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Agreement and Plan of Merger
Dated as of December 27, 2001
among
YAHOO! INC.
HJ ACQUISITION CORP.
and
HOTJOBS.COM, LTD.
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TABLE OF CONTENTS
Page
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ARTICLE I THE OFFER AND THE MERGER...........................................2
Section 1.1 The Offer.....................................................2
Section 1.2 Company Actions...............................................5
Section 1.3 Directors.....................................................6
Section 1.4 The Merger....................................................7
Section 1.5 Closing.......................................................8
Section 1.6 Effective Time................................................8
Section 1.7 Certificate of Incorporation and Bylaws.......................8
Section 1.8 Directors and Officers of the Surviving Corporation...........8
Section 1.9 Effects of the Merger.........................................8
Section 1.10 Subsequent Actions...........................................9
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES.......................................9
Section 2.1 Effect on Capital Stock.......................................9
Section 2.2 Exchange of Certificates.....................................10
Section 2.3 Dissenting Shares............................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................14
Section 3.1 Representations and Warranties of the Company................14
Section 3.2 Representations and Warranties of Parent and Sub.............28
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS........................33
Section 4.1 Conduct of Business..........................................33
Section 4.2 No Solicitation..............................................36
ARTICLE V ADDITIONAL AGREEMENTS.............................................38
Section 5.1 Preparation of the Proxy Statement; Stockholders Meetings....38
Section 5.2 Letters of the Company's Accountants.........................39
Section 5.3 [RESERVED]...................................................40
Section 5.4 Access to Information; Confidentiality.......................40
Section 5.5 Reasonable Best Efforts......................................40
Section 5.6 Stock Options; Employee Benefits.............................42
Section 5.7 Indemnification, Exculpation and Insurance...................44
Section 5.8 Fees and Expenses............................................46
Section 5.9 Public Announcements.........................................47
Section 5.10 Affiliates..................................................47
Section 5.11 Nasdaq Listing..............................................48
Section 5.12 Tax Treatment...............................................48
Section 5.13 Notices of Certain Events...................................48
Section 5.14 Conveyance Taxes............................................49
Section 5.15 Stockholder Agreements......................................49
Section 5.16 Matters.....................................................49
Section 5.17 Antitrust Notice............................................49
ARTICLE VI CONDITIONS PRECEDENT.............................................50
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Section 6.1 Conditions to Each Party's Obligation to Effect the Merger...50
Section 6.2 Frustration of Closing Conditions............................50
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER...............................50
Section 7.1 Termination..................................................50
Section 7.2 Effect of Termination........................................52
Section 7.3 Amendment....................................................53
Section 7.4 Extension; Waiver............................................53
ARTICLE VIII GENERAL PROVISIONS.............................................53
Section 8.1 Nonsurvival of Representations and Warranties................53
Section 8.2 Notices......................................................53
Section 8.3 Definitions..................................................54
Section 8.4 Interpretation...............................................56
Section 8.5 Counterparts.................................................56
Section 8.6 Entire Agreement; Third-Party Beneficiaries..................56
Section 8.7 Governing Law................................................56
Section 8.8 Assignment...................................................57
Section 8.9 Enforcement..................................................57
Section 8.10 Severability................................................57
Exhibit 5.10...... Form of Company Affiliate Agreement
Exhibit 5.15...... Form of Stockholder Agreement
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INDEX OF DEFINED TERMS
Defined
Term
Section
-------
Adjusted Option..................................................... 5.6(a)
Affiliate........................................................... 8.3(a)
Agreement........................................................... Preamble
Appointment Time.................................................... 1.3(c)
Benefit Plan........................................................ 3.1(l)(i)
Benefit Plans....................................................... 3.1(l)(i)
Business Day........................................................ 8.3(b)
Certificate of Merger............................................... 1.6
Certificates........................................................ 2.2(b)
Closing............................................................. 1.5
Closing Date........................................................ 1.5
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 SEC Documents............................................... 3.1(e)
Company Stock Plans................................................. 5.6(a)
Company Stockholder Approval........................................ 3.1(r)
Company Stockholders Meeting........................................ 5.1(b)
Confidentiality Agreement........................................... 5.4
DGCL................................................................ 1.4
Dissenting Shares................................................... 2.3(a)
DOJ................................................................. 5.5(c)
Dow Jones News Release.............................................. 3.1(e)
Effective Time...................................................... 1.6
Employees........................................................... 5.6(e)
Environmental Laws.................................................. 3.1(j)
ERISA............................................................... 3.1(l)(i)
ESPP................................................................ 5.6(f)
Exchange Act........................................................ 1.1(a)
Exchange Agent...................................................... 2.2(a)
Exchange Fund....................................................... 2.2(a)
Exchange Offer Consideration........................................ 1.1(a)
Exchange Ratio...................................................... 1.1(a)
Expenses............................................................ 5.8(b)
Filed Company SEC Document.......................................... 3.1(e)
Filed Parent SEC Document........................................... 3.2(d)
Form S-4............................................................ 3.1(f)
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Defined
Term
Section
-------
Forward Merger...................................................... Preamble
FTC................................................................. 5.5(c)
Fully Diluted Basis................................................. 1.1(b)
GAAP................................................................ 3.1(e)
Governmental Entity................................................. 3.1(d)
Hazardous Materials................................................. 3.1(j)
HSR Act............................................................. 3.1(d)
Indemnified Party................................................... 5.7(a)
Independent Directors............................................... 1.3(b)
Initial Expiration Date............................................. 1.1(b)
Intellectual Property Rights........................................ 3.1(q)
IRS................................................................. 3.1(l)(i)
Knowledge........................................................... 8.3(c)
Law................................................................. 1.1(b)
Legal Provisions.................................................... 3.1(j)
Liens............................................................... 3.1(d)
Material Adverse Effect............................................. 8.3(d)
Material Contracts.................................................. 3.1(i)
Merger.............................................................. 1.4
Merger Consideration................................................ 2.1(c)
Minimum Consideration............................................... 1.1(b)
Offer............................................................... Preamble
Offer Documents..................................................... 1.1(c)
Offer Registration Statement........................................ 1.1(c)
Offer to Purchase................................................... 1.1(b)
Option Exchange Ratio............................................... 5.6(a)
Parent.............................................................. Preamble
Parent Common Stock................................................. Preamble
Parent Disclosure Memorandum........................................ 3.2
Parent Preferred Stock.............................................. 3.2(b)
Parent Market Price................................................. 1.1(a)
Parent SEC Documents................................................ 3.2(d)
Parent Stock Plans.................................................. 3.2(b)
Pension Plans....................................................... 3.1(l)(i)
Per Share Cash Consideration........................................ 1.1(a)
Permits............................................................. 3.1(j)
Person.............................................................. 8.3(e)
Preliminary Prospectus.............................................. 1.1(c)
Proxy Statement..................................................... 3.1(d)
Recommendations..................................................... 1.2(c)
Regulation M-A...................................................... 1.1(c)
Regulatory Law...................................................... 5.5(b)
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Defined
Term
Section
-------
Release............................................................. 3.1(j)
Restraints.......................................................... 6.1(b)
Reverse Merger...................................................... Preamble
Schedule 14D-9...................................................... 1.2(a)
Schedule TO......................................................... 1.1(c)
SEC................................................................. 1.1(b)
Shares.............................................................. Preamble
Significant Subsidiary.............................................. 8.3(f)
Securities Act...................................................... 3.1(e)
Stockholder......................................................... Preamble
Stockholder Agreement............................................... 5.15
Stock Option........................................................ 5.6(a)
Sub................................................................. Preamble
Subsidiary.......................................................... 8.3(g)
Superior Proposal................................................... 8.3(h)
Surviving Corporation............................................... 1.4
Takeover Proposal................................................... 4.2(a)
Tax Opinion......................................................... 5.12
Tax Returns......................................................... 3.1(n)
Taxes............................................................... 3.1(n)
Termination Fee..................................................... 5.8(b)
TMP................................................................. Preamble
TMP Agreement....................................................... Preamble
Transaction......................................................... Preamble
Trading Day......................................................... 8.3(i)
Valuation Period.................................................... 1.1(a)
Welfare Plans....................................................... 3.1(l)(i)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of
December 27, 2001, by and among Yahoo! Inc., a Delaware corporation
("PARENT"), HJ Acquisition Corp., a Delaware corporation and a newly formed,
direct, wholly-owned subsidiary of Parent ("SUB"), and HotJobs.com, 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, the Offer and the
Merger (as defined herein).
