or
a fiduciary thereof or by which the Company or any of its Subsidiaries
(or any of their rights, properties or assets) is currently bound or
(3) with respect to which the Company or any of its Subsidiaries has
any obligation to make payments or contributions, including, without
limitation, all "employee pension benefit plans" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (sometimes referred to herein as "PENSION PLANS"), "employee
welfare benefit plans" (as defined in Section 3(1) of ERISA) (sometimes
referred to herein as "WELFARE PLANS") (all of the foregoing referred
to collectively herein as "BENEFIT PLANS"), and all other Benefit Plans
maintained, or contributed to, by the Company, its Subsidiaries or any
Person or entity that, together with the Company, is treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code (a
"COMMONLY CONTROLLED ENTITY") for the benefit of any current or former
officers, directors, employees or independent contractors of the
Company and its Subsidiaries (or their beneficiaries) (including any
such plans maintained for current or former foreign employees). The
Company has made available to Parent true, complete and correct copies
of (1) each Benefit Plan (or, in the case of any unwritten Benefit
Plans, descriptions thereof), (2) the most recent annual report on Form
5500 required to be filed with the Internal Revenue Service (the "IRS")
with respect to each Benefit Plan, (3) the most recent summary plan
description for each Benefit Plan for which such summary plan
description is required and (4) each trust agreement and group annuity
contract relating to any Benefit Plan. Each Benefit Plan has been
administered in all material respects in accordance with its terms. The
Company, its Subsidiaries and all the Benefit Plans are all in
compliance in all material respects with the applicable provisions of
ERISA, the Code and all other applicable Legal Provisions.
Notwithstanding anything contained herein to the contrary, with respect
to any Benefit Plan maintained, sponsored or contributed to primarily
for the benefit of persons residing and providing services to the
Company or its
16
Subsidiaries outside of the United States, the term "Benefit Plan" as
used herein shall only include such non-United States Benefit Plans
that are material Benefit Plans of the Company or its Subsidiaries.
(ii) All Pension Plans are the subject of a determination
letter from the IRS to the effect that such Pension Plans are qualified
(or has time remaining to apply under applicable regulations or IRS
pronouncements to make any amendment necessary to obtain a favorable
determination or opinion letter) and exempt from United States Federal
income taxes under Sections 401(a) and 501(a), respectively, of the
Code, and no such determination letter has been revoked nor to the
Company's Knowledge, has any event occurred since the date of its most
recent determination letter or application therefor that would
adversely affect its qualification.
(iii) Neither the Company nor any Commonly Controlled Entity
has (1) at any time in the six years prior to the Closing Date
maintained or contributed to any Benefit Plan that is subject to Title
IV of ERISA, Section 302 of ERISA or Section 412 of the Code or (2) has
any unsatisfied liability under Title IV of ERISA, Section 302 of
ERISA, Section 412 of the Code or Section 4980B of the Code. None of
the Company, its Subsidiaries, or any Commonly Controlled Entity
contributes to a "multiemployer plan" as defined in Section 3(37) of
ERISA.
(iv) With respect to any Benefit Plan (other than employment
agreements or any other individual contract), there are no
understandings, agreements or undertakings, written or oral, that would
prevent any such Benefit Plan (including any such plan covering
retirees or other former employees, other than agreements with
individuals) from being amended or terminated without material
liability to the Company on or at any time after the Effective Time.
(v) No pending or, to the Knowledge of the Company, overtly
threatened disputes, lawsuits, claims (other than routine claims for
benefits), investigations, audits or complaints to, or by, any Person
or Governmental Entity have been filed or are pending with respect to
any Benefit Plans of the Company or any of its Subsidiaries in
connection with any Benefit Plan or the fiduciaries or administrators
thereof that could reasonably be expected to give rise to a material
liability. With respect to each Benefit Plan, there has not occurred,
and neither the Company, any Subsidiary of the Company, the plan
sponsor nor, to the Company's Knowledge, a plan fiduciary that the
Company has an obligation to indemnify or is contractually bound to
enter into, any nonexempt "prohibited transaction" within the meaning
of Section 4975 of the Code or Section 406 of ERISA, nor any
transaction that would result in a material civil penalty being imposed
under Section 409 or 502(i) of ERISA.
(vi) There are no unfunded liabilities with respect to any
Benefit Plan other than those that would not individually or in the
aggregate reasonably be expected to have a Material Adverse Effect on
the Company.
17
(vii) Except as would not reasonably be expected to have a
Material Adverse Effect on the Company, all contributions to and
payments with respect to or under the Benefit Plans that are required
to be made with respect to periods ending on or before the Effective
Time have been made or accrued before the Effective Time by the Company
in accordance with the appropriate plan documents, financial
statements, actuarial report, collective bargaining agreements or
insurance contracts or arrangements.
(viii) No Welfare Plan providing medical or death benefits
(whether or not insured) with respect to current or former employees of
the Company or any Subsidiary continues such coverage or provides such
benefits beyond their date of retirement or other termination of
service (except as required by Code Section 4908B or applicable state
healthcare continuation law(s)).
(ix) The execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any plan, policy, arrangement or agreement (including under any
collective bargaining agreement) or any trust or loan that will or
would reasonably be expected to result in any payment (whether of
severance pay or otherwise), acceleration of, forgiveness of
indebtedness owing from, vesting of, distribution of, or increase in or
obligation to fund, any benefits with respect to any current or former
employee, director or consultant of the Company.
(m) LABOR RELATIONS. Neither the Company nor any of its
Subsidiaries is a party to, or bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor
union or labor organization. There is no pending or, to the Knowledge
of the Company, overtly threatened (i) union organizational campaign
effort, collective bargaining negotiations, bargaining impasse,
implementation of final offer, work-to-rule or intermittent strike or
(ii) labor dispute, grievance or arbitration matter, economic or unfair
labor practice strike, boycott, work stoppage or slowdown involving, in
each case of this clause (ii), a material number of employees of the
Company and its Subsidiaries, against the Company or any of its
Subsidiaries, no lockout is in effect and no permanent or temporary
strike replacements are currently employed at any Company facility.
Neither the Company nor any of its Subsidiaries, nor their respective
representatives or employees, has committed any unfair labor practices
in connection with the operation of the respective businesses of the
Company or any of its Subsidiaries, and there is no pending or, to the
Knowledge of the Company, threatened charge, complaint, decision,
order, notice-posting requirement, settlement agreement or injunctive
action or order against the Company or any of its Subsidiaries by the
National Labor Relations Board or any similar governmental or
adjudicatory agency or court, except in each case as would not
reasonably be expected to have a Material Adverse Effect on the
Company. The Company and its Subsidiaries have in the past been and are
in compliance in all respects with all applicable collective bargaining
agreements and Legal Provisions respecting employment, employment
practices, employee classification, labor relations, safety and health,
wages, hours and terms
18
and conditions of employment, except where the failure to be in
compliance would not reasonably be expected to have a Material Adverse
Effect on the Company. The Company has complied in all material
respects with its payment obligations to all employees of the Company
and its Subsidiaries in respect of all wages, salaries, commissions,
bonuses, benefits and other compensation due and payable to such
employees under any Company or Company Subsidiary policy, practice,
agreement, plan, program or any statute or other law. Neither the
Company nor any of its Subsidiaries has experienced within the past 12
months a "plant closing" or "mass layoff" within the meaning of the
Worker Adjustment and Retraining Notification Act, 29 U.S.C. xx.xx.
2101 et seq.
(n) TAXES. Each of the Company and its Subsidiaries has timely
filed all Tax Returns required to be filed by it, or requests for
extensions to file such Tax Returns have been timely filed and granted
and have not expired, and all such filed Tax Returns are complete and
accurate in all respects, except for such failures to (i) file, (ii)
have extensions granted that remain in effect or (iii) be complete and
accurate in all respects, as applicable, as would not individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect on the Company. The Company and each of its Subsidiaries has
paid (or the Company has paid on its behalf) all Taxes required to be
paid by it, except for such failures to pay as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect on the Company. The most recent financial statements contained
in the Filed Company SEC Documents reflect an adequate reserve for all
Taxes payable by the Company and its Subsidiaries for all taxable
periods and portions thereof accrued through the date of such financial
statements, except for such failures to reflect such reserves as would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company. No deficiencies for any Taxes
have been proposed, asserted or assessed against the Company or any of
its Subsidiaries that are not adequately reserved for on the Company's
financial statements in accordance with GAAP except for such failures
to so reserve as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the
Company. Except as set forth in Section 3.1(n) of the Company
Disclosure Memorandum, no Company income or franchise Tax Return has
ever been examined or audited by any Governmental Entity. No requests
for waivers of the time to assess any Taxes against the Company or any
of its Subsidiaries have been granted that remain in effect. No claim
has ever been made in writing by a Governmental Entity in a
jurisdiction where the Company or any of its Subsidiaries does not file
Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Liens for Taxes upon any of the assets of
the Company or its Subsidiaries except Liens for current Taxes not yet
due and payable or for Taxes that are being disputed in good faith by
appropriate proceedings and for which appropriate reserves under GAAP
exist on the books of the Company. Neither the Company nor any of its
Affiliates has taken or agreed to take any action or has Knowledge of
any fact or circumstance that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code. As used in this Agreement, "TAXES" shall
include all U.S. Federal, state and local, domestic and foreign,
income, franchise, property, sales, use, excise and other taxes, of any
nature whatsoever,
19
tariffs or similar governmental charges, including any obligations for
withholding taxes from payments due or made to any other person,
together with all interest, penalties or additions to tax imposed with
respect to such amounts and "TAX RETURNS" shall include any return,
report or similar statement (including attached schedules) required to
be filed with respect to any Tax, including, without limitation, any
information return, claim for refund, amended return or declaration of
estimated Tax.
(o) NO EXCESS PARACHUTE PAYMENTS; NO SECTION 162(m) PAYMENTS.
There will be no payments or benefits to any "disqualified individual"
(within the meaning of Section 280G of the Code) that would constitute
or result in an "excess parachute payment" under Section 280G of the
Code as a direct or indirect consequence of the transactions
contemplated by this Agreement, including, without limitation, as a
result of the acceleration of vesting or exercisability of any options
to purchase Company Common Stock held by "disqualified individuals" as
a direct or indirect consequence of the transactions contemplated by
this Agreement. No such Person is entitled to receive any additional
payment from the Company, the Surviving Corporation or any other Person
in the event that the excise tax of Section 4999(a) of the Code is
imposed on such Person. The Benefit Plans and other Company employee
compensation arrangements in effect as of the date of this Agreement
have been designed so that the disallowance of a deduction under
Section 162(m) of the Code for employee remuneration will not apply to
any amounts paid or payable by the Company or any of its Subsidiaries
under any such plan or arrangement.
(p) TITLE TO PROPERTIES. (i) Each of the Company and its
Subsidiaries has good and marketable title to, or valid leasehold
interests in, all its properties and assets except for such as are no
longer used or useful in the conduct of its businesses or as have been
disposed of in the ordinary course of business and except for failures
to have, or defects in title or interests, easements, restrictive
covenants and similar encumbrances that individually or in the
aggregate would not reasonably be expected to have a Material Adverse
Effect on the Company. All such material assets and properties, other
than assets and properties in which the Company or any of its
Subsidiaries has a leasehold interest, are free and clear of all Liens,
except for Liens that individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect on the
Company.
(ii) Each of the Company and its Subsidiaries has complied in
all respects with the terms of all leases to which it is a party and
under which it is in occupancy, and all such leases are in full force
and effect, except for such noncompliance or failure to be in full
force and effect that individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect on the
Company. Each of the Company and its Subsidiaries enjoys peaceful and
undisturbed possession under all such leases, except for failures to do
so that individually or in the aggregate are not reasonably likely to
have a Material Adverse Effect on the Company.
20
(q) INTELLECTUAL PROPERTY.
