the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement, or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement, (ix) in the case of any contract, arrangement, commitment or understanding that is not a Seller Benefit Plan, any of the benefits, rights or obligations under which would be accelerated or triggered by or are conditioned on a change of control and/or any of the transactions contemplated hereby, (x) which would prohibit or delay the consummation of any of the transactions contemplated by this Agreement, (xi) with any client or customer of Seller under which services remain to be performed (excluding statements of work), and which relates to more than $3,000,000 in annual fee revenue per contract, (xii) indentures, mortgages, promissory notes, loan agreements, bonds, guarantees of borrowed money, letters of credit or other agreements or instruments representing indebtedness for borrowed money in excess of $1,000,000 or providing for the creation of any Encumbrance upon any of the material assets of the Seller or its subsidiaries, (xiii) which requires or involves the payment by the Seller or any subsidiary of more than $1,000,000 per year and which cannot be terminated by the Seller or its subsidiary on 30 days or less prior notice or (xiv) with any officer, director or Affiliate of the Company or its subsidiaries other than employment, severance or consulting agreements covered elsewhere in this Article V. The Seller has previously made available to the Parent complete and accurate copies of each contract, arrangement, commitment or understanding of the type described in this Section 5.15 (collectively referred to herein as the ‘‘Seller Contracts’’). All of the Seller Contracts are valid and in full force and effect, except to the extent they have previously expired in accordance with their terms or if the failure to be in full force and effect, individually or in the aggregate, would not reasonably be expected to have a Seller Material Adverse Effect. Neither the Seller nor any of its subsidiaries has, and to the knowledge of the Seller, none of the other parties thereto have, violated any provision of, or committed or failed to perform any act, and no event or condition exists, which with or without notice, lapse of time or both would constitute a default under the provisions of, any Seller Contract, except in each case for those violations and defaults which, individually or in the aggregate, would not reasonably be expected to result in a Seller Material Adverse Effect.
(a) Neither the Seller nor any of its subsidiaries owns any real property. Section 5.16(a) of the Seller Disclosure Schedule lists all real property leased, subleased or licensed to or by the Seller or any of its subsidiaries, including any leases or subleases otherwise guaranteed by Seller or its subsidiaries (all of the foregoing being collectively referred to as ‘‘leases and subleases’’). The Seller has made available to the Seller true, complete and accurate copies of the leases and subleases (each as amended to date) relating to the leased property in Section 5.16(a) of the Seller Disclosure Schedule. With respect to each such lease and sublease:
(i) the lease or sublease is a valid, binding and enforceable obligation of the Seller or its subsidiary, as the case may be, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors’ rights and general principles of equity;
(ii) neither the Seller nor any of its subsidiaries, or to the knowledge of the Seller, any other party, is in breach or violation of, or default under, any such
lease or sublease, and no event has occurred, is pending or, to the knowledge of the Seller, is threatened, which, after the giving of notice or the lapse of time or both, would constitute a breach or default by the Seller or any of its subsidiaries, or to the knowledge of the Seller, any other party under such lease or sublease;
(iii) neither the Seller nor any of its subsidiaries has assigned, transferred, conveyed, mortgaged, deeded in trust or Encumbered any interest in the leasehold or subleasehold, or further leased, subleased or licensed or permitted any other Person to use or occupy the property subject thereto; and
(iv) Seller or its subsidiaries have good, valid leasehold or subleasehold title to the premises leased pursuant to the leases and subleases, except as would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect, and there are no Encumbrances applicable to the real property subject to any such lease or sublease, except for recorded easements, covenants and other restrictions which do not, individually or in the aggregate, materially impair the current uses or the occupancy by the Parent or its subsidiary, as the case may be, of the property subject thereto; and
(v) there are no consents, permissions or approvals by any third party pursuant to any lease or sublease which may be required with respect to the making of any lease or sublease by Seller or its subsidiaries, which have not been obtained, except for those, the failure of which would not reasonably be expected, individually or in the aggregate, to have a Seller Material Adverse Effect.
(b) Except as set forth in Section 5.16(b) of the Seller Disclosure Schedule, the Parent and its subsidiaries own good title, free and clear of all Encumbrances, to all property and assets necessary to conduct the business of the Seller as currently conducted, except for (i) Encumbrances reflected in the Seller Balance Sheet included in the Seller SEC Reports, (ii) Encumbrances or imperfections of title which do not detract from the value or interfere with the present or presently contemplated use of the assets subject thereto or affected thereby, (iii) Encumbrances for current Taxes not yet due and payable and (iv) Encumbrances on the landlord’s interest in the premises (subject to Section 5.16(a)(iv) above). The Seller and its subsidiaries, as lessees, have the right under valid and subsisting leases to use, possess and control all personal property leased by the Seller or its subsidiaries as now used, possessed and controlled by the Seller or its subsidiaries, as applicable. All of the machinery, equipment and other tangible personal property and assets owned or used by the Seller and its subsidiaries are in good condition, maintenance and repair, except for ordinary wear and tear, are useable in the ordinary course of business, and are reasonably adequate and suitable for the uses to which they are being put.
5.17 Environmental Liability. There are, and have been, no legal, administrative, arbitral or other proceedings, claims, actions, causes of action, private environmental investigations or remediation activities or governmental investigations pending or, to the Seller’s knowledge, threatened, of any nature seeking to impose, or that are reasonably likely to result in the imposition, on the Seller of any liability or obligation arising under common law, under any lease or sublease, or under any foreign, local, state