WHEREAS, it is intended that the acquisition be accomplished by Sub
commencing an offer (as it may be amended from time to time as permitted by this
Agreement, the "OFFER") in which each of the issued and outstanding shares of
common stock, par value $0.01, of the Company (the "SHARES" or "COMPANY COMMON
STOCK"), upon the terms and subject to the conditions set forth in this
Agreement, may be exchanged for the right to receive from Parent (A) a fraction
of a share of common stock, par value $0.001 per share, of Parent together with
the associated rights to purchase shares of Series A Junior Participating
Preferred Stock, par value $.001 per share, of Parent issued and issuable
pursuant to the Rights Agreement dated as of March 15, 2001 between Parent and
EquiServe Trust Company, N.A., as Rights Agent (together, "PARENT COMMON STOCK")
as determined in accordance with Article I hereof and (B) the Per Share Cash
Consideration (together with any cash to be paid in lieu of fractional shares of
Parent Common Stock to be paid pursuant to Article I hereof) in cash, to be
followed by a merger of the Company with and into Sub (the "FORWARD MERGER").
WHEREAS, subsequent to the acquisition by Sub of Shares in the
Offer, upon the terms and subject to the conditions set forth in this Agreement,
each issued and outstanding Share, other than Shares owned by Parent, Sub or the
Company, will be converted into the right to receive cash and Parent Common
Stock as set forth herein.
WHEREAS, the Company's Board of Directors has unanimously, by those
present at such meeting of the Board of Directors, determined that the
consideration to be paid for each Share in the Offer and the Merger is fair to
the holders of such Shares and has resolved to recommend that the holders of
each Share accept the Offer and adopt this Agreement and each of the
transactions contemplated by this Agreement upon the terms and subject to the
conditions set forth herein.
WHEREAS, the Company has validly terminated the Agreement and Plan
of Merger (the "TMP AGREEMENT"), dated as of June 29, 2001, among TMP Worldwide
Inc. ("TMP"), TMP Tower Corp. and the Company pursuant to Section 7.1(f)
thereof.
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WHEREAS, the voting agreement by and between John A. Hawkins and
TMP dated as of June 29, 2001 was validly terminated on December 27, 2001 in
accordance with Section 7.16 thereof.
WHEREAS, if the Tax Opinion (as defined herein) is not obtained, the
parties desire to provide for an alternate merger structure providing for the
merger of Sub (or other direct or indirect wholly-owned subsidiary of Parent, as
determined by Parent in its sole discretion) with and into the Company (the
"REVERSE MERGER"), and the surviving corporation shall thereby become a direct
or indirect wholly-owned subsidiary of Parent.
WHEREAS, for U.S. Federal income tax purposes, it is intended that
the Offer and the Forward Merger (the "TRANSACTION") shall be treated as an
integrated transaction and 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.
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, and as a condition and inducement to Parent's and Sub's willingness
to enter into this Agreement, certain stockholders of the Company (each, a
"STOCKHOLDER") are entering into a stockholders agreement in the form attached
hereto as Exhibit 5.15, pursuant to which each such Stockholder is agreeing,
among other things, to validly tender for exchange all Shares owned by such
Stockholder.
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 OFFER AND THE MERGER
Section 1.1 THE OFFER.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 7.1 hereof and none of the events set forth in Annex I
hereto shall have occurred or be existing, Sub (or another direct or indirect
wholly-owned Subsidiary of Parent in Parent's sole discretion (so long as such
change of entity shall not adversely affect the intended tax-free nature of the
transaction), in which case all references to "Sub" in this Agreement shall be
to such other Subsidiary) shall commence (within the meaning of Rule 14d-2 under
the Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "EXCHANGE ACT")) not later than ten (10)
Business Days after the date hereof the Offer to exchange for each Share: (i) a
fraction of a share of Parent Common Stock equal to the Exchange Ratio and (ii)
cash in an amount equal to (A) Ten Dollars and Fifty Cents ($10.50) minus (B) an
amount equal to the product of (x) the Exchange Ratio multiplied by (y) the
Parent Market Price, without interest (the "PER SHARE CASH CONSIDERATION") as
promptly as practicable following the date hereof (together, the "EXCHANGE OFFER
CONSIDERATION"). For purposes of this
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Agreement, the "EXCHANGE RATIO" shall be equal to the result obtained by
dividing Five Dollars and Twenty-Five Cents ($5.25) by the Parent Market Price;
provided if the number of shares of Parent Common Stock otherwise issuable as
part of the Exchange Offer Consideration (assuming valid tender and no
withdrawal of Thirty-Nine Million Five Hundred Thousand (39,500,000) Shares)
would otherwise exceed Fifteen Million (15,000,000) (the "MAXIMUM NUMBER"), then
the Exchange Ratio shall be reduced to a number equal to the quotient of (i) the
Maximum Number divided by (ii) Thirty-Nine Million Five Hundred Thousand
(39,500,000), rounded to four decimal points. In the event that Parent declares
a stock split, stock dividend or other reclassification or exchange with respect
to Parent Common Stock with a record or ex-dividend date occurring during the
Valuation Period or for the period between the termination of the Valuation
Period and the Effective Time, there will be an appropriate adjustment made to
the closing sales prices during the Valuation Period and the Maximum Number for
purposes of calculating the Exchange Ratio. The "PARENT MARKET PRICE" means the
average of the daily volume-weighted average prices, rounded to four decimal
points, of Parent Common Stock, as reported by Bloomberg, L.P., during each
Trading Day in the Valuation Period. "VALUATION PERIOD" means the period of ten
(10) consecutive Trading Days ending on and including the second Trading Day
before and excluding the Initial Expiration Date or, if applicable, the latest
extension of such expiration date, other than an extension relating to a
"subsequent offering period" pursuant to Rule 14d-11 of the Exchange Act.