(i) Each of the Company and its Subsidiaries owns, or is
validly licensed or otherwise has the right to use (in each case free
and clear of all Liens) all patents, patent applications, trademarks,
trademark rights, trade names, trade name rights, service marks,
service xxxx rights, copyrights and other proprietary intellectual
property rights and computer programs (collectively, "INTELLECTUAL
PROPERTY RIGHTS") which if the Company or its Subsidiaries did not own
or validly license or otherwise have the right to use would reasonably
be expected to have a Material Adverse Effect on the Company. Section
3.1(q) of the Company Disclosure Memorandum sets forth, as of the date
hereof, a list of all granted patents, pending patent applications,
trademarks and applications therefor owned by the Company or any of its
Subsidiaries. Except as, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company, (i) the use
of any Intellectual Property Rights by the Company and its Subsidiaries
does not infringe on or otherwise violate the rights of any Person and
is in accordance with any applicable license pursuant to which the
Company or any Subsidiary of the Company acquired the right to use any
Intellectual Property Rights; (ii) no Person is challenging or, to the
Knowledge of the Company, infringing on or otherwise violating any
right of the Company or any of its Subsidiaries with respect to any
Intellectual Property Right owned by and/or licensed to the Company or
its Subsidiaries; and (iii) neither the Company nor any of its
Subsidiaries has received any written notice or otherwise has Knowledge
of any pending claim, order or proceeding with respect to any
Intellectual Property Right used by the Company and its Subsidiaries
and to its Knowledge no Intellectual Property Right owned and/or
licensed by the Company or its Subsidiaries is being used or enforced
in a manner that would reasonably be expected to result in the
abandonment, cancellation or unenforceability of such Intellectual
Property Right. The Company has no Knowledge that the use of its
material Intellectual Property Rights in the business of the Company
and its Subsidiaries as presently conducted or as presently
contemplated does or will infringe (i) any granted patent or existing
trademark or (ii) any patent granted from a pending patent application.
(ii) The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby will not (A) constitute a breach by the Company or
its Subsidiaries of any instrument or agreement governing any Company
Intellectual Property Rights, (B) pursuant to the terms of any license
or agreement relating to any Company Intellectual Property Rights,
cause the modification of any terms of any such license or agreement,
including but not limited to the modification of the effective rate of
any royalties or other payments provided for in any such license or
agreement, (C) cause the forfeiture or termination of any Company
Intellectual Property Rights under the terms thereof, (D) give rise to
a right of forfeiture or termination of any Company Intellectual
Property Rights under the terms thereof or (E) impair the right of the
Company, its Subsidiaries, the Surviving Corporation or Parent to make,
have made, offer for sale, use, sell, export or license any Company
Intellectual Property Rights or portion thereof pursuant to the terms
thereof, except in each case for those matters that individually
21
or in the aggregate would not reasonably be expected to have a Material
Adverse Effect on the Company.
(r) VOTING REQUIREMENTS. The affirmative vote of a majority of
the outstanding shares of Company Common Stock to adopt this Agreement
(the "COMPANY STOCKHOLDER APPROVAL") is the only vote of the holders of
any class or series of the Company's capital stock necessary to adopt
this Agreement and approve the transactions contemplated hereby.
(s) BROKERS. No broker, investment banker, financial advisor
or other Person, other than Lazard Freres & Co., LLC, the fees and
expenses of which will be paid by the Company, is entitled to any
broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.
(t) OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Lazard Freres & Co., LLC, dated the date hereof, to the
effect that, as of such date, the Exchange Ratio is fair from a
financial point of view to the holders of shares of Company Common
Stock.
(u) ACCOUNTING MATTERS. Neither the Company nor any of its
Affiliates has taken or agreed to take any action or has Knowledge of
any fact or circumstance that is reasonably likely to prevent Parent
from accounting for the business combination to be effected by the
Merger as a pooling of interests. The Company's management has
consulted with and has made representations to its advisors regarding
the Company's management's conclusion that the Merger will qualify as a
pooling of interests business combination. Based upon the Company's
management's consultations with its advisors, nothing has come to the
Company's management's attention that would preclude the Merger from
qualifying as a pooling of interests business combination, subject to
the occurrence of any events between (i) the initiation and the
consummation of the Merger and (ii) for a period of two years
subsequent to the consummation of the Merger that would preclude Parent
from accounting for the Merger as a pooling of interests business
combination.
(v) CERTAIN BUSINESS PRACTICES. Neither the Company nor any of
its Subsidiaries nor (to the Knowledge of the Company) any director,
officer, agent or employee of the Company or any of its Subsidiaries
has, in connection with the conduct of the business of the Company and
its Subsidiaries, (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political
activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political
parties or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, or (iii) made any other unlawful
payment.
Section 3.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB. Except
as expressly set forth in the Filed Parent SEC Documents filed since December
31, 2000 or on the disclosure
22
memorandum delivered by Parent to the Company immediately prior to the execution
of this Agreement and initialed on behalf of the Company and Parent, which
disclosure memorandum specifies the section or subsection of this Agreement to
which the exception relates (the "PARENT DISCLOSURE MEMORANDUM"), Parent and Sub
represent and warrant to the Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Parent
and each of its Subsidiaries is a corporation duly organized, validly
existing and, to the extent applicable, in good standing under the laws
of the jurisdiction in which it is organized and has all requisite
corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Each of Parent and
each of its Significant Subsidiaries is duly qualified or licensed to
do business and, to the extent applicable, is in good standing in each
jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure
to be so qualified or licensed individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect on Parent.
Parent has made available to the Company prior to the execution of this
Agreement complete and correct copies of its Certificate of
Incorporation and Bylaws, and the comparable organizational documents
of each of its Significant Subsidiaries, in each case as amended to the
date hereof.
(b) SUBSIDIARIES. All the outstanding shares of capital stock
of, or other equity interests in, each Subsidiary have been validly
issued and are fully paid and nonassessable and are owned directly or
indirectly by Parent free and clear of all Liens, and free of any
restriction on the right to vote, sell or otherwise dispose of such
capital stock or other ownership interests. Other than such
Subsidiaries of Parent, neither Parent nor any Subsidiary owns a
greater than 20% equity interest or similar interest in, or any
interest convertible into or exchangeable or exercisable for a greater
than 20% equity or similar interest in, any Person. Neither the Parent
nor any of its Subsidiaries is subject to any obligation or requirement
to make any material loan, capital contribution investment or similar
expenditure to or in any Person, except for loans, capital
contributions, investments or similar expenditures by Parent or any
Parent Subsidiary to any Parent Subsidiary. Except as provided by
applicable law, there are no restrictions of any kind which prevent the
payment of dividends by any Subsidiary.
Parent owns all the outstanding capital stock of Sub. Sub was
formed solely for the purpose of effecting the Merger and, since the
date of its incorporation, Sub has not engaged in any activities and
has not incurred any liabilities or obligations other than in
connection with its formation and in connection with or as contemplated
by this Agreement.
(c) CAPITAL STRUCTURE. The authorized capital stock of Parent
consists of 1,500,000,000 shares of Parent Common Stock 39,000,000
shares of Parent Class B Common Stock and 1,000,000 shares of Preferred
Stock, par value $.001 per share ("PARENT PREFERRED STOCK"). At the
close of business on June 25, 2001, (i) 103,820,962 shares of
23
Parent Common Stock were issued and outstanding, (ii) 4,762,000 shares
of Parent Class B Common Stock were issued and outstanding, (iii) no
shares of Parent Common Stock were held by Parent in its treasury, (iv)
16,536,718 shares of Parent Common Stock were issuable pursuant to
outstanding Parent Stock Options, (v) no shares of Preferred Stock were
issued or outstanding, and (vi) no shares of 10.5% cumulative preferred
stock, par value $10.00 per share, were issued and outstanding. All
outstanding shares of capital stock of Parent Common Stock are, and all
shares of Parent Common Stock which may be issued pursuant to this
Agreement will be, when issued in accordance with the terms hereof,
duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. As of the date hereof there are no bonds,
debentures, notes or other indebtedness of Parent having the right to
vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which stockholders of Parent may vote.
Except (i) as set forth above in this Section 3.2(c), and (ii) for
shares of Parent Common Stock reserved for issuance under any plan or
arrangement providing for the grant of options to purchase shares of
Parent Common Stock to current or former officers, directors, employees
or consultants of Parent or its Subsidiaries (the "PARENT STOCK PLANS")
or resulting from the issuance of shares of Parent Common Stock
pursuant to options or other benefits issued or granted pursuant to the
Parent Stock Plans outstanding as of the close of business on June 25,
2001, as of the date hereof (x) there are not issued, issuable,
reserved for issuance or outstanding (A) any shares of capital stock or
other voting securities of Parent, (B) any securities of Parent
convertible into or exchangeable or exercisable for shares of capital
stock or voting securities of Parent, (C) any warrants, calls, options
or other rights to acquire from Parent or any Parent Subsidiary, and no
obligation of Parent or any Parent Subsidiary to issue, any capital
stock, voting securities or securities convertible into or exchangeable
or exercisable for capital stock or voting securities of Parent, or (D)
any stock appreciation rights or rights to receive shares of Parent
Common Stock on a deferred basis granted under the Parent Stock
Purchase Plans or otherwise; and (y) there are not any outstanding
obligations of Parent or any Parent Subsidiary to repurchase, redeem or
otherwise acquire any such securities or to issue, deliver or sell, or
cause to be issued, delivered or sold, any such securities. Neither
Parent nor any Significant Subsidiary is a party to any voting
agreement with respect to the voting of any such securities. Except as
set forth in this Section 3.2(c) and in the Joint Venture Agreement
among Parent, TMP Worldwide Pty Limited, Xxxxxxx.xxx A&NZ Pty Limited,
ninemsn Pty Limited, Turustar Pty Limited and Clycal Pty Limited, there
are no issued, issuable, reserved for issuance or outstanding (A)
securities of Parent or any Parent Significant Subsidiary convertible
into or exchangeable or exercisable for shares of capital stock or
other voting securities or ownership interests in any Parent
Significant Subsidiary, (B) warrants, calls, options or other rights to
acquire from Parent or any Significant Subsidiary of Parent, and no
obligation of Parent or any Significant Subsidiary of Parent to issue,
any capital stock, voting securities or other ownership interests in,
or any securities convertible into or exchangeable or exercisable for
any capital stock, voting securities or ownership interests in, any
Significant Subsidiary of Parent or (C) obligations of Parent or any
Significant Subsidiary of Parent to repurchase, redeem or otherwise
acquire any such outstanding securities of the
24
Significant Subsidiaries of Parent or to issue, deliver or sell, or
cause to be issued, delivered or sold, any such securities.
(d) AUTHORITY; NONCONTRAVENTION. Each of Parent and Sub has
all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the part of
Parent and Sub and no other corporate proceedings on the part of Parent
or Sub are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby, subject, in the case of the Merger,
to the filing of the Certificate of Merger. The Board of Directors of
each of Parent and Sub have unanimously approved this Agreement,
determined that this Agreement and the transactions contemplated hereby
are fair to and in the best interests of Parent and Sub and their
respective stockholders and declared that the Merger is advisable. This
Agreement has been duly executed and delivered by Parent and Sub, as
applicable, and, assuming the due authorization, execution and delivery
by each of the other parties thereto, constitute legal, valid and
binding obligations of Parent and Sub, as applicable, enforceable
against Parent and Sub, as applicable, in accordance with its terms
(except insofar as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally or by principles governing
availability of equitable remedies).
The execution and delivery of this Agreement does not, and the
consummation of the Merger and the other transactions contemplated by
this Agreement and compliance with the provisions of this Agreement
will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any
obligation or to loss of a benefit under, or result in the creation of
any Lien in or upon any of the properties or assets of Parent or any of
its Subsidiaries under (i) the Certificate of Incorporation or Bylaws
of Parent or the comparable organizational documents of any of its
Subsidiaries, (ii) any loan or credit agreement, bond, note, mortgage,
indenture, lease or other contract, agreement, obligation, commitment,
arrangement, understanding, instrument, permit or license applicable to
Parent or any of its Subsidiaries or their respective properties or
assets or (iii) subject to the governmental filings and other matters
referred to in the following paragraph, any (A) statute, law,
ordinance, rule or regulation or (B) judgment, order or decree, in each
case applicable to Parent or any of its Subsidiaries or their
respective properties or assets, other than, in the case of clauses
(ii) and (iii), any such conflicts, violations, defaults, rights,
cancellations, accelerations, losses or Liens that individually or in
the aggregate would not reasonably be expected to have a Material
Adverse Effect on Parent or to prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
No consent, approval, order or authorization of, action by or
in respect of, or registration, declaration or filings with, any
Governmental Entity is required by or with
25
respect to Parent or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by Parent and Sub or the
consummation by Parent and Sub of the Merger or the other transactions
contemplated by this Agreement, except for (1) the filing of a
premerger notification and report form under the HSR Act and any
applicable filings and approvals under similar foreign antitrust laws
and regulations, (2) the filing with the SEC of (A) the Form S-4 and
(B) such reports under Section 13(a), 13(d), 15(d) or 16(a) of the
Exchange Act as may be required in connection with this Agreement or
the Company Voting Agreements and the transactions contemplated by this
Agreement or the Company Voting Agreements, (3) the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities of
other states in which the Parent is qualified to do business, (4) such
filings with Governmental Entities to satisfy the applicable
requirements of state securities or "blue sky" laws, (5) such filings
with and approvals of Nasdaq to permit the shares of Parent Common
Stock that are to be issued pursuant to the Merger to be traded on the
Nasdaq National Market and (6) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of
which to be obtained or made individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on Parent
or to prevent or materially delay the consummation of the transactions
contemplated by this Agreement.