(b) The obligations of Sub to accept for payment and to pay for any
Shares validly tendered and not withdrawn prior to the expiration of the Offer
(as it may be extended in accordance with the requirements of this Section
1.1(b)) shall be subject only to (i) there being validly tendered and not
withdrawn prior to the expiration of the Offer that number of Shares which,
together with the Shares then owned by Parent or Sub (without giving effect to
Shares subject to the Stockholder Agreement (as defined herein) unless such
shares have been validly tendered and not withdrawn as of such time), represents
at least a majority of the Shares outstanding on a Fully Diluted Basis (the
"MINIMUM CONDITION"), and (ii) the other conditions set forth in Annex I hereto.
The Company agrees that no Shares held by the Company or any of its Subsidiaries
will be tendered to Parent pursuant to the Offer. As used in this Agreement,
"FULLY DILUTED BASIS" shall refer to the number of Shares issued and outstanding
at any time after taking into account all Shares issuable upon the conversion of
the Company's convertible securities or upon the exercise of any options,
warrants or rights to purchase shares of the capital stock of the Company to the
extent that the exercise price or conversion price, as the case may be, of such
convertible security, option, warrant or right is less than $10.00 per share.
Subject to the prior satisfaction or waiver by Parent or Sub of the Minimum
Condition and the other conditions set forth in Annex I hereto, Sub shall
promptly consummate the Offer in accordance with its terms and accept for
payment and pay for all Shares tendered and not withdrawn promptly following the
acceptance of Shares for payment pursuant to the Offer. The Offer shall be made
by means of an offer to purchase (the "OFFER TO PURCHASE") that contains the
terms set forth in this Agreement, the Minimum Condition and the other
conditions set forth in Annex I hereto. Parent expressly reserves the right to
waive any of such conditions, to increase the Exchange Offer Consideration
payable in the Offer and to make any other changes in the terms of the Offer;
provided, however, that Sub shall not, and Parent shall cause Sub not to,
decrease the Exchange Offer Consideration, change the form of consideration
payable in the Offer (including the ratio of cash to shares of Parent Common
Stock, except as provided in Section 1.1(a) hereof), decrease the number of
Shares sought in the Offer, waive the Minimum
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Condition, impose additional conditions to the Offer, extend the offer beyond
the date that is twenty (20) "business days" (as such term is defined in Rule
14d-1(g) under the Exchange Act) after commencement of the Offer (the "INITIAL
EXPIRATION DATE") except as set forth herein, or amend any other condition of
the Offer in any manner adverse to the holders of the Shares, in each case
without the prior written consent of the Company (such consent to be authorized
by the Company's Board of Directors or a duly authorized committee thereof).
Notwithstanding the foregoing, Sub may, without the consent of the Company, (i)
extend the Offer beyond the Initial Expiration Date if, at the Initial
Expiration Date or, if applicable, the latest extension of such expiration date,
any of the conditions to Sub's obligation to accept Shares for payment shall not
be satisfied or waived, or (ii) extend the Offer for any period required by any
rule, regulation or interpretation of the United States Securities and Exchange
Commission ("SEC"), or the staff thereof, or by any other federal, state, local,
foreign or other statute, law, ordinance, rule or regulation or any order, writ,
decision, injunction, judgment, award or decree (collectively, "LAW"),
applicable to the Offer. If at the Initial Expiration Date or the latest
extension of such date all of the conditions to the Offer have been satisfied or
waived, Sub may (and, if the number of Shares validly tendered and not withdrawn
pursuant to the Offer equals seventy percent (70%) or more, but less than ninety
percent (90%) of the Shares outstanding on a Fully Diluted Basis of Company
Common Stock, shall) extend the Offer pursuant to a "subsequent offering period"
not to exceed twenty (20) business days (as such term is defined in Rule
14d-1(g) under the Exchange Act) to the extent permitted under, and in
compliance with, Rule 14d-11 under the Exchange Act.
(c) Within ten (10) Business Days after the date of this Agreement,
Parent shall prepare and file with the SEC a registration statement on Form S-4
(together with any amendments, supplements and exhibits thereto, the "OFFER
REGISTRATION STATEMENT") to register the offer and sale of Parent Common Stock
pursuant to the Offer. The Offer Registration Statement will include a
preliminary prospectus containing the information required under Rule 14d-4(b)
promulgated under the Exchange Act (the "PRELIMINARY PROSPECTUS"). As soon as
practicable on the date the Offer is commenced, Parent and Sub shall file with
the SEC, pursuant to Regulation M-A under the Exchange Act ("REGULATION M-A"), a
Tender Offer Statement on Schedule TO which will contain or incorporate by
reference all or part of the Preliminary Prospectus, the Offer to Purchase and
the related letter of transmittal form and all other ancillary documents with
respect to the Offer (together with all amendments, supplements and exhibits
thereto, the "SCHEDULE TO") (the Schedule TO, the Offer Registration Statement
and such documents included therein pursuant to which the Offer will be made,
together with any amendments, supplements and exhibits thereto, the "OFFER
DOCUMENTS"). Parent and Sub agree to take all steps necessary to cause the Offer
Documents to be filed with the SEC and disseminated to holders of Shares, in
each case as and to the extent required by applicable federal securities laws.
Parent and Sub, on the one hand, and the Company, on the other hand, agree to
promptly correct any information provided by it for use in the Offer Documents
if and to the extent that it shall have become false or misleading in any
material respect or as otherwise required by Law. Parent and Sub further agree
to take all steps necessary to cause the Offer Documents as so corrected to be
filed with the SEC and disseminated to holders of Shares, in each case as and to
the extent required by applicable federal securities laws. The Company and its
counsel shall be given a reasonable opportunity to review the Offer Documents
before they are filed with the SEC. In addition, Parent and Sub agree to provide
the Company and its counsel with any comments that Parent, Sub or their counsel
may receive from time to time from
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the SEC or its staff with respect to the Offer Documents promptly after receipt
of such comments, and any responses thereto.
(d) Withholding Rights. Each of Parent and Sub shall be entitled to
deduct and withhold, or cause the Exchange Agent to deduct and withhold, from
the Exchange Offer Consideration payable to a holder of Shares pursuant to the
Offer such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Sub or Parent, as
the case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by Sub or Parent, as the case may be.
Section 1.2 COMPANY ACTIONS.
(a) As soon as practicable on the date the Offer is commenced, the
Company shall, in a manner that complies with Rule 14d-9 under the Exchange Act,
file with the SEC a Tender Offer Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments, supplements and exhibits thereto,
the "SCHEDULE 14D-9") which shall, subject to the provisions of Section 4.2(b),
contain the Recommendations (as defined herein). The Company further agrees to
take all steps necessary to cause the Schedule 14D-9 to be filed with the SEC
and disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. The Company, on the one hand,
and Parent and Sub, on the other hand, agree to promptly correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false or misleading in any material respect or as otherwise required
by Law. The Company agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and disseminated to holders of
the Shares, in each case as and to the extent required by applicable federal
securities laws. Parent, Sub and their counsel shall be given the opportunity to
review and comment on the Schedule 14D-9 and any amendment thereto before filing
with the SEC. In addition, the Company agrees to provide Parent, Sub and their
counsel in writing with any comments that the Company or its counsel may receive
from time to time from the SEC or its staff with respect to the Schedule 14D-9
promptly after receipt of such comments, and to consult with Parent, Sub and
their counsel prior to responding to any such comments.
(b) In connection with the Offer, the Company shall promptly furnish
or cause to be furnished to Parent or Sub mailing labels, security position
listings and all available listings and computer files containing the names and
addresses of the record and beneficial holders of the Shares as of a recent
date, and shall promptly furnish Parent or Sub with such additional information
and assistance (including, but not limited to, lists of holders of the Shares,
updated periodically, and their addresses, mailing labels and lists of security
positions) as Parent or Sub or its agent(s) may reasonably request for the
purpose of communicating the Offer to the record and beneficial holders of the
Shares.
(c) The Company hereby approves of and consents to the Offer and the
Merger and represents and warrants that the Company's Board of Directors, at a
meeting duly called and held, has (i) unanimously, by those present at such
meeting of the Board of Directors, determined that this Agreement and the
transactions contemplated hereby, including the Offer
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and the Merger, are advisable and are fair to and in the best interests of the
stockholders of the Company, (ii) unanimously, by those present at such meeting
of the Board of Directors, approved and adopted this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, in a
manner which constitutes a directors' action (as defined in Section 141(b) of
the DGCL), (iii) unanimously, by those present at such meeting of the Board of
Directors, determined to terminate the TMP Agreement in accordance with its
terms pursuant to Section 7.1(f) thereof, and (iv) unanimously, by those present
at such meeting of the Board of Directors, resolved to recommend that the
stockholders of the Company accept the Offer, tender their Shares to Parent
thereunder and approve and adopt this Agreement and the Merger (the
recommendations referred to in this clause (iv) are collectively referred to in
this Agreement as the "RECOMMENDATIONS"). The Company hereby consents to the
inclusion in the Offer Documents of the Recommendations and approval of the
Board of Directors described in the immediately preceding sentence, and the
Company shall not permit the Recommendations and approval of the Company's Board
of Directors or any component thereof to be modified in any manner adverse to
Parent or Sub or to be withdrawn by the Company's Board of Directors or any
committee thereof, except as provided, and only to the extent set forth, in
Section 5.1(b) hereof.
Section 1.3 DIRECTORS.
(a) Effective upon the acceptance of any Shares for payment by Parent
or Sub or any of its affiliates pursuant to the Offer (the "APPOINTMENT TIME"),
Parent shall be entitled to elect or designate such number of directors, rounded
up to the next whole number, on the Company Board of Directors as is equal to
the product of the total number of directors on the Company Board of Directors
(giving effect to the directors elected or designated by Parent pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Sub, Parent and any of their affiliates bears to the total
number of Shares then outstanding. The Company shall, upon Parent's request,
promptly increase the size of the Company Board of Directors, including by
amending the Bylaws of the Company if necessary so as to increase the size of
the Company Board of Directors, or promptly secure the written resignations of
such number of its incumbent directors, or both, as is necessary to enable
Parent's designees to be so elected or designated to the Company Board of
Directors, and shall use its reasonable best efforts to cause Parent's designees
to be so elected or designated at such time. At the Appointment Time, the
Company shall, upon Parent's request, also cause persons elected or designated
by Parent to constitute the same percentage (rounded up to the next whole
number) as is on the Company Board of Directors of (i) each committee of the
Company Board of Directors; (ii) each board of directors (or similar body) of
each of the Company's Subsidiaries; and (iii) each committee (or similar body)
of each such board, in each case only to the extent permitted by applicable Law
or the rules of any stock exchange or trading market on which the Company's
common stock is listed or traded after giving effect to the foregoing changes to
the composition of the Company's Board of Directors. The Company's obligations
under this Section 1.3(a) shall be subject to Section 14(f) of the Exchange Act
and Rule 14f-l promulgated thereunder. The Company shall promptly upon execution
of this Agreement take all actions required pursuant to such Section 14(f) and
Rule 14f-l in order to fulfill its obligations under this Section 1.3(a),
including, but not limited to, mailing to record and beneficial holders of the
Shares as of a recent date (together with the Schedule 14D-9) the information
required by Section 14(f) and Rule 14f-l as is necessary to enable Parent's
designees to be elected or designated to the Company Board of Directors. Parent
or Sub shall supply the Company, in writing, and be solely responsible for
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information with respect to either of them and their nominees, officers,
directors and affiliates to the extent required by Section 14(f) and Rule 14f-l.
The provisions of this Section 1.3(a) are in addition to and shall not limit any
rights that any of Sub, Parent or any of their respective affiliates may have as
a holder or beneficial owner of Shares as a matter of law with respect to the
election of directors or otherwise.
(b) In the event that Parent's designees are elected or designated to
the Company Board of Directors, then, until the Effective Time, the Company
shall cause the Company Board of Directors to have at least two (2) directors
who are directors on the date hereof including at least two (2) members who are
independent directors for purposes of the continued listing requirements of the
Nasdaq National Market (the "INDEPENDENT DIRECTORS"), provided, however, that if
any Independent Director is unable to serve due to death or disability, the
remaining Independent Directors shall be entitled to elect or designate another
person (or persons) who serves as a director on the date hereof to fill such
vacancy, and such person (or persons) shall be deemed to be an Independent
Director for purposes of this Agreement. If no Independent Director then
remains, the other directors shall designate two (2) persons who are directors
on the date hereof (or, in the event there shall be less than two (2) directors
available to fill such vacancies as a result of such persons' deaths,
disabilities or refusals to serve, such smaller number of persons who are
directors on the date hereof) to fill such vacancies and such persons shall be
deemed Independent Directors for purposes of this Agreement. Notwithstanding
anything in this Agreement to the contrary, if Parent's designees constitute a
majority of the Company Board of Directors after the acceptance for payment of
Shares pursuant to the Offer and prior to the Effective Time, then the
affirmative vote of a majority of the Independent Directors (or if only one
exists, then the vote of such Independent Director) shall be required to (i)
amend or terminate this Agreement by the Company; (ii) exercise or waive any of
the Company's rights, benefits or remedies hereunder, if such action would
adversely affect holders of Shares other than Parent or Sub; (iii) amend the
Certificate of Incorporation or Bylaws of the Company if such action would
adversely affect holders of Shares other than Parent or Sub; or (iv) take any
other action of the Company Board of Directors under or in connection with this
Agreement if such action would adversely affect holders of Shares other than
Parent or Sub; provided, however, that if there shall be no Independent
Directors as a result of such persons' deaths, disabilities or refusal to serve,
then such actions may be effected by majority vote of the entire Board of
Directors of the Company.