(e) PARENT SEC DOCUMENTS. Except as listed in Section 3.2(c)
of the Parent Disclosure Memorandum, Parent has timely filed all
reports, schedules, forms, statements and other documents (including
exhibits and other information incorporated therein) with the SEC
required to be filed by the Parent since January 1, 1999 (the "PARENT
SEC DOCUMENTS"). No Parent Subsidiary is required to file any form,
report, registration statement, prospectus or other document with the
SEC. As of their respective dates (and, if amended or superseded by a
filing prior to the date of this Agreement or the Closing Date, then on
the date of such filing), the Parent SEC Documents complied in all
material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be and none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. The Parent SEC Documents filed since
December 31, 2000, together with any public announcements in a Dow
Xxxxx News Release made by Parent after the date hereof taken as a
whole, as of the Effective Time will not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances existing as of the Effective Time, not misleading.
The financial statements (including the related notes) of Parent
included in the Parent SEC Documents, as of their respective dates,
complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto) and (except as amended or superseded by
a filing prior to the date of this Agreement) fairly presented the
financial position of Parent and its consolidated Subsidiaries as of
the dates thereof and the
26
consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments not material in amount). Except (i) as set
forth in the Parent SEC Documents filed since December 31, 2000 and
(ii) for liabilities set forth in this Agreement, neither Parent nor
any of its Subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) which,
individually or in the aggregate, would reasonably be expected to have
a Material Adverse Effect on Parent. For purposes of this Agreement, a
"FILED PARENT SEC DOCUMENT" shall mean a Parent SEC Document filed by
Parent and publicly available prior to the date of this Agreement.
(f) INFORMATION SUPPLIED. None of the information supplied or
to be supplied by Parent or Sub specifically for inclusion or
incorporation by reference in the Form S-4 will, at the time the Form
S-4 is filed with the SEC, at any time it is supplemented or amended or
at the time it becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Form S-4 will comply in all material respects with the
requirements of the Securities Act and the Exchange Act, respectively,
in each case as applicable to Parent and Sub, except that no
representation or warranty is made by Parent or Sub with respect to
statements made or incorporated by reference therein based on
information supplied by the Company specifically for inclusion or
incorporation by reference in the Form S-4.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in the Filed Parent SEC Documents filed after December 31, 2000 and for
transactions contemplated or permitted by this Agreement, since
December 31, 2000 (i) Parent and its Subsidiaries have conducted their
businesses in the ordinary course consistent with past practice and
(ii) there has not been a Material Adverse Effect on Parent. Except as
set forth in the Filed Parent SEC Documents and for actions in the
ordinary course of business, since December 31, 2000, neither Parent
nor any Parent Subsidiary has taken any action, or failed to take any
action, which if such action or failure occurred during the period from
the date of this Agreement to the Effective Time would constitute a
breach or violation of Section 4.1(b), and neither Parent nor any
Parent Subsidiary has authorized, or committed or agreed, to take any
of such actions.
(h) LITIGATION. There is no suit, action or proceeding pending
or, to the Knowledge of Parent, overtly threatened against or affecting
Parent or any of its Subsidiaries or any of their respective properties
that individually or in the aggregate would reasonably be expected to
have a Material Adverse Effect on Parent, nor is there any judgment,
decree, injunction, rule, order, action, demand or requirement of any
Governmental Entity or arbitrator outstanding against, or, to the
Knowledge of Parent, any investigation by any Governmental Entity
involving, Parent or any of its Subsidiaries that individually or in
the aggregate would reasonably be expected to have a Material Adverse
Effect on Parent.
27
(i) COMPLIANCE WITH LAWS. (i) Each of Parent and its
Subsidiaries is in compliance with all Legal Provisions applicable to
its business or operations, except for instances of noncompliance that
individually or in the aggregate would not reasonably be expected to
have a Material Adverse Effect on Parent. Since January 1, 1998,
neither Parent nor any of its Subsidiaries has received any written
notice from any Governmental Entity regarding any actual or possible
violation of, or failure to comply with, any Legal Provisions, except
for such violations or failures to comply that individually or in the
aggregate would not reasonably be expected to have a Material Adverse
Effect on Parent. Each of Parent and its Subsidiaries has in effect all
Permits necessary for it to own, lease or operate its properties and
assets and to carry on its business and operations as now conducted,
except for the failure to have such Permits that individually or in the
aggregate would not reasonably be expected to have a Material Adverse
Effect on Parent. There has occurred no default under, or violation of,
any such Permit, except for defaults under, or violations of, Permits
that individually or in the aggregate would not reasonably be expected
to have a Material Adverse Effect on Parent. The Merger, in and of
itself, would not cause the revocation or cancellation of any such
Permit that individually or in the aggregate is reasonably likely to
have a Material Adverse Effect on Parent.
(ii) Except for those matters that individually or in the
aggregate would not reasonably be expected to have a Material Adverse
Effect on Parent: (A) each of Parent and its Subsidiaries is, and has
been, in compliance with all applicable Environmental Laws; (B) during
the period of ownership or operation by Parent or its Subsidiaries of
any of its currently or previously owned, leased or operated
properties, no Hazardous Material has been treated or disposed of, and
there have been no Releases or threatened Releases of Hazardous
Material at, in, on, under or affecting such properties or any
contiguous site; (C) prior to the period of ownership or operation by
Parent or its Subsidiaries of any of its currently or previously owned,
leased or operated properties, to the Knowledge of Parent, no Hazardous
Material was treated, stored or disposed of, and there were no Releases
of Hazardous Material at, in, on, under or affecting any such property
or any contiguous site; and (D) neither Parent nor its Subsidiaries
have received any written notice of, or entered into or assumed by
contract, judicial or administrative settlement, or operation of law
any indemnification obligation, order, settlement or decree relating
to: (1) any violation of any Environmental Laws or the institution or
pendency of any suit, action, claim, proceeding or investigation by any
Governmental Entity or any third party in connection with any alleged
violation of Environmental Laws or any Release of Hazardous Materials,
(2) the response to or remediation of Hazardous Material at or arising
from any of Parent's or its Subsidiaries' activities or properties or
any other properties or (3) payment for any response action relating to
or remediation of Hazardous Material at or arising from any of Parent's
or its Subsidiaries' properties, activities, or any other properties.
(j) ACCOUNTING MATTERS. Neither Parent nor any of its
Affiliates has taken or agreed to take any action that would prevent
Parent from accounting for the business combination to be effected by
the Merger as a pooling of interests. Parent's management has consulted
28
with and has made representations to its advisors regarding Parent's
management's conclusion that the Merger will qualify as a pooling of
interests business combination. Based upon Parent's management's
consultations with its advisors, nothing has come to Parent's
management's attention that would preclude the Merger from qualifying
as a pooling of interests business combination, subject to the
occurrence of any events between (i) the initiation and the
consummation of the Merger and (ii) for a period of two years
subsequent to the consummation of the Merger that would preclude Parent
from accounting for the Merger as a pooling of interests business
combination.
(k) TAX MATTERS. Each of Parent and its Subsidiaries has
timely filed all Tax Returns required to be filed by it, or requests
for extensions to file such Tax Returns have been timely filed and
granted and have not expired, and all such filed Tax Returns are
complete and accurate in all respects, except for such failures to (i)
file, (ii) have extensions granted that remain in effect or (iii) be
complete and accurate in all respects, as applicable, as would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent. Parent and each of its Subsidiaries
has paid (or Parent has paid on its behalf) all Taxes required to be
paid by it, except for such failures to pay as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect on Parent. The most recent financial statements contained in the
Filed Parent SEC Documents reflect an adequate reserve for all Taxes
payable by Parent and its Subsidiaries for all taxable periods and
portions thereof accrued through the date of such financial statements,
except for such failures to reflect such reserves as would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent. Neither Parent nor any of its
Affiliates have taken or agreed to take any action or has Knowledge of
any fact or circumstance that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(l) BROKERS. No broker, investment banker, financial advisor
or other Person, other than Deutsche Banc Alex. Xxxxx, the fees and
expenses of which will be paid by Parent, is entitled to any broker's,
finder's, financial advisors or other similar fee or commission in
connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Parent.
(m) LABOR RELATIONS. There is no pending or, to the knowledge
of Parent, overtly threatened union organizational campaign effort,
collective bargaining negotiations, bargaining impasse, implementation
of final offer, boycott, work stoppage, slowdown, work- to-rule or
intermittent strike against Parent or any of its Subsidiaries, no
lockout is in effect and no permanent or temporary strike replacements
are currently employed at any Parent facility, in each case except as
would not be reasonably expected to have a Material Adverse Effect on
Parent.
(n) NO STOCKHOLDER VOTE. No vote of the stockholders of Parent
is necessary to approve the issuance of Parent Common Stock in
connection with the Merger.
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(o) OWNERSHIP OF COMPANY CAPITAL STOCK. Neither Parent nor Sub
is, nor at any time during the last three years has it been, an
"interested stockholder" of the Company as defined in Section 203 of
the DGCL (other than as contemplated by this Agreement). Neither Parent
nor Sub owns (directly or indirectly, beneficially or of record) or is
a party to any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of, in each case, any shares
of capital stock of the Company (other than as contemplated by this
Agreement).
(p) INTELLECTUAL PROPERTY.
(i) Each of the Parent and its Subsidiaries owns, or is
validly licensed or otherwise has the right to use (in each case free
and clear of all Liens) all Intellectual Property Rights which if the
Parent or its Subsidiaries did not own or validly license or otherwise
have the right to use would reasonably be expected to have a Material
Adverse Effect on the Parent. Except as, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Parent,
(i) the use of any Intellectual Property Rights by the Parent and its
Subsidiaries does not infringe on or otherwise violate the rights of
any Person and is in accordance with any applicable license pursuant to
which the Parent or any Subsidiary of the Parent acquired the right to
use any Intellectual Property Rights; (ii) no Person is challenging or,
to the Knowledge of the Parent, infringing on or otherwise violating
any right of the Parent or any of its Subsidiaries with respect to any
Intellectual Property Right owned by and/or licensed to the Parent or
its Subsidiaries; and (iii) neither the Parent nor any of its
Subsidiaries has received any written notice or otherwise has Knowledge
of any pending claim, order or proceeding with respect to any
Intellectual Property Right used by the Parent and its Subsidiaries and
to its Knowledge no Intellectual Property Right owned and/or licensed
by the Parent or its Subsidiaries is being used or enforced in a manner
that would reasonably be expected to result in the abandonment,
cancellation or unenforceability of such Intellectual Property Right.
The Parent has no Knowledge that the use of its material Intellectual
Property Rights in the business of the Parent and its Subsidiaries as
presently conducted or as presently contemplated does or will infringe
(i) any granted patent or existing trademark or (ii) any patent granted
from a pending patent application.
(ii) The execution, delivery and performance of this Agreement
by the Parent and the consummation by the Parent of the transactions
contemplated hereby will not (A) constitute a breach by the Parent or
its Subsidiaries of any instrument or agreement governing any Parent
Intellectual Property Rights, (B) pursuant to the terms of any license
or agreement relating to any Parent Intellectual Property Rights, cause
the modification of any terms of any such license or agreement,
including but not limited to the modification of the effective rate of
any royalties or other payments provided for in any such license or
agreement, (C) cause the forfeiture or termination of any Parent
Intellectual Property Rights under the terms thereof, (D) give rise to
a right of forfeiture or termination of any Parent Intellectual
Property Rights under the terms thereof or (E) impair the right of the
Parent or its Subsidiaries to make, have made, offer for sale, use,
sell, export or license any Parent Intellectual Property
30
Rights or portion thereof pursuant to the terms thereof, except in each
case for those matters that individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect on the Parent.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1. CONDUCT OF BUSINESS.