Section 1.4 THE MERGER.
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL"), the Forward Merger shall be effected and the Company shall be merged
with and into Sub at the Effective Time with the separate corporate existence of
the Company ceasing and Sub continuing as the surviving corporation; provided,
however, that if Parent does not obtain the Tax Opinion (as defined herein),
then the Reverse Merger shall be effected, with the separate corporate existence
of Sub (or another direct or indirect wholly-owned subsidiary of Parent, as
determined by Parent in its sole discretion) ceasing and the Company continuing
as the surviving corporation. The surviving corporation of the Forward Merger or
the Reverse Merger, as the case may be, shall be herein referred as the
"SURVIVING CORPORATION" and the Forward Merger and Reverse Merger shall
collectively be referred to as the "MERGER". The Surviving Corporation shall
become a direct or
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indirect wholly owned subsidiary of Parent and shall succeed to and assume all
the rights and obligations of Sub and the Company in accordance with the DGCL.
Section 1.5 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 Skadden,
Arps, Slate, Meagher & Flom LLP, 525 University Ave., Ste. 1100, Palo Alto,
California, unless another date or place is agreed to by the parties hereto.
Section 1.6 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 1.7 CERTIFICATE OF INCORPORATION AND BYLAWS.
(a) The Certificate of Incorporation of Sub, as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter 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 1.8 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.
(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 1.9 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 T
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ime all the property, rights, privileges, powers and franchises of the Company
and Sub shall be vested in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Sub shall become the debts, liabilities and duties
of the Surviving Corporation.
Section 1.10 SUBSEQUENT ACTIONS.
If at any time after the Effective Time the Surviving Corporation
shall determine, in its sole discretion, or shall be advised, that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or Sub acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, then the officers and directors
of the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either the Company or Sub, all such deeds, bills of sale,
instruments of conveyance, assignments and assurances and to take and do, in the
name and on behalf of each such corporation or otherwise, all such other actions
and things as may be necessary or desirable to vest, perfect or confirm any and
all right, title or interest in, to and under such rights, properties or assets
in the Surviving Corporation or otherwise to carry out this Agreement.
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 or any
shares of capital stock of Parent or Sub:
(a) Capital Stock of Sub. In the event of a Forward Merger, each
issued and outstanding share of capital stock of Sub shall remain as one validly
issued, fully paid and nonassessable share of common stock, par value $0.001, of
the Surviving Corporation. Notwithstanding the foregoing, in the event of a
Reverse Merger, then each issued and outstanding share of capital stock of Sub
(or another direct or indirect wholly-owned Subsidiary of Parent, as determined
by Parent in its sole discretion) shall be converted into and become one validly
issued, fully paid and non-assessable share of common stock of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock. Each Share
that is owned by the Company, Parent or Sub (except for Shares that are owned by
Sub, in the event of a Reverse Merger) 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.
(i)Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares to be canceled in accordance with Section
2.1(b) and other
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than Shares owned by Sub in the event of a Reverse Merger) shall be converted
into the right to receive the Exchange Offer Consideration (the "MERGER
CONSIDERATION").
(ii) As of the Effective Time, all such Shares 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 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 Merger Consideration shall be appropriately
adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination, exchange or similar transaction (without
duplication of any adjustments made pursuant to Section 1.1(a)).
(iii) Notwithstanding anything expressed or implied to the
contrary in this Agreement, appropriate modifications shall be made to the
provisions of this Agreement (including, without limitation, this Section 2.1)
in the event of a Reverse Merger.
Section 2.2 EXCHANGE OF CERTIFICATES.
(a) Exchange Agent. As of the Effective Time, Parent shall deposit
with Equiserve, L.P. 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, for exchange in accordance
with this Article II, through the Exchange Agent, certificates representing the
shares of Parent Common Stock and cash (such shares of Parent Common Stock and
cash, 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 and payable pursuant to Section 2.1 in exchange for
Shares. Parent agrees to make available to the Exchange Agent from time to time,
as needed, cash sufficient to pay cash in lieu of fractional shares pursuant to
Section 2.2(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 (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 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
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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 then held by such holder under all such Certificates so surrendered, (y)
cash which such holder has the right to receive pursuant to the provisions of
this Article II after taking into account all the Shares then held by such
holder under all such Certificates so surrendered (together with cash in lieu of
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.2(e)), and (z) any dividends or other distributions to
which such holder is entitled pursuant to Section 2.2(c) (in each case after
giving effect to any required withholding taxes), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Company Common Stock which is not registered in the transfer records of the
Company, a certificate representing the proper number of shares of Parent Common
Stock may be issued to a Person other than the Person in whose name the
Certificate so surrendered is registered, if, upon presentation to the Exchange
Agent, such Certificate shall be properly endorsed or otherwise be in proper
form for transfer and the Person requesting such issuance shall pay any transfer
or other taxes required by reason of the issuance of shares of Parent Common
Stock to a Person other than the registered holder of such Certificate or
establish to the reasonable satisfaction of Parent that such tax has been paid
or is not applicable. Notwithstanding anything to the contrary contained herein,
no certificate representing Parent Common Stock or cash (including in lieu of a
fractional share interest) shall be delivered to a Person who is an "affiliate"
(as contemplated by Section 5.10 hereof) of the Company unless such affiliate
has theretofore executed and delivered to Parent the agreement referred to in
Section 5.10. 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.
(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.
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(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 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 in accordance with the terms of this
Agreement or prior to the date of this Agreement and which remain unpaid at the
Effective Time.
(e) No Fractional Shares.
(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 exchanged pursuant to the Offer or 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), which are
required to be withheld with respect thereto, equal to the product of (A) such
fractional part of a share and (B) Parent Market Price.
(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 such amounts as it is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or Parent, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect 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 (6)
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 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 applicable Law, become the property of the Surviving
Corporation free and clear of any claims or interest of any Person previously
entitled thereto.
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(h) No Liability. None of Parent, Sub, the Company or the Exchange
Agent shall be liable to any Person in respect of any shares of Parent Common
Stock (or dividends or distributions with respect thereto) or cash in lieu of
fractional shares of Parent Common Stock or cash from the Exchange Fund, in each
case delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(i) Investment of Exchange Fund. The Exchange Agent shall invest 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 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 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).
Section 2.3 DISSENTING SHARES.
(a) Notwithstanding anything in this Agreement to the contrary, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
complied with Section 262 of the DGCL (the "DISSENTING SHARES") shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect or withdraws or otherwise loses his or her right to appraisal.
A holder of Dissenting Shares shall be entitled to receive payment of the
appraised value of such Shares held by him or her in accordance with Section 262
of the DGCL, unless, after the Effective Time, such holder fails to perfect or
withdraws or loses his or her right to appraisal, in which case such Shares
shall be converted into and represent only the right to receive the Merger
Consideration, without interest thereon, upon surrender of the Certificate or
Certificates representing such Shares, pursuant to Section 2.2.
(b) The Company shall give Parent (i) prompt notice of any written
demands for appraisal of any Shares, attempted withdrawals of such demands and
any other instruments
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served pursuant to the DGCL and received by the Company relating to rights of
appraisal; and (ii) the opportunity to participate in the conduct of all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. Except with the prior written consent of Parent, the Company shall not
voluntarily make any payment with respect to any demands for appraisal or settle
or offer to settle any such demands for appraisal.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as
expressly set forth in the Filed Company SEC Documents filed since December 31,
2000 or on the disclosure memorandum delivered by the Company to Parent
immediately prior to the execution of this Agreement and initialed on behalf of
Parent and the Company, which disclosure memorandum specifies the section or
subsection of this Agreement to which the exception relates (the "COMPANY
DISCLOSURE MEMORANDUM"), the Company represents and warrants to Parent and Sub
as follows:
(a) Organization, Standing and Corporate Power. Each of the Company
and each of its Significant Subsidiaries is a corporation duly organized,
validly existing and, to the extent applicable, in good standing under the laws
of the jurisdiction in which it is organized and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of the Company and each of its Significant
Subsidiaries is duly qualified or licensed to do business and, to the extent
applicable, is in good standing in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed 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 twenty percent (20%) equity interest or similar
interest in, or any interest convertible into or exchangeable or exercisable for
a greater than twenty percent (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 of its Subsidiaries to any of the
Company's Subsidiaries. Except as provided by applicable Law, there are no
restrictions of any kind which prevent the payment of dividends by any
Subsidiary.
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(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 December 20, 2001, (i) 38,766,678 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) 5,623,424 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 December 20, 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 December
20, 2001 under Company Stock Plans, and (ii) no options, warrants, securities
convertible into, or commitments with respect to the issuance of shares of
Company Common Stock have been issued, granted or made. All outstanding shares
of capital stock of the Company are, and all shares which may be issued pursuant
to the Company Stock Plans will be, when issued in accordance with the terms
thereof, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote. Except (i) as set forth above in this
Section 3.1(c), and (ii) for shares of Company Common Stock reserved for
issuance 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 December 20, 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
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any Subsidiary of the Company to repurchase, redeem or otherwise acquire any
such outstanding securities of Subsidiaries of the Company or to issue, deliver
or sell, or cause to be issued, delivered or sold, any such securities. Except
as set forth above in this Section 3.1(c), neither the Company nor any
Subsidiary is a party to or bound by any agreement regarding any securities of
the Company or any Subsidiary of the Company.
(d) Authority; Noncontravention. The Company has the requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of the Company and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby, subject, in the case of the
Merger, to receipt of the Company Stockholder Approval (if required by
applicable Law to consummate the Merger) and the filing of the Certificate of
Merger. The Board of Directors of the Company has unanimously, by those present
at such meeting of the Board of Directors, 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(i)
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 Stockholder Agreement and the consummation of the
Offer and 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 Offer, 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 Offer, 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
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Company or any of its Subsidiaries or their respective properties or assets,
other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights, cancellations, accelerations, losses or Liens that
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect on the Company or to prevent or materially delay the
consummation of the transactions contemplated by this Agreement. No consent,
approval, order or authorization of, action by or in respect of, or
registration, declaration or filing with, any supranational, national, state,
municipal, local or foreign government, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing, importing
or other governmental or quasi-governmental authority (each, a "GOVERNMENTAL
ENTITY") is required by or with respect to the Company or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the Offer, the Merger or the
other transactions contemplated by this Agreement, except for (1) the filing of
a pre-merger notification and report form by the Company under the
Hart-Scott-Rodino 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 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 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), 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 Jones news service, PR
Newswire or any equivalent service (collectively, a "DOW JONES NEWS RELEASE")
made by the Company after the date hereof taken as a whole, as of the Effective
Time will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the
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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 generally
accepted accounting principles ("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 in the Form S-4, Proxy Statement, Offer Documents and
Schedule 14D-9. 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. The information supplied by the Company expressly for inclusion
in the Offer Documents will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Schedule 14D-9 will comply in all material
respects with the provisions of applicable federal securities laws and, on the
date filed with the SEC and on the date first published or sent or given to the
stockholders, will not 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
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made or incorporated by reference therein based on information supplied by
Parent or Sub specifically for inclusion or incorporation by reference in the
Schedule 14D-9.
(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 Section 5.12, 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)(A) of the Company
Disclosure Memorandum or listed as an exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 2000, neither the Company nor any
Company Subsidiary is a party to, and none of their respective properties or
assets are bound by, any "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) (the contracts listed in Section 3.1(i)
of the Company Disclosure Memorandum being referred to as the "MATERIAL
CONTRACTS"). Each such Material Contract is a valid, binding and enforceable
obligation of the Company or its Subsidiaries and, to the Company's Knowledge,
of the other party or parties thereto, in accordance with its terms, and in full
force and effect, except where the failure to be valid, binding, enforceable and
in full force and effect would not reasonably be expected to have a Material
Adverse Effect on the Company and to the extent as may be limited by applicable
bankruptcy, insolvency, moratorium or other laws affecting the enforcement of
creditors' rights generally or by general principles of equity. The Company has
not received any notice from any other party to any such Material Contract, and
otherwise has no Knowledge that such third party intends to terminate, or not
renew, any such Material Contract. As of the date hereof, the Company has made
available to Parent true and correct copies of all such contracts. Neither the
Company nor any of its Subsidiaries, and, to the Knowledge of the Company, no
other party thereto, is in violation of or in default under (nor does there
exist any condition which upon the passage of time or the giving of notice or
both would cause such a violation of or default under) any loan or credit
agreement, bond, note, mortgage, indenture, lease or other contract, agreement,
obligation, commitment, arrangement, understanding, instrument, permit or
license to which it is a party or by which it or any of its properties or assets
is bound, except for violations or defaults
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that individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect on the Company. Except as set forth in Section 3.1(i)(B)
of the Company Disclosure Memorandum, neither the Company, its Subsidiaries nor,
to the Company's Knowledge, any of its employees 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 or
by any agreement or covenant granting any exclusive rights whatsoever.