(a) CONDUCT OF BUSINESS BY THE COMPANY. During the period from the date
of this Agreement to the Effective Time, or the date, if any, on which this
Agreement is earlier terminated pursuant to Section 7.1, and except as may be
agreed in writing by Parent, as may be expressly permitted pursuant to this
Agreement or as set forth in Section 4.1 of the Company Disclosure Memorandum,
the Company shall, and shall cause its Subsidiaries to, carry on their
respective businesses in the ordinary course consistent with past practice and
in compliance in all material respects with all applicable Legal Provisions and,
to the extent consistent therewith, use all commercially reasonable efforts to
preserve intact its current business organizations, keep available the services
of its current officers and key employees and preserve its relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with them with the intention that its goodwill and ongoing
business shall be preserved. Without limiting the generality of the foregoing,
during the period from the date of this Agreement to the Effective Time, or the
date, if any, on which this Agreement is earlier terminated pursuant to Section
7.1, and except as may be agreed in writing by Parent, as may be expressly
permitted pursuant to this Agreement or as set forth in Section 4.1 of the
Company Disclosure Memorandum, the Company shall not, and shall not permit any
of its Subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, stock or property), in
respect of, any of its capital stock, other than dividends or
distributions by a direct or indirect wholly owned Subsidiary of the
Company to its parent, (B) split, combine or reclassify any of its
capital stock or amend the terms of any outstanding securities
(including Stock Options) or (C) purchase, redeem or otherwise acquire
any shares of its capital stock or any other securities;
(ii) issue, deliver, sell, grant, pledge or otherwise encumber
or subject to any Lien any shares of its capital stock, any other
securities convertible into or exercisable or exchangeable for, or any
rights, warrants or options to acquire, any such shares or securities
(other than the issuance of shares of Company Common Stock upon the
exercise of Stock Options outstanding on the date hereof or permitted
to be granted after the date hereof as set forth in Section 4.1 of the
Company's Disclosure Memorandum and in accordance with their terms on
the date hereof) or any "phantom" stock, "phantom" stock rights, stock
appreciation rights or stock based performance units;
31
(iii) amend its Certificate of Incorporation or Bylaws or
other comparable charter or organizational documents;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing assets of, or by any other manner, any Person or
division, business or equity interest of any Person except for
purchases of assets in the ordinary course of business which do not
constitute the purchase of a Person's business;
(v) except in the ordinary course of business, sell, lease,
license, mortgage or otherwise encumber or subject to any Lien or
otherwise dispose of any of its properties or assets (including
securitizations);
(vi) (A) except for borrowings under the Company's existing
credit facilities, incur any indebtedness for borrowed money or
guarantee any such indebtedness of another Person, issue or sell any
debt securities or warrants or other rights to acquire any debt
securities of the Company or any of its Subsidiaries, guarantee any
debt securities of another Person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
Person or enter into any arrangement having the economic effect of any
of the foregoing or (B) make any loans, advances or capital
contributions to, or investments in, any other Person, other than in
the ordinary course of business or to or in any direct or indirect
wholly-owned Subsidiary of the Company (or any foreign Subsidiary of
the Company with nominal non-Company ownership);
(vii) make or agree to make any new capital expenditure
(including leases) or enter into any agreement or agreements providing
for payments which are in excess of $100,000 individually or $500,000
in the aggregate, excluding capital expenditures or agreements provided
for or contemplated by the capital budgets approved by the Company's
Board of the Directors prior to the date hereof (copies of which have
been provided to Parent);
(viii) (A) pay, discharge, settle or satisfy any claims,
liabilities, obligations or litigation (absolute, accrued, asserted or
unasserted, contingent or otherwise) in excess of $100,000 individually
and $250,000 in the aggregate, other than the payment, discharge,
settlement or satisfaction in the ordinary course of business or in
accordance with their terms, of liabilities disclosed, reflected or
reserved against in the most recent consolidated financial statements
(or the notes thereto) of the Company included in the Filed Company SEC
Documents or incurred since the date of such financial statements in
the ordinary course of business, or (B) cancel any indebtedness in
excess of $10,000 individually and $50,000 in the aggregate, other than
in the ordinary course of business;
(ix) modify, amend or terminate any Material Contract to which
the Company or any of its Subsidiaries is a party in a manner that
would reasonably be expected to have a Material Adverse Effect on the
Company;
32
(x) enter into any contract, agreement, binding arrangement or
understanding that would be a Material Contract, other than pursuant to
any such contracts, agreements, arrangements or understandings
currently in place (that have been disclosed in writing to Parent prior
to the date hereof) in accordance with their terms as of the date
hereof;
(xi) except as otherwise set forth in this Agreement or as
required to comply with applicable Legal Provisions or contractual
commitments existing as of the date hereof, (A) adopt, enter into,
terminate or amend in any material respect (I) any collective
bargaining agreement or Benefit Plan or (II) any other agreement, plan
or policy involving the Company or its Subsidiaries, and one or more of
its current or former directors, officers, or other executive
employees, (B) increase in any manner the compensation, bonus or fringe
or other benefits of, or pay any bonus to, any current or former
officer, director or employee, other than in the case of employees who
are neither current nor former officers or directors, increases made in
connection with normal periodic reviews and related compensation and
benefit increases which are consistent with past practice, (C) pay any
benefit or amount not required under any Benefit Plan, (D) increase in
any manner the severance or termination pay of any current or former
director, officer or other executive employee, (E) enter into or amend
any employment, deferred compensation, consulting, severance,
termination or indemnification agreement, arrangement or understanding
with any current or former officer, director or other executive
employee, (F) grant any awards under any bonus, incentive, performance
or other compensation plan or arrangement or Benefit Plan (including
the grant of stock options, stock appreciation rights, performance
units, restricted stock, "phantom" stock or other stock related
awards), or remove any existing restrictions in any Benefit Plans or
agreements or awards made thereunder, (G) amend or modify any Stock
Option, (H) take any action to fund or in any other way secure the
payment of compensation or benefits under any employee plan, agreement,
contract or arrangement or Benefit Plan, or (I) take any action to
accelerate the vesting of payment of any compensation or benefit under
any Benefit Plan;
(xii) except as required by GAAP, make any change in
accounting methods, principles or practices;
(xiii) transfer or license to any Person or otherwise extend,
amend or modify any rights to the Intellectual Property Rights of the
Company and its Subsidiaries, other than in the ordinary course of
business or pursuant to any contracts, agreements, arrangements or
understandings currently in place (that have been disclosed in writing
to Parent prior to the date of this Agreement);
(xiv) take any action (including any action otherwise
permitted by this Section 4.1(a)) that would reasonably be expected to
prevent the Merger from qualifying as a "pooling of interests" for
accounting purposes or as a "reorganization" under Section 368(a) of
the Code;
33
(xv) enter into any hedging, option, derivative or other
similar transaction of any foreign exchange position or contract for
the exchange of currency other than in the ordinary course of business
and consistent with past practice;
(xvi) [RESERVED];
(xvii) take any action that would reasonably be expected to
prevent, impair or materially delay the ability of the Company, Parent
or Sub to consummate the transactions contemplated by this Agreement;
(xviii) (A) change any material tax election; (B) change any
annual tax accounting period or method of tax accounting in any
material respect; (C) file any amended Tax Return; (D) enter into any
closing agreement relating to any material Tax; (E) settle any material
Tax claim or assessment or (F) surrender any right to claim a material
Tax refund or to any extension or waiver of the limitations period
applicable to any material Tax claim or assessment; or
(xix) authorize, or commit or agree to take, any of the
foregoing actions.
(b) CONDUCT OF BUSINESS BY PARENT. During the period from the date of
this Agreement to the Effective Time or the date, if any, on which this
Agreement is earlier terminated pursuant to Section 7.1, and except as may be
agreed in writing by the Company, or as may be contemplated by this Agreement or
Section 4.1(b) of the Parent Disclosure Memorandum, (i) Parent shall and shall
cause its Subsidiaries to carry on their respective businesses in the ordinary
course consistent with past practice and in compliance in all material respects
with all applicable Legal Provisions and, to the extent consistent therewith,
use all commercially reasonable efforts to preserve intact its current business
organizations, keep available the services of its current officers and key
employees and preserve its relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with them with the
intention that its goodwill and ongoing business shall be preserved. Parent
shall not, and shall not permit any of its Subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, stock or property), in
respect of, any of its capital stock, other than dividends or
distributions by a direct or indirect wholly owned Subsidiary of Parent
to its parent, or (B) split, combine or reclassify any of its capital
stock;
(ii) amend its Certificate of Incorporation or other
comparable charter or organizational documents;
(iii) except as required by GAAP, make any changes in
accounting methods, principles or practices;
34
(iv) take any action that would reasonably be expected to
prevent, impair or materially delay the ability of the Company, Parent
or Sub to consummate the transactions contemplated by this Agreement;
(v) take any action (including any action otherwise permitted
by this Section 4.1(b)) that would reasonably be expected to prevent
the Merger from qualifying as a "pooling of interests" for accounting
purposes or as a "reorganization" under Section 368(a) of the Code;
(vi) cause Sub to engage in any activities or incur any
liabilities or obligations other than in connection with or as
contemplated by this Agreement; or
(vii) authorize, or commit or agree to take, any of the
foregoing actions.
Section 4.2. NO SOLICITATION.
(a) The Company agrees that neither it nor any of its Subsidiaries nor
any of the officers and directors of the Company or its Subsidiaries shall, and
that it shall use its reasonable best efforts to cause its and its Subsidiaries'
employees, agents and representatives (including any investment banker, attorney
or accountant retained by the Company or any of its Subsidiaries) not to,
directly or indirectly, (i) initiate, solicit, encourage or knowingly facilitate
any inquiries or the making of any proposal or offer with respect to, or a
transaction to effect, a merger, reorganization, share exchange, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving it or any of its Significant Subsidiaries (or any group of
Subsidiaries which taken together could constitute a Significant Subsidiary), or
any purchase or sale of 15% or more of the consolidated assets (including stock
of its Subsidiaries) of the Company and its Subsidiaries, taken as a whole, or
any purchase or sale of, or tender or exchange offer for, its equity securities
that, if consummated, would result in any Person (or the stockholders of such
Person) beneficially owning securities representing 15% or more of its total
voting power (or of the surviving parent entity in such transaction) or the
voting power of any of its Significant Subsidiaries (any such proposal, offer or
transaction (other than a proposal or offer made by Parent or an Affiliate
thereof) a "TAKEOVER PROPOSAL"), (ii) have any discussion with or provide any
confidential information or data to any Person relating to a Takeover Proposal,
or engage in any negotiations concerning a Takeover Proposal, or knowingly
facilitate any effort or attempt to make or implement a Takeover Proposal, (iii)
approve or recommend, or propose publicly to approve or recommend, any Takeover
Proposal or (iv) approve or recommend, or propose to approve or recommend, or
execute or enter into, any letter of intent, agreement in principle,
merger
agreement, acquisition agreement, option agreement or other similar agreement or
propose publicly or agree to do any of the foregoing related to any Takeover
Proposal.
(b) Notwithstanding anything in this Agreement to the contrary, the
Company (and its Board of Directors) shall be permitted to (i) comply with
applicable law (including Rule 14d-9 and Rule 14e-2 promulgated under the
Exchange Act) with regard to a Takeover Proposal or make any other disclosure to
the Company's stockholders if, in the good faith judgment of the Company, after
taking
35
into account the advice of outside counsel, failure to so disclose would be
inconsistent with applicable law (and any such disclosure shall not be deemed a
change, amendment or modification in the Company's (or its Board of Directors')
recommendation to the stockholders of the Company), (ii) change its
recommendation to its stockholders or (iii) engage in discussions or
negotiations with, or provide any information to any Person in response to, an
unsolicited bona fide written Takeover Proposal by such Person that did not
result from a breach of Section 4.1(a) if and only to the extent that, in any
such case referred to in clause (ii) or (iii), (A) the Company Stockholders
Meeting shall not have occurred, (B) (I) in the case of clause (ii) above, it
has received an unsolicited bona fide written Takeover Proposal from a third
party that did not result from a breach of Section 4.1(a) and its Board of
Directors concludes in good faith that such Takeover Proposal constitutes a
Superior Proposal and such withdrawal is in connection with the termination of
this Agreement in accordance with the provisions of Section 7.1(f) and (II) in
the case of clause (iii) above, its Board of Directors concludes in good faith
that there is a reasonable likelihood that such Takeover Proposal could
constitute a Superior Proposal and (C) prior to providing any information or
data to any Person or entering into discussions or negotiations with any Person,
it notifies Parent promptly of such inquiries, proposals or offers received by,
any such information requested from, or any such discussions or negotiations
sought to be initiated or continued with, any of its representatives indicating,
in connection with such notice, the name of such Person and the material terms
and conditions of any inquiries, proposals or offers and enters into a customary
and reasonable confidentiality agreement no less favorable to the Company than
the Confidentiality Agreement. The Company agrees that it will promptly keep
Parent reasonably informed of the status and terms of any inquiries, proposals
or offers and the status and terms of any discussions or negotiations, including
the identity of the Person making such inquiry, proposal or offer and will
deliver to Parent the information delivered to such Person to the extent not
previously provided to Parent. The Company agrees that it will, and will cause
its officers, directors and representatives to, immediately cease and cause to
be terminated any activities, discussions or negotiations existing as of the
date of this Agreement with any Person (other than the parties hereto) conducted
heretofore with respect to any Takeover Proposal, and Parent agrees that no such
prior activity shall be considered solicitation of a Takeover Proposal
hereunder. The Company agrees that it will use reasonable best efforts to
promptly inform its directors, officers, key employees, agents and
representatives of the obligations undertaken in this Section 4.2. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in this Section 4.2 by any officer or director of the Company or any
of its Subsidiaries or any investment banker, attorney or other advisor or
representative of the Company or any of its Subsidiaries, whether or not such
Person is purporting to act on behalf of the Company or any of its Subsidiaries
or otherwise, shall be deemed to be a breach of this Section 4.2 by the Company.