(j) Compliance with Laws. 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. Neither
the Offer nor 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. Except for
those matters that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the Company: (A) each of the
Company and its Subsidiaries is, and has been, in compliance with all applicable
Environmental Laws; (B) during the period of ownership or operation by the
Company or its Subsidiaries of any of its currently or previously owned, leased
or operated properties, no Hazardous Material has been treated or disposed of,
and there have been no Releases or threatened Releases of Hazardous Material at,
in, on, under or affecting such properties or any contiguous site; (C) prior to
the period of ownership or operation by the Company or its Subsidiaries of any
of its currently or previously owned, leased or operated properties, to the
Knowledge of the Company, no Hazardous Material was treated, stored or disposed
of, and there were no Releases of Hazardous Material at, in, on, under or
affecting any such property or any contiguous site; and (D) neither the Company
nor its Subsidiaries have received any written notice of, or entered into or
assumed by contract, judicial or administrative settlement, or operation of law
any indemnification obligation, order, settlement or decree relating to: (1) any
violation of any Environmental Laws or the institution or pendency of 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
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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 manmade, that is prohibited, limited or regulated by or pursuant to
an Environmental Law applicable to the Company, any Company Subsidiary or their
respective properties. The term "RELEASE" means the spilling, leaking,
discharging, injecting, emitting and/or disposing and placement of a Hazardous
Material in any location that poses a threat thereof.
(k) Absence of Changes in Benefit Plans. There has not been, since
December 31, 2000, any adoption or amendment in any material respect by the
Company or any of its Subsidiaries of any collective bargaining agreement or any
Benefit Plan, or any material change in any actuarial or other assumption used
to calculate funding obligations with respect to any Pension Plans, or any
change in the manner in which contributions to any Pension Plans are made or the
basis on which such contributions are determined.
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(l) ERISA Compliance.
(i) Section 3.1(l) 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
nonmaterial plan or program maintained by the Company or its Subsidiaries for
the benefit of non U.S. employees), under which (1) current or former employees,
officers, directors or independent contractors of the Company or any of its
Subsidiaries (or their beneficiaries) participate or are entitled to participate
by reason of their relationship with the Company or any of its Subsidiaries, (2)
to which the Company or any of its Subsidiaries is a party or a sponsor or a
fiduciary thereof or by which the Company or any of its Subsidiaries (or any of
their rights, properties or assets) is currently bound or (3) with respect to
which the Company or any of its Subsidiaries has any obligation to make payments
or contributions, including, without limitation, all "employee pension benefit
plans" (as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) (sometimes referred to herein as "PENSION
PLANS"), "employee welfare benefit plans" (as defined in Section 3(1) of ERISA)
(sometimes referred to herein as "WELFARE PLANS") (all of the foregoing referred
to collectively herein as "BENEFIT PLANS"), and all other Benefit Plans
maintained, or contributed to, by the Company, its Subsidiaries or any Person or
entity that, together with the Company, is treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code (a "COMMONLY CONTROLLED ENTITY") for
the benefit of any current or former officers, directors, employees or
independent contractors of the Company and its Subsidiaries (or their
beneficiaries) (including any such plans maintained for current or former
foreign employees). The Company has made available to Parent true, complete and
correct copies of (1) each Benefit Plan (or, in the case of any unwritten
Benefit Plans, descriptions thereof), (2) the most recent annual report on Form
5500 required to be filed with the Internal Revenue Service (the "IRS") with
respect to each Benefit Plan, (3) the most recent summary plan description for
each Benefit Plan for which such summary plan description is required and (4)
each trust agreement and group annuity contract relating to any Benefit Plan.
Each Benefit Plan has been administered in all material respects in accordance
with its terms. The Company, its Subsidiaries and all the Benefit Plans are all
in compliance in all material respects with the applicable provisions of ERISA,
the Code and all other applicable Legal Provisions. Notwithstanding anything
contained herein to the contrary, with respect to any Benefit Plan maintained,
sponsored or contributed to primarily for the benefit of persons residing and
providing services to the Company or its Subsidiaries outside of the United
States, the term "BENEFIT PLAN" as used herein shall only include such non
United States Benefit Plans that are material Benefit Plans of the Company or
its Subsidiaries.
(ii) All Pension Plans are the subject of a determination letter
from the IRS to the effect that such Pension Plans are qualified (or the Company
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
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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 (6) 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 "multi-employer plan" as defined in
Section 3(37) of ERISA.
(iv) With respect to any Benefit Plan (other than employment
agreements or any other individual contract), there are no understandings,
agreements or undertakings, written or oral, that would prevent any such Benefit
Plan (including any such plan covering retirees or other former employees, other
than agreements with individuals) from being amended or terminated without
material liability to the Company on or at any time after the Effective Time.
(v) No pending or, to the Knowledge of the Company, overtly
threatened disputes, lawsuits, claims (other than routine claims for benefits),
investigations, audits or complaints to, or by, any Person or Governmental
Entity have been filed or are pending with respect to any Benefit Plans of the
Company or any of its Subsidiaries in connection with any Benefit Plan or the
fiduciaries or administrators thereof that could reasonably be expected to give
rise to a material liability. With respect to each Benefit Plan, there has not
occurred, and neither the Company, any Subsidiary of the Company, the plan
sponsor nor, to the Company's Knowledge, a plan fiduciary that the Company has
an obligation to indemnify or is contractually bound to enter into, any
nonexempt "prohibited transaction" within the meaning of Section 4975 of the
Code or Section 406 of ERISA, nor any transaction that would result in a
material civil penalty being imposed under Section 409 or 502(i) of ERISA.
(vi) There are no unfunded liabilities with respect to any
Benefit Plan other than those that would not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect on the Company.
(vii) Except as would not reasonably be expected to have a
Material Adverse Effect on the Company, all contributions to and payments with
respect to or under the Benefit Plans that are required to be made with respect
to periods ending on or before the Effective Time have been made or accrued
before the Effective Time by the Company in accordance with the appropriate plan
documents, financial statements, actuarial report, collective bargaining
agreements or insurance contracts or arrangements.
(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)).
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(ix) The execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence of
any additional or subsequent events) constitute an event under any plan, policy,
arrangement or agreement (including under any collective bargaining agreement)
or any trust or loan that will or would reasonably be expected to result in any
payment (whether of severance pay or otherwise), acceleration of, forgiveness of
indebtedness owing from, vesting of, distribution of, or increase in or
obligation to fund, any benefits with respect to any current or former employee,
director or consultant of the Company.