Nothing in this Section 4.2 shall (i) permit Parent or the Company to terminate
this Agreement (except as specifically provided in Article VII) or (ii) affect
or limit any other obligation of Parent or the Company under this Agreement
except as explicitly provided herein. Notwithstanding anything to the contrary
in this Agreement, if requested by a third party, the Company may waive any
"standstill" or similar provisions in favor of the Company in any agreement with
such third party if the Board of Directors reasonably believes that there is a
reasonable likelihood that third party will submit a bona fide Takeover Proposal
that could constitute a Superior Proposal, and any such waiver shall not be
construed as a breach of this Section 4.2.
36
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1. PREPARATION OF THE FORM S-4 AND THE PROXY STATEMENT;
STOCKHOLDERS MEETINGS
(a) As soon as practicable following the date of this Agreement, the
Company and Parent shall prepare and file with the SEC the Proxy Statement and
Parent shall prepare and file with the SEC the Form S-4, in which the Proxy
Statement will be included as a prospectus. Subject to Section 4.2, each of the
Company and Parent shall use its reasonable best efforts to (i) have the Form
S-4 declared effective under the Securities Act as promptly as practicable after
such filing and (ii) cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable after the Form S-4 is declared effective
under the Securities Act. Parent shall also take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process) required to be
taken under any applicable state securities laws in connection with the issuance
of Parent Common Stock in the Merger and upon the exercise of Adjusted Options,
and the Company shall furnish all information concerning the Company and the
holders of Company Common Stock as may be reasonably requested in connection
with any such action. The Form S-4 and the Proxy Statement shall comply as to
form in all material respects with the applicable provisions of the Securities
Act and the Exchange Act. The Company and Parent shall, as promptly as
practicable after receipt thereof, provide the other party copies of any written
comments and advise the other party of any oral comments, with respect to the
Proxy Statement received from the SEC. Parent shall provide the Company with a
reasonable opportunity to review and comment on any amendment or supplement to
the Form S-4 prior to filing such with the SEC, and shall provide the Company
with a copy of all such filings made with the SEC. Notwithstanding any other
provision herein to the contrary, no amendment or supplement (including by
incorporation by reference) to the Proxy Statement or the Form S-4 shall be made
without the approval of both parties, which approval shall not be unreasonably
withheld or delayed; PROVIDED, that with respect to documents filed by a party
which are incorporated by reference in the Form S-4 or Proxy Statement, this
right of approval shall apply only with respect to information relating to the
other party or its business, financial condition or results of operations or the
transactions contemplated by this Agreement. No filing of, or amendment or
supplement to, the Form S-4 shall be made by Parent, or to the Proxy Statement
shall be made by the Company, without providing the other party the opportunity
to review and comment thereon. Parent shall advise the Company, promptly after
it receives notice thereof, of the time when the Form S-4 has become effective,
the issuance of any stop order, the suspension of the qualification of Parent
Common Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Form S-4 or
comments thereon and responses thereto or requests by the SEC for additional
information. Each party shall advise the other party, promptly after it receives
notice thereof, of any request by the SEC for amendment of the Proxy Statement
or the Form S-4 or comments thereon and responses thereto or requests by the SEC
for additional information. If at any time prior to the Effective Time any
information relating to the Company or Parent, or any of their respective
Affiliates, officers or directors, should be discovered by the Company or Parent
which should be set
37
forth in an amendment or supplement to any of the Form S-4 or the Proxy
Statement, so that any of such documents would not include any misstatement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party which discovers such information shall promptly notify
the other parties hereto and an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and, to the extent
required by law, disseminated to the stockholders of the Company and Parent.
(b) The Company shall, as soon as reasonably practicable, consistent
with the process of clearing the Proxy Statement with the SEC and having the SEC
declare the Form S-4 effective, all as provided in Section 5.1(a), establish a
record date for, duly call, give notice of, convene and hold a meeting of its
stockholders (the "COMPANY STOCKHOLDERS MEETING") for the purpose of obtaining
the Company Stockholder Approval and shall take all lawful action to solicit
adoption of this Agreement by the required Company Stockholder Approval. Unless
the Company has terminated this Agreement pursuant to Section 7.1(f) hereof, the
Company shall, through its Board of Directors, recommend to its stockholders
adoption of this Agreement (the "COMPANY RECOMMENDATION"), and except as
expressly permitted by this Agreement, shall not withdraw, amend or modify in a
manner adverse to Parent its recommendation. The Company shall ensure that the
Company Stockholders Meeting is called, noticed, convened, held and conducted,
and that all proxies solicited in connection with the Company Stockholders
Meeting are solicited, in compliance with all applicable Legal Provisions.
Without limiting the generality of the foregoing, (i) the Company agrees that
its obligation to duly call, give notice of, convene and hold a meeting of the
holders of Company Common Stock, as required by this Section 5.1(b), shall not
be affected by the withdrawal, amendment or modification of the Company
Recommendation and (ii) the Company agrees that its obligations pursuant to this
Section 5.1(b) shall not be affected by the commencement, public proposal,
public disclosure or communication to the Company of any Takeover Proposal.
Section 5.2. LETTERS OF THE COMPANY'S ACCOUNTANTS.
(a) The Company shall use its reasonable best efforts to cause to be
delivered to Parent two letters from KPMG LLP, the Company's independent public
accountants, one dated a date within two Business Days before the date on which
the Form S-4 shall become effective and one dated a date within two Business
Days before the Closing Date, each addressed to Parent and the Company, in form
and substance reasonably satisfactory to Parent and customary in scope and
substance for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
(b) The Company shall use its reasonable best efforts to cause to be
delivered to Parent a letter from KPMG LLP, addressed to Parent and the Company,
dated as of the Closing Date, stating that (i) KPMG LLP concurs with the Company
management's conclusion that, subject to customary qualifications, the Company
meets the requirements to be a party to a pooling of interests transaction for
financial reporting purposes under Opinion 16 of the Accounting Principles Board
and applicable
38
SEC rules and regulations and (ii) the basis for such a concurrence is KPMG
LLP's belief that the criteria for such accounting treatment have been met.
Section 5.3. LETTERS OF PARENT'S ACCOUNTANTS.
(a) Parent shall use its reasonable best efforts to cause to be
delivered to the Company two letters from BDO Xxxxxxx LLP, Parent's independent
public accountants, one dated a date within two Business Days before the date on
which the Form S-4 shall become effective and one dated a date within two
Business Days before the Closing Date, each addressed to the Company and Parent,
in form and substance reasonably satisfactory to the Company and customary in
scope and substance for comfort letters delivered by independent public
accountants in connection with registration statements similar to the Form S-4.
(b) Parent shall use its reasonable best efforts to cause to be
delivered to the Company a letter from BDO Xxxxxxx LLP, addressed to the Company
and Parent, dated as of the Closing Date, stating that (i) BDO Xxxxxxx LLP
concurs with Parent's management's conclusion that, subject to customary
qualifications, the Merger qualifies for pooling of interests treatment for
financial reporting purposes under Opinion 16 of the Accounting Principles Board
and applicable SEC rules and regulations and (ii) the basis for such a
concurrence is BDO Xxxxxxx LLP's belief that the criteria for such accounting
treatment have been met.
Section 5.4. ACCESS TO INFORMATION; CONFIDENTIALITY. Upon reasonable
notice, each party shall (and shall cause its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financial advisors and other
representatives of the other party reasonable access during normal business
hours, during the period prior to the Effective Time, to such of its properties,
books, contracts, commitments, records, officers and employees as the other
party may reasonably request and, during such period, such party shall (and
shall cause its Subsidiaries to) furnish promptly to the other party (a) a copy
of each report, schedule, registration statement and other document filed,
published, announced or received by it during such period pursuant to the
requirements of Federal or state securities laws, as applicable (other than
documents which such party is not permitted to disclose under applicable law),
and (b) consistent with its legal obligations, all other information concerning
it and its business, properties and personnel as such other party may reasonably
request; PROVIDED, HOWEVER, that either party may restrict the foregoing access
to the extent that it reasonably concludes, after consultation with outside
counsel, that (i) any Legal Provision of any Governmental Entity applicable to
such party requires such party or its Subsidiaries to restrict access to any
properties or information, (ii) providing such access would result in the loss
of the attorney-client privilege, (iii) such document discusses the pricing or
dollar value of the transactions contemplated by this Agreement or (iv) the
documents contain competitively sensitive information, the sharing of which
could constitute a violation of any applicable antitrust laws. The parties shall
hold any such information in confidence to the extent required by, and in
accordance with, the provisions of the Confidentiality Agreement dated as of
June 18, 2001, between Parent and the Company (as it may be amended from time to
time, the "CONFIDENTIALITY AGREEMENT"). Each party shall make all reasonable
best efforts to minimize disruption to the business of the other party and its
Subsidiaries
39
which may result from the requests for data and information hereunder. All
requests for access and information shall be coordinated through senior
executives of the parties to be designated. Any investigation by Parent or the
Company shall not affect the representations and warranties of Parent or the
Company, as the case may be.
Section 5.5. REASONABLE BEST EFFORTS.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use its reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including using reasonable best efforts to accomplish the following:
(i) the taking of all reasonable acts necessary to cause the conditions to
Closing to be satisfied, (ii) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by any Governmental Entity, (iii) the obtaining of all necessary
consents, approvals or waivers from third parties other than Governmental
Entities (provided that if obtaining any such consent, approval or waiver would
require any action other than the payment of a nominal amount, such action shall
be subject to the consent of Parent, not to be unreasonably withheld), (iv) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby or thereby, including seeking to have any stay
or temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (v) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. In connection with and without
limiting the foregoing Parent, Sub and the Company and their respective Boards
of Directors shall, if any state takeover statute or similar statute becomes
applicable to this Agreement, the Merger or any other transactions contemplated
by this Agreement, take all action necessary, with the reasonable cooperation of
the other parties hereto if reasonably requested, to ensure that the Merger and
the other transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on this
Agreement, the Merger and the other transactions contemplated by this Agreement.
The Company shall give Parent the opportunity to participate, on an advisory
basis, in the defense of any stockholder litigation against the Company and/or
its directors relating to the transactions contemplated by this Agreement.
(b) In furtherance and not in limitation of the foregoing, each party
hereto agrees to make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act and any other Regulatory Law with respect to the
transactions contemplated hereby as promptly as practicable after the date
hereof and to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act and any other
Regulatory Law and to take all other actions necessary to cause the expiration
or termination of the applicable waiting periods
40
under the HSR Act as soon as practicable. "REGULATORY LAW" means the Xxxxxxx
Act, as amended, the Xxxxxxx Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other applicable federal, state and foreign,
if any, statutes, rules, regulations, orders, decrees, administrative and
judicial doctrines and other laws that are designed or intended to prohibit,
restrict or regulate (i) foreign investment or (ii) actions having the purpose
or effect of monopolization or restraint of trade or lessening of competition.
(c) Each of Parent and the Company shall, in connection with the
efforts referenced in Section 5.5(b) to obtain all requisite approvals and
authorizations for the transactions contemplated by this Agreement under the HSR
Act or any other Regulatory Law, use its reasonable best efforts to (i)
cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry, including
any proceeding initiated by a private party, (ii) promptly inform the other
party of any communication received by such party from, or given by such party
to, the Antitrust Division of the Department of Justice (the "DOJ"), the Federal
Trade Commission (the "FTC") or any other Governmental Entity and of any
material communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby, and (iii) subject to Section 5.4 and unless prohibited from doing so by
applicable law, permit the other party to review any communication given by it
to, and consult with each other in advance of any meeting or conference with,
the DOJ, the FTC or any such other Governmental Entity or, in connection with
any proceeding by a private party, with any other Person, and to the extent
appropriate or permitted by the DOJ, the FTC or such other applicable
Governmental Entity or other Person, give the other party the opportunity to
attend and participate in such meetings and conferences.
(d) Nothing in this Agreement shall require any of Parent and its
Subsidiaries or the Company and its Subsidiaries to sell, hold separate or
otherwise dispose of or conduct any portion of their business in a specified
manner, or agree to sell, hold separate or otherwise dispose of or conduct any
portion of their business in a specified manner, or permit the sale, holding
separate or other disposition of, any assets of Parent, the Company or their
respective Subsidiaries or the conduct of their business in a specified manner,
whether as a condition to obtaining any approval from a Governmental Entity by
March 31, 2002 or any other Person or for any other reason, if such sale,
holding separate or other disposition or the conduct of their business in a
specified manner would reasonably be expected to have a Material Adverse Effect
on Parent and its Subsidiaries (including the Surviving Corporation and its
Subsidiaries), taken together, after giving effect to the Merger.