(m) Labor Relations. Neither the Company nor any of its Subsidiaries
is a party to, or bound by, any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization. There
is no pending or, to the Knowledge of the Company, overtly threatened (i) union
organizational campaign effort, collective bargaining negotiations, bargaining
impasse, implementation of final offer, work to rule or intermittent strike or
(ii) labor dispute, grievance or arbitration matter, economic or unfair labor
practice strike, boycott, work stoppage or slowdown involving, in each case of
this clause (ii), a material number of employees of the Company and its
Subsidiaries, against the Company or any of its Subsidiaries, no lockout is in
effect and no permanent or temporary strike replacements are currently employed
at any Company facility. Neither the Company nor any of its Subsidiaries, nor
their respective representatives or employees, has committed any unfair labor
practices in connection with the operation of the respective businesses of the
Company or any of its Subsidiaries, and there is no pending or, to the Knowledge
of the Company, threatened charge, complaint, decision, order, notice posting
requirement, settlement agreement or injunctive action or order against the
Company or any of its Subsidiaries by the National Labor Relations Board or any
similar governmental or adjudicatory agency or court, except in each case as
would not reasonably be expected to have a Material Adverse Effect on the
Company. The Company and its Subsidiaries have in the past been and are in
compliance in all respects with all applicable collective bargaining agreements
and Legal Provisions respecting employment, employment practices, employee
classification, labor relations, safety and health, wages, hours and terms and
conditions of employment, except where the failure to be in compliance would not
reasonably be expected to have a Material Adverse Effect on the Company. The
Company has complied in all material respects with its payment obligations to
all employees of the Company and its Subsidiaries in respect of all wages,
salaries, commissions, bonuses, benefits and other compensation due and payable
to such employees under any Company or Company Subsidiary policy, practice,
agreement, plan, program or any statute or other law. Neither the Company nor
any of its Subsidiaries has experienced within the past twelve (12) months a
"plant closing" or "mass layoff" within the meaning of the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. ss.ss. 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,
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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 (other than as a result of a decline in
the market price of Parent Common Stock) that is reasonably likely to prevent
the Transaction from qualifying as a reorganization within the meaning of
Section 368(a) of the Code. As used in this Agreement, "TAXES" shall include all
U.S. Federal, state and local, domestic and foreign, income, franchise,
property, sales, use, excise and other taxes, of any nature whatsoever, tariffs
or similar governmental charges, including any obligations for withholding taxes
from payments due or made to any other person, together with all interest,
penalties or additions to tax imposed with respect to such amounts and "TAX
RETURNS" shall include any return, report or similar statement (including
attached schedules) required to be filed with respect to any Tax, including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
(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.
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(p) Title to Properties.
(i) Each of the Company and its Subsidiaries has good and
marketable title to, or valid leasehold interests in, all its properties and
assets except for such as are no longer used or useful in the conduct of its
businesses or as have been disposed of in the ordinary course of business and
except for failures to have, or defects in title or interests, easements,
restrictive covenants and similar encumbrances that individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect on
the Company. All such material assets and properties, other than assets and
properties in which the Company or any of its Subsidiaries has a leasehold
interest, are free and clear of all Liens, except for Liens that individually or
in the aggregate would not reasonably be expected to have a Material Adverse
Effect on the Company.
(ii) Each of the Company and its Subsidiaries has complied in all
respects with the terms of all leases to which it is a party and under which it
is in occupancy, and all such leases are in full force and effect, except for
such noncompliance or failure to be in full force and effect that individually
or in the aggregate would not reasonably be expected to have a Material Adverse
Effect on the Company. Each of the Company and its Subsidiaries enjoys peaceful
and undisturbed possession under all such leases, except for failures to do so
that individually or in the aggregate are not reasonably likely to have a
Material Adverse Effect on the Company.
(q) Intellectual Property.
(i) Each of the Company and its Subsidiaries owns, or is validly
licensed or otherwise has the right to use (in each case free and clear of all
Liens) all patents, patent applications, trademarks, trademark rights, trade
names, trade name rights, service marks, service mark rights, copyrights and
other proprietary intellectual property rights, computer programs and other
technology (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.
(ii) In each of the following cases, 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) 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; (B) 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
(C) 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
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expected to result in the abandonment, cancellation or unenforceability of such
Intellectual Property Right.
(iii) 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 (A)
any granted patent or existing trademark or (B) any patent granted from a
pending patent application.
(iv) In each of the following cases, except for those matters
that individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect on the Company, 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 Intellectual
Property Rights owned by or licensed to the Company or any of its Subsidiaries
(the "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.
(v) The Company has no Knowledge of any facts which would cause
it to reasonably believe that either the Offer or the Merger (including the
assignment by operation of law of any contract to the Surviving Corporation)
will result in: (A) the granting by Parent or any of its Subsidiaries (other
than Sub in the case of a Forward Merger and other than the Company and its
Subsidiaries in the case of a Reverse Merger) of any rights or licenses to any
material Intellectual Property Rights of Parent or any Subsidiary of Parent to
any third party (including a covenant not to sue with respect to any material
Intellectual Property Rights of Parent or any Subsidiary of Parent) which
granting, individually or in the aggregate, would reasonably be expected to be
material to Parent and its Subsidiaries taken as a whole or (B) the Parent or
any of its Subsidiaries (other than Sub in the case of a Forward Merger and
other than the Company and its Subsidiaries in the case of a Reverse Merger)
being bound by any material non-compete or other material restriction on the
operation of any business of the Parent or its Subsidiaries (such materiality to
be determined with respect to Parent and its Subsidiaries taken as a whole).
(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. No vote of any holders of any class or series
of the Company's capital stock is necessary to adopt this Agreement or approve
the transactions contemplated hereby in the event that Parent shall acquire at
least ninety percent (90%) of the outstanding Shares in the Offer, other than,
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subject to the satisfaction of (to the extent permitted hereunder) waiver of all
conditions to the Merger, in accordance with Section 253 of the DGCL.
(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 consideration to be paid in the Offer and the Merger is fair from
a financial point of view to the holders of shares of Company Common Stock.
(u) 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.
(v) TMP Agreement. The TMP Agreement was validly terminated pursuant
to Section 7.1(f) thereof.
Section 3.2 REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB. Except as
expressly set forth in the Filed Parent SEC Documents filed since December 31,
2000 or on the disclosure memorandum delivered by Parent to the Company
immediately prior to the execution of this Agreement and initialed on behalf of
the Company and Parent, which disclosure memorandum specifies the section or
subsection of this Agreement to which the exception relates (the "PARENT
DISCLOSURE MEMORANDUM"), Parent and Sub represent and warrant to the Company as
follows:
(a) Organization, Standing and Corporate Power. Each of Parent and
each of its Subsidiaries is an entity 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.
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(b) Capital Structure. The authorized capital stock of Parent consists
of 5,000,000,000 shares of Parent Common Stock and 10,000,000 shares of
Preferred Stock, par value $.001 per share