Section 5.6. STOCK OPTIONS; EMPLOYEE BENEFITS.
(a) As of the Effective Time, (i) each outstanding option to purchase
shares of Company Common Stock (a "STOCK OPTION") granted under any plan or
arrangement providing for the grant of options to purchase shares of Company
Common Stock to current or former officers, directors, employees or consultants
of the Company or its Subsidiaries (the "COMPANY STOCK PLANS"), whether vested
or unvested, shall be assumed by Parent and converted into an option to acquire,
on the same
41
terms and conditions as were applicable under the Stock Option, the number of
shares of Parent Common Stock (rounded up to the nearest whole share) determined
by multiplying the number of shares of Company Common Stock subject to such
Stock Option by the Exchange Ratio, at a price per share of Parent Common Stock
equal to (A) the aggregate exercise price for the shares of Company Common Stock
otherwise purchasable pursuant to such Stock Option (assuming all conditions to
the exercise of such Stock Option had then been met) divided by (B) the
aggregate number of shares of Parent Common Stock deemed purchasable pursuant to
such Stock Option (each, as so adjusted, an "ADJUSTED OPTION"); PROVIDED that
such exercise price shall be rounded up to the nearest whole cent and (ii) any
and all repurchase rights under any Company Stock Plan held by the Company on
the shares of Company Common Stock shall, to the extent permitted by law, be
assigned to Parent and shall be converted into repurchase rights held by Parent
as the corresponding shares of Parent Common Stock.
(b) The adjustments provided herein with respect to any Stock Options
that are "incentive stock options" as defined in Section 422 of the Code shall
be and are intended to be effected in a manner which is consistent with Section
424(a) of the Code.
(c) Parent shall, prior to the Effective Time, take all action
necessary so that, at the Effective Time, by virtue of the Merger and without
the need of any further corporate action, Parent shall assume the Company Stock
Plans with the result that all obligations of the Company under the Company
Stock Plans with respect to Stock Options outstanding at the Effective Time,
shall be obligations of Parent, and all Adjusted Options shall be exercisable,
on the same terms as were applicable under the Stock Options, for shares of
Parent Common Stock following the Effective Time.
(d) At or prior to the Effective Time, Parent shall take all corporate
action necessary to reserve for issue a sufficient number of shares of Parent
Common Stock for delivery upon exercise of Adjusted Options. As soon as
practicable after the Effective Time, Parent shall file a Registration Statement
on Form X-0, Xxxx X-0 or Form S-8 as the case may be (or any successor or other
appropriate forms), with respect to the shares of Parent Common Stock subject to
such Adjusted Options, and shall maintain the effectiveness of such registration
statement and the current status of the prospectus or prospectuses contained
therein, for so long as such Adjusted Options remain outstanding. Following the
Effective Time, Parent shall use its reasonable best efforts to provide that
holders of Adjusted Options do not experience delays in exercising and settling
their Adjusted Options.
(e) [Reserved]
(f) Parent shall take, and shall cause the Surviving Corporation and
its Subsidiaries to take, the following actions: (i) waive any limitations
regarding pre-existing conditions and eligibility waiting periods under any
health benefit plan maintained by any of them for the benefit of individuals who
are employees of the Company and its Subsidiaries immediately prior to the
Effective Time (the "EMPLOYEES") to the extent such pre-existing condition or
waiting period did not
42
apply to the Employee under a comparable plan of the Company or its Subsidiary
immediately prior to the Effective Time (or the date the Employees become
eligible to receive benefits under Parent's plans following the Continuation
Period), (ii) provide each Employee with credit for any co-payments and
deductibles paid prior to the Effective Time for the calendar year in which the
Effective Time occurs (or the date the Employees become eligible to receive
benefits under Parent's plans following the Continuation Period), in satisfying
any applicable deductible or out-of-pocket requirements under such health plans,
and (iii) for eligibility, vesting and benefit accrual purposes (but not for
purposes of benefit accruals under any defined benefit pension plan) under all
compensation and benefit plans and policies applicable to the Employees, treat
all service by the Employees with the Company or any of its Subsidiaries and
their predecessor entities before the Effective Time as service with Parent and
its Subsidiaries. Parent shall cause the Surviving Corporation to honor all
employment, retention and severance arrangements (including, without limitation,
those set forth on Section 5.6(f) of the Company Disclosure Schedule) and all
obligations to current and former employees of the Company and its Subsidiaries
thereunder. Parent shall take all actions necessary to cause the Surviving
Corporation and its Subsidiaries to satisfy the obligations listed in Section
5.6(f) of the Company Disclosure Memorandum.
(g) The Company shall terminate its Employee Stock Purchase Plan in
accordance with its terms as of or prior to the Effective Time. The Company
shall not commence a new offering under its Employee Stock Purchase Plan after
the date of this Agreement.
(h) The provisions of this Section 5.6 shall not create in any employee
or former employee of the Company or any of its Subsidiaries any rights to
employment or continued employment with Parent, the Surviving Corporation, the
Company or any of their respective Subsidiaries.
Section 5.7. INDEMNIFICATION, EXCULPATION AND INSURANCE.
(a) Parent shall cause all rights to indemnification and exculpation
from liabilities for acts or omissions occurring at or prior to the Effective
Time now existing in favor of the current or former directors or employees or
officers of the Company (each such Person being an "INDEMNIFIED PARTY") as
provided in the Company's Certificate of Incorporation, Bylaws or any
indemnification agreement between such directors or officers and the Company (in
each case, as in effect on the date hereof) to be assumed by the Surviving
Corporation in the Merger, without further action, as of the Effective Time and
such rights shall survive the Merger and shall continue in full force and effect
in accordance with their terms. Without limiting the foregoing, Parent shall
indemnify and hold harmless, and provide advancement of expenses to, all past
and present directors, officers and employees of the Company and its
Subsidiaries (in all of their capacities) to the fullest extent permitted by the
Company's Certificate of Incorporation, Bylaws or any indemnification agreement
between such directors, officers and employees for acts or omissions occurring
at or prior to the Effective Time (including for acts or omissions occurring in
connection with the approval of this Agreement and the transactions contemplated
hereby).
43
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 5.7 shall promptly notify the Surviving
Corporation, upon learning of any such claim, action, suit, proceeding or
investigation, but the failure to so notify shall not relieve the Surviving
Corporation of any liability it may have to such Indemnified Party to the extent
such failure does not materially prejudice the Surviving Corporation. The
Surviving Corporation may, at its own expense: (i) participate in the defense of
any claim, suit, action or proceeding; or (ii) at any time during the course of
any such claim, suit, action or proceeding, assume the defense thereof, unless
the Indemnified Parties (or any of them) determine in good faith (after
consultation with legal counsel) that there is, under applicable standards of
professional conduct, a conflict or any significant issue between the positions
of Parent and any of such Indemnified Parties, PROVIDED that the Surviving
Corporation's counsel shall be reasonably satisfactory to the Indemnified
Parties. If the Surviving Corporation assumes such defense, the Indemnified
Parties shall have the right (but not the obligation) to participate in the
defense thereof and to employ counsel, at their own expense, separate from the
counsel employed by the Surviving Corporation. Whether or not the Surviving
Corporation chooses to assume the defense of any such claim, suit, action or
proceeding, the Surviving Corporation and Parent shall cooperate in the defense
thereof. If the Surviving Corporation fails to so assume the defense thereof,
the Indemnified Parties may retain counsel reasonably satisfactory to the
Surviving Corporation and the Surviving Corporation shall pay the reasonable
fees and expenses of such counsel promptly after statements therefor are
received; PROVIDED that the Indemnified Parties on whose behalf expenses are
advanced provide (x) a written affirmation of their good faith belief that the
standard of conduct necessary for indemnification under Section 145 of the DGCL
has been met, and (y) an undertaking to repay such advances if it is ultimately
determined that such Indemnified Party is not entitled to indemnification under
Section 145 of the DGCL. Neither Parent nor the Surviving Corporation shall be
liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld or delayed); PROVIDED that, in the event that
any claim or claims for indemnification are asserted or made within such a
period of six years after the Effective Time, all rights to indemnification in
respect of any such claim or claims (and the matters giving rise thereto) shall
continue until the disposition of any and all such claim or claims (and the
matters giving rise thereto). The Indemnified Parties as a group may retain only
one law firm (in addition to local counsel) to represent them with respect to a
single action unless any Indemnified Party determines in good faith (after
consultation with legal counsel) that there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two or more Indemnified Parties. In the event Parent or the Surviving
Corporation or any of their respective successors or assigns (i) consolidates
with or merges into any other Person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or (ii)
transfers or conveys all or substantially all of its properties and assets to
any Person, then, and in each such case, to the extent necessary to effectuate
the purposes of this Section 5.7, proper provision shall be made so that the
successors and assigns of Parent and the Surviving Corporation assume the
obligations set forth in this Section 5.7, and none of the actions described in
clause (i) or (ii) shall be taken until such provision is made. Nothing in this
Section 5.7(b) is intended to modify adversely any existing rights to
indemnification of an Indemnified Party from the Company.
44
(c) For six years after the Effective Time, Parent shall cause the
Surviving Corporation to maintain in effect the Company's current officers',
directors' and employees' liability insurance in respect of acts or omissions
occurring at or prior to the Effective Time, covering each Person currently
covered by the Company's officers' and directors' liability insurance policy (a
copy of which has been heretofore delivered to Parent), on terms with respect to
such coverage and amount no less favorable than those of such policy in effect
on the date hereof; PROVIDED that Parent may substitute therefor policies of
Parent containing terms with respect to coverage and amount no less favorable to
such directors and officers; PROVIDED, HOWEVER, that in satisfying its
obligation under this Section 5.7(b) Parent shall not be obligated to pay annual
premiums in excess of 200% of the amount per annum paid by the Company in its
last full fiscal year; and PROVIDED FURTHER that if Parent is not able to obtain
such coverage for such 200% amount, Parent shall nevertheless be obligated to
provide such coverage as may be obtained annually for such 200% amount and
PROVIDED FURTHER that notwithstanding the foregoing, the Surviving Corporation
may satisfy its obligations under this Section 5.7(c) by purchasing a "tail"
policy under the Company's existing directors' and officers' insurance policy
that (i) has an effective term of six years from the Effective Time, (ii) covers
those Persons who are currently covered, or will be covered on or prior to the
Effective Time, by the Company's directors' and officers' insurance policy in
effect on the date hereof for actions and omissions occurring on or prior to the
Effective Time and (iii) contains terms and conditions (including without
limitation coverage amounts) that are at least as favorable in the aggregate as
the terms and conditions of the Company's directors' and officers' insurance
policy in effect on the date hereof.
(d) The Certificate of Incorporation and Bylaws of the Surviving
Corporation shall contain, and Parent shall cause the Surviving Corporation to
fulfill and honor, provisions with respect to indemnification and exculpation
that are substantially identical to those set forth in the certificate of
incorporation and bylaws of the Company as of the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would adversely affect the
rights thereunder of any of the Indemnified Parties.
(e) The obligations of Parent or the Surviving Corporation under this
Section 5.7 are subject to the conditions that each Indemnified Party shall
comply with the reasonable requests of the Surviving Corporation or Parent in
defending or settling any action hereunder and that any Indemnified Party shall
approve any proposed settlement of any such action if (i) such settlement
involves no finding or admission of any liability by any Indemnified Party, and
(ii) the sole relief provided in connection with such settlement is monetary
damages that are paid in full by the Surviving Corporation or Parent.
(f) The provisions of this Section 5.7 are (i) intended to be for the
benefit of, and will be enforceable by, each Indemnified Party, his or her heirs
and his or her representatives and (ii) in addition to, and not in substitution
for, any other rights to indemnification or contribution that any such Person
may have by contract or otherwise. Parent hereby guarantees the performance by
Surviving Corporation of its obligations under this Section 5.7.
45
Section 5.8. FEES AND EXPENSES.
(a) Except as provided below, all fees and expenses incurred in
connection with this Agreement, the Merger and the other transactions
contemplated by this Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
(b) In the event that (1) a bona fide Takeover Proposal shall have been
publicly disclosed or has been made directly to the Company's stockholders or
any Person has announced an intention (whether or not conditional) to make a
bona fide Takeover Proposal and thereafter this Agreement is terminated (x) by
Parent or the Company pursuant to Section 7.1(b)(iii), (y) by Parent pursuant to
Section 7.1(d) (PROVIDED that the breach or failure to perform giving rise to
Parent's right to terminate under Section 7.1(d) shall be willful and material)
or (z) by Parent pursuant to Section 7.1(e)(vii) and, in any case, within 12
months of termination either the Company enters into definitive agreement with
respect to a Takeover Proposal or a Takeover Proposal is consummated (provided
that for this purpose the percentage in the definition of Takeover Proposal
shall be 50% in lieu of 15%) or (2) this Agreement is terminated (x) by the
Company pursuant to Section 7.1(f) or (y) by Parent pursuant to Section 7.1(e)
(other than Section 7.1(e)(vii)), then the Company shall pay Parent a fee equal
to $15 million (the "TERMINATION FEE"), payable by wire transfer of immediately
available funds, such payment to be made (A) in the case of the termination
contemplated by clause (1), on the earlier of the date the Company enters into a
definitive agreement or a Takeover Proposal is consummated, (B) in the case of a
termination contemplated by clause (2)(x), no later than immediately prior to
such termination and (c) in the case of termination contemplated by clause 2(y),
no later than the date of such termination. Simultaneously with the payment of
the Termination Fee, the Company shall reimburse Parent for all of its
documented out-of-pocket expenses incurred in connection with this Agreement and
the transactions contemplated hereby (including documented fees and expenses of
accountants, attorneys and financial advisors) up to an aggregate of $2.0
million (the "EXPENSES"). The Company acknowledges that the agreements contained
in this Section 5.8(b) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Parent would not enter into
this Agreement. If Parent shall successfully bring an action to enforce its
rights under this Section 5.8(b), the Company shall reimburse Parent for its
reasonable fees and expenses in connection therewith and shall pay Parent
interest on the Termination Fee and Expenses from the date the Termination Fee
becomes payable to the date of payment at the publicly announced prime rate of
Citibank, N.A. in effect on the date the Termination Fee became payable.
Section 5.9. PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult
with each other before issuing, and give each other the opportunity to review
and comment upon, any press release or other public statements with respect to
the transactions contemplated by this Agreement, including the Merger, and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange or national securities quotation system. In addition to the foregoing,
neither Parent nor the Company shall issue any press release or otherwise make
any public statement or disclosure concerning non-public information
46
relating to the other party's business, financial condition or results of
operations without the consent of the other party, which consent shall not be
unreasonably withheld or delayed. The parties agree that the initial press
release to be issued with respect to the transactions contemplated by this
Agreement shall be in the form prepared by Parent after consultation with the
Company.
Section 5.10. AFFILIATES.
(a) As soon as practicable after the date hereof, and in no event more
than 45 days prior to the date of the Company Stockholders Meeting, the Company
shall deliver to Parent a letter identifying all Persons who are, at the time
this Agreement is submitted for adoption by the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act or
for purposes of qualifying the Merger for pooling of interests accounting
treatment under Opinion 16 of the Accounting Principles Board and its related
interpretations and applicable SEC rules and regulations. The Company shall use
its reasonable best efforts to cause each such Person to deliver to Parent at
least 30 days prior to the Closing Date a written agreement substantially in the
form attached as EXHIBIT 5.10(A) hereto.
(b) As soon as practicable after the date hereof, and in no event more
than 45 days prior to the date of the Company Stockholders Meeting, Parent shall
deliver to the Company a letter identifying all Persons who are, at the time the
issuance of Parent Common Stock in the Merger is submitted for approval by the
stockholders of the Company, "affiliates" of the Parent for purposes of
qualifying the Merger for pooling of interests accounting treatment under
Opinion 16 of the Accounting Principles Board and its related interpretations
and applicable SEC rules and regulations. Parent shall use its reasonable best
efforts to cause each such Person to deliver to Parent at least 30 days prior to
the Closing Date a written agreement substantially in the form attached as
EXHIBIT 5.10(B) hereto.
Section 5.11. NASDAQ LISTING. Parent shall use its reasonable best
efforts to cause the shares of Parent Common Stock to be issued in the Merger
and such other shares of Parent Common Stock to be reserved for issuance in
connection with the Merger to be approved for listing on the Nasdaq National
Market, subject to official notice of issuance, prior to the Closing Date.
Section 5.12. POOLING OF INTERESTS. Each of the Company and Parent
shall use reasonable best efforts to cause the Merger to be accounted for as a
pooling of interests under Opinion 16 of the Accounting Principles Board and its
related interpretations and applicable SEC rules and regulations, and such
accounting treatment to be accepted by each of the Company's and Parent's
independent public accountants, and by the SEC, respectively, and each of the
Company and Parent agrees that it will voluntarily take no action that would
cause such accounting treatment not to be obtained.
Section 5.13. TAX TREATMENT. Parent and the Company intend that the
Merger will qualify as a reorganization within the meaning of Section 368(a) of
the Code. Parent and the Company shall each use all reasonable efforts to cause
the Merger to so qualify.
47
Section 5.14. PUBLICATION OF COMBINED FINANCIAL RESULTS. Parent shall
use its reasonable best efforts to file with the SEC within 28 days, but in no
event later than 42 days, after the end of the first full calendar month after
the Effective Time, a Form 8-K containing financial results (including combined
sales and net income) covering at least 30 days of post-merger combined
operations of Parent and the Company. The provisions of this Section 5.14 are
intended to be for the benefit of, and will be enforceable by, each affiliate of
the Company immediately preceding the Effective Time, his or her heirs and his
or her representatives.
Section 5.15. NOTICES OF CERTAIN EVENTS. Each party hereto shall
promptly notify the other parties orally and in writing of:
(a) the receipt by such party or any of such party's
Subsidiaries of any notice or other communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
(b) subject to any applicable legal restrictions, the receipt
by such party or any of such party's Subsidiaries of any notice or
other communication from any Governmental Entity in connection with the
transactions contemplated by this Agreement;
(c) such party's obtaining Knowledge of any actions, suits,
claims, investigations or proceedings commenced or threatened against,
relating to or involving or otherwise affecting any of Parent, Sub or
the Company, as the case may be, or any of their respective
Subsidiaries which relate to the consummation of the transactions
contemplated by this Agreement; and
(d) such party's obtaining Knowledge of the occurrence, or
failure to occur, of any event which occurrence or failure to occur
will be likely to cause the conditions set forth in Article VII not to
be satisfied;
PROVIDED, HOWEVER, that no such notification shall affect the representations,
warranties or obligations of the parties or the conditions to the obligations of
the parties hereunder, or limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 5.16. CONVEYANCE TAXES. The Company and the Parent shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transaction contemplated by
this Agreement that are required or permitted to be filed on or before the
Effective Time.
Section 5.17. [RESERVED]
48
Section 5.18. VOTING AGREEMENTS. Concurrently with the execution and
delivery of this Agreement, each of Xxxxxxx Xxxxxxx and Xxxx X. Xxxxxxx shall
execute and deliver to Parent an agreement substantially in the form of EXHIBIT
5.18 hereto (the "COMPANY VOTING AGREEMENT"), pursuant to which, among other
things, such Person is agreeing to vote all of the shares of Company Common
Stock owned, beneficially or of record, by him or her it to approve the Merger.
Section 5.19. SECTION 16 MATTERS. Prior to the Effective Time, Parent
and the Company shall take all such steps as may be required to cause any
dispositions of Company Common Stock (including derivative securities with
respect to the Company Common Stock) resulting from the transactions
contemplated by this Agreement by each individual who is subject to the
reporting requirements of Section 16(a) of the Exchange Act with respect to the
Company to be exempt under Rule 16b-3 promulgated under the Exchange Act, such
steps to be taken in accordance with the No-Action Letter, dated January 12,
1999, issued by the SEC to Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVAL. The Company shall have obtained the
Company Stockholder Approval.
(b) NASDAQ LISTING. The shares of Parent Company Stock to be
issued in the Merger and such other shares of Parent Common Stock to be
reserved for issuance in connection with the Merger shall have been
approved for listing on the Nasdaq National Market, subject to official
notice of issuance.
(c) HSR ACT. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated
or shall have expired.
(d) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining
order, preliminary or permanent injunction or other judgment or order
issued by any court of competent jurisdiction or other statute, law,
rule, legal restraint or prohibition (collectively, "RESTRAINTS") shall
be in effect preventing the consummation of the Merger.
(e) FORM S-4. The Form S-4 shall have become effective under
the Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
49
(f) POOLING LETTERS. Parent and the Company shall have
received letters from KPMG LLP and BDO Xxxxxxx LLP, dated as of the
Closing Date, in each case addressed to Parent and the Company, stating
in substance the matters to be stated by KPMG LLP and BDO Xxxxxxx LLP,
pursuant to Section 5.2(b) and Section 5.3(b), respectively.
(g) NO GOVERNMENTAL LITIGATION. There shall not be pending any
suit, action or proceeding by any Governmental Entity, (i) challenging
the acquisition by Parent or Sub of any shares of Company Common Stock,
seeking to restrain or prohibit the consummation of the Merger, or
seeking to place limitations on the ownership of shares of Company
Common Stock (or shares of common stock of the Surviving Corporation)
by Parent or Sub or seeking to obtain from the Company, Parent or Sub
any damages that are material in relation to the Company, (ii) seeking
to prohibit or materially limit the ownership or operation by the
Company or its Subsidiaries, Parent or any of Parent's Subsidiaries of
any material portion of any business or of any assets of the Company,
Parent or any of Parent's Subsidiaries, or to compel the Company,
Parent or any of Parent's Subsidiaries to divest or hold separate any
material portion of any business or of any assets of the Company,
Parent or any of their respective Subsidiaries, as a result of the
Merger or (iii) seeking to prohibit Parent or any of its Subsidiaries
from effectively controlling in any material respect the business or
operations of the Company or its Subsidiaries.
(h) GOVERNMENTAL AND REGULATORY APPROVALS. Other than the
filing provided for under Section 1.3 and filings pursuant to the HSR
Act (which are addressed in Section 5.5(c)), all consents, approvals
and actions of, filings with and notices to any Governmental Entity
required of Parent, the Company or any of their Subsidiaries to
consummate the Merger, the issuance of Parent Common Stock in the
Merger and the other transactions contemplated hereby, the failure of
which to be obtained or taken, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on Parent and
its Subsidiaries (including the Surviving Corporation and its
Subsidiaries), taken together after giving effect to the Merger, shall
have been obtained. No consents, approvals, actions, filings or notices
related to any antitrust requirements of any jurisdiction, except as
set forth in Section 6.1(c) hereof, shall be a condition of closing
under this Section 6.1(h).
Section 6.2. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of the Company contained in this Agreement shall be true and
correct in all respects without reference to any qualification as to
materiality such that the aggregate effect of any inaccuracies in such
representations and warranties will not have a Material Adverse Effect
on the Company, in each case as of the date of this Agreement and as of
the Closing Date as though made on the Closing Date, except to the
extent such representations and warranties expressly relate to an
earlier date, in which case as of such earlier date. Parent shall have
50
received a certificate signed on behalf of the Company by the chief
executive officer and the chief financial officer of the Company to
such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company (i)
shall have performed or complied with all agreements and covenants
required to be performed by it under this Agreement at or prior to the
Closing Date that are qualified as to Material Adverse Effect and (ii)
shall have performed or complied with all agreements and covenants
required to be performed by it under this Agreement at or prior to the
Closing Date that are not qualified as to Material Adverse Effect
except where such non-performance or non- compliance individually or in
the aggregate would not reasonably be expected to have a Material
Adverse Effect on the Company, and Parent shall have received a
certificate signed on behalf of the Company by the chief executive
officer and the chief financial officer of the Company to such effect.
(c) LETTERS FROM COMPANY AFFILIATES. Parent shall have
received from each Person named in the letter referred to in Section
5.10(a) an executed copy of an agreement substantially in the form of
Exhibit A hereto.
(d) CONSENTS. All consents, the absence of which, in the
aggregate, would be reasonably likely to have a Material Adverse Effect
on the Company, shall have been obtained.
(e) TAX OPINION. Parent shall have received an opinion of
Fulbright & Xxxxxxxx L.L.P., counsel to Parent, dated as of the
Effective Time, to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. The
issuance of such opinion shall be conditioned upon the receipt by such
counsel of customary representation letters from each of Parent, Sub
and the Company, in each case, in form and substance reasonably
satisfactory to such counsel. Each such representation letter shall be
dated on or before the date of such opinion and shall not have been
withdrawn or modified in any material respect.
Section 6.3. CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of
the Company to effect the Merger is further subject to the satisfaction or
waiver on or prior to the Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of Parent and Sub contained in this Agreement shall be true
and correct in all respects without reference to any qualification as
to materiality such that the aggregate effect of any inaccuracies in
such representations and warranties will not have a Material Adverse
Effect on Parent, in each case as of the date of this Agreement and as
of the Closing Date as though made on the Closing Date, except to the
extent such representations and warranties expressly relate to an
earlier date, in which case as of such earlier date. The Company shall
have received a certificate signed on behalf of Parent by an executive
officer of Parent to such effect.
51
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND SUB. Each of
Parent and Sub (i) shall have performed or complied with all agreements
and covenants required to be performed by it under this Agreement at or
prior to the Closing Date that are qualified as to Material Adverse
Effect and (ii) shall have performed or complied in all material
respects with all agreements and covenants required to be performed by
it under this Agreement at or prior to the Closing Date that are not
qualified as to Material Adverse Effect except where such
non-performance or non-compliance individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect on
Parent, and the Company shall have received a certificate signed on
behalf of Parent by an executive officer of Parent to such effect.
(c) TAX OPINION. The Company shall have received an opinion of
Wachtell, Lipton, Xxxxx & Xxxx, counsel to the Company, dated as of the
Effective Time, to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. The
issuance of such opinion shall be conditioned upon the receipt by such
counsel of customary representation letters from each of Parent, Sub
and the Company, in each case, in form and substance reasonably
satisfactory to such counsel. Each such representation letter shall be
dated on or before the date of such opinion and shall not have been
withdrawn or modified in any material respect. The Company may not
waive or amend this condition without the express written consent of
Parent.
Section 6.4. FRUSTRATION OF CLOSING CONDITIONS. None of the Company,
Parent or Sub may rely on the failure of any condition set forth in Section 6.1,
Section 6.2 or Section 6.3, as the case may be, to be satisfied if such failure
was caused by such party's failure to use reasonable best efforts to consummate
the Merger and the other transactions contemplated by this Agreement, as
required by and subject to Section 5.5.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Stockholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated by
March 31, 2002 for any reason; PROVIDED, HOWEVER, that the
right to terminate this Agreement under this Section 7.1(b)(i)
shall not be available to any party whose action or failure to
act has been a principal cause of or resulted in the failure
of the Merger to be consummated on or before such date;
52
(ii) if any Restraint having any of the effects set
forth in Section 6.1(d) shall be in effect and shall have
become final and nonappealable; PROVIDED that the party
seeking to terminate this Agreement pursuant to this Section
7.1(b)(ii) shall have used reasonable best efforts to prevent
the entry of and to remove such Restraint; or
(iii) if the Company Stockholder Approval shall not
have been obtained at the Company Stockholders Meeting duly
convened therefor or at any adjournment or postponement
thereof;
(c) by the Company, if Parent shall have breached or failed to
perform any of its representations, warranties, covenants or agreements
set forth in this Agreement, which breach or failure to perform (A)
would give rise to the failure of a condition set forth in Section
6.3(a) or Section 6.3(b), and (B) is not cured by Parent within 30
calendar days following receipt of written notice of such breach or
failure to perform from the Company;
(d) by Parent, if the Company shall have breached or failed to
perform any of its representations, warranties, covenants or agreements
set forth in this Agreement, which breach or failure to perform (A)
would give rise to the failure of a condition set forth in Section
6.2(a) or Section 6.2(b), and (B) is not cured by the Company within 30
calendar days following receipt of written notice of such breach or
failure to perform from Parent;
(e) by Parent, if (i) the directors of the Company shall have
failed to include in the Proxy Statement the Company Recommendation,
(ii) the directors of the Company shall have withdrawn the Company
Recommendation, (iii) the directors of the Company shall have modified
or changed the Company Recommendation in a manner adverse to Parent or
Sub (it being agreed that any disclosure of information required by
applicable law regarding the Company's operations shall not be deemed a
modification or change of the Company Recommendation in a manner
adverse to Parent or Sub), provided that Parent shall not be entitled
to terminate this Agreement pursuant to this clause (iii) unless it has
notified the Company in writing that it intends to terminate the
Agreement pursuant to this clause (iii) and the Company has not, within
two Business Days after receipt of Parent's notice, revised the Company
Recommendation in a manner not so adverse, (iv) a tender or exchange
offer relating to securities of the Company shall have been commenced
and the Company shall not have sent to its security holders, within 15
Business Days after the commencement of such tender or exchange offer
(or such longer period as the Company advises Parent it requires to
obtain the information necessary to evaluate such offer), a statement
disclosing that the Company's Board of Directors recommends rejection
of such tender or exchange offer, (v) the directors of the Company
shall have approved or recommended to the stockholders of the Company a
Takeover Proposal, (vi) the directors of the Company shall have
approved or recommended that the stockholders of the Company tender
their shares of Company Common Stock into any tender offer or exchange
offer that is a Takeover Proposal or is related thereto, (vii) the
Company willfully breaches any of its obligations under Section 4.2 of
this Agreement that results in a Person making a Takeover Proposal,
(viii) the Company
53
shall have materially breached its obligations under this Agreement by
reason of a failure to call the Company Stockholders Meeting in
accordance with Section 5.1(b), or (ix) the directors of the Company
shall have adopted a resolution to do any of the foregoing specified in
clauses (i), (ii), (iii), (iv), (v), (vi) or (viii); or
(f) by the Company, if the Board of Directors of Company has
provided written notice to Parent that the Company intends to enter
into a binding written agreement for a Superior Proposal (with such
termination becoming effective upon the Company entering into such
binding written agreement); provided, however, that (i) the Company
shall have complied with Section 4.2 in all material respects; (ii) the
Company shall have (A) notified Parent in writing of its receipt of
such Superior Proposal, (B) further notified Parent in writing that the
Company intends to enter into a binding agreement with respect to such
Superior Proposal subject to clause (iii) below and (C) attached the
most current written version of such Superior Proposal (or a summary
containing all material terms and conditions of such Superior Proposal)
to such notice referred to in clause (B), (iii) Parent does not make,
within 72 hours after receipt of the Company's written notice pursuant
to clause (ii)(B) above, an offer that the Board of Directors of the
Company shall have reasonably concluded in good faith (following
consultation with its financial advisor and outside counsel) is as
favorable to the stockholders of the Company as such Superior Proposal
and (iv) the Company pays the Termination Fee and Expenses in
accordance with Section 5.8(b) concurrently with entering into such
binding written agreement.
Section 7.2. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
provisions of the second sentence of Section 5.4 and Section 5.8, this Section
7.2 and ARTICLE VIII, which provisions shall survive such termination, PROVIDED
THAT, notwithstanding anything to the contrary contained in this Agreement,
neither Parent nor the Company shall be relieved or released from any
liabilities or damages arising out of its willful and material breach of this
Agreement.
Section 7.3. AMENDMENT. This Agreement may be amended by the parties
hereto at any time before or after approval of the matters presented in
connection with the Merger to the stockholders of the Company; PROVIDED,
HOWEVER, that after any such approval, there shall be made no amendment that by
law requires further approval by the stockholders of the Company without such
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
Section 7.4. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto or (c) subject to the proviso of Section 7.3, waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party to any such
54
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations, warranties, covenants and other agreements in this Agreement or
in any instrument delivered pursuant to this Agreement, including any rights
arising out of any breach of such representations, warranties, covenants and
other agreements, shall survive the Effective Time, except for those covenants
and agreements contained herein and therein (including Sections 5.6(d), 5.7 and
5.14) that by their terms apply or are to be performed in whole or in part after
the Effective Time and this Article VIII.
Section 8.2. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given, and
shall be effective upon receipt, if delivered personally, telecopied (which is
confirmed) or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
if to Parent or Sub, to:
TMP Worldwide Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: CEO
and
TMP Worldwide Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: General Counsel
55
with a copy to (which shall not constitute notice):
Fulbright & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxx Xxxxxx, Esq.
if to the Company, to:
XxxXxxx.xxx, Ltd.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Chief Executive Officer
and
XxxXxxx.xxx, Ltd.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: General Counsel
with a copy to (which shall not constitute notice):
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
Section 8.3. DEFINITIONS. For purposes of this Agreement:
(a) an "AFFILIATE" of any Person means another Person that
directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such first Person;
56
(b) "BUSINESS DAY" means any day other than Saturday, Sunday
or any other day on which banks are legally permitted to be closed in
New York, New York;
(c) "KNOWLEDGE" of any Person that is not an individual means,
with respect to any matter in question, the actual knowledge of any of
such person's executive officers having primary responsibility for such
matter;
(d) "MATERIAL ADVERSE EFFECT" with respect to the Company or
Parent, means any change, effect, event, occurrence or state of facts
(or any development that has had or is reasonably likely to have any
change or effect) that is materially adverse to the business, financial
condition or results of operations of such entity and its Subsidiaries,
taken as a whole, PROVIDED, HOWEVER, none of the following shall be
deemed in themselves, either alone or in combination, to constitute,
and none of the following shall be taken into account in determining
whether there has been a Material Adverse Effect: (i) any change in the
market price or trading volume of such entity's capital stock after the
date hereof, (ii) any adverse change, event or effect arising from or
relating to general business or economic conditions in the United
States (including prevailing interest rate and stock market levels),
(iii) any adverse change, event or effect arising from or relating to
the general state of the industries and market sectors in which such
entity operates and (iv) the loss of existing customers or employees, a
reduction in business by, or revenue from, existing customers, or any
reduction in job seekers, in each case resulting primarily from the
announcement or consummation of the Merger;
(e) "PERSON" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust,
unincorporated organization or other entity;
(f) "SIGNIFICANT SUBSIDIARY" shall have the meaning ascribed
to such term in Rule 1-02 of Regulation S-X of the SEC;
(g) a "SUBSIDIARY" of any Person means, with respect to such
Person, any corporation, partnership, joint venture or other legal
entity of which such person (either alone or through or together with
any other subsidiary), owns, directly or indirectly, 50% or more of the
stock or other equity interests the holders of which are generally
entitled to vote for the election of the Board of Directors or other
governing body of such corporation or other legal entity; and
(h) "SUPERIOR PROPOSAL" means a bona fide written proposal
made by a Person other than a party hereto that is (a) for a Takeover
Proposal (except that references in the definition of "Takeover
Proposal" to "15%" shall be "50%") and (b) is on terms which the Board
of Directors of the Company in good faith concludes (following receipt
of the advice of its financial advisors and outside counsel), taking
into account, among other things, all legal, financial, regulatory and
other aspects of the proposal and the Person making the proposal, (i)
would, if consummated, result in a transaction that is more favorable
to the Company's
57
stockholders (in their capacities as stockholders), from a financial
point of view, than the transactions contemplated by this Agreement and
(ii) is reasonably capable of being completed by March 31, 2002.
Section 8.4. INTERPRETATION. When a reference is made in this Agreement
to an Article, a Section, Exhibit or Schedule, such reference shall be to an
Article of, a Section of, or an Exhibit or Schedule to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns.
References to this Agreement include references to the Company Disclosure
Memorandum and Parent Disclosure Memorandum. Each Section of this Agreement is
qualified by the matters set forth in the related Section of the Company
Disclosure Memorandum and of the Parent Disclosure Memorandum and by such
matters set forth any place else in this Agreement or in the Company Disclosure
Memorandum or the Parent Disclosure Memorandum where the applicability of such
qualification to the Section of this Agreement is reasonably apparent.
Section 8.5. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 8.6. ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This
Agreement and the Confidentiality Agreement (a) constitute the entire agreement,
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter of this Agreement and the
Confidentiality Agreement and (b) except for the provisions of Sections 5.6(f)
(including the corresponding section of the Company Disclosure Memorandum), 5.7
and 5.14, are not intended to confer upon any Person other than the parties any
rights or remedies.
Section 8.7. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of
Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
58
Section 8.8. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned newly-formed
United States Subsidiary of Parent, provided that no such assignment shall
adversely affect the tax-free nature of the transaction and provided further
that no such assignment shall relieve Sub of any of its obligations hereunder.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
Section 8.9. ENFORCEMENT. The parties agree that irreparable damage
would occur and that the parties would not have any adequate remedy at law in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in the Chancery or other Courts of
the State of
Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of the Chancery or other
Courts of the State of
Delaware in the event any dispute arises out of this
Agreement or the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (c) agrees that it will not bring any
action relating to this Agreement or the transactions contemplated by this
Agreement in any court other than the Chancery or other Courts of the State of
Delaware, and each of the parties irrevocably waives the right to trial by jury,
and (d) each of the parties irrevocably consents to service of process by first
class certified mail, return receipt requested, postage prepaid, to the address
at which such party is to receive notice.
Section 8.10. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
59
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
TMP WORLDWIDE INC.
By: /s/ Xxxxx Xxxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Vice President-General Counsel
TMP TOWER CORP.
By: /s/ Xxxxx Xxxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Vice President
XXXXXXX.XXX, LTD.
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxx
Title: President and CEO
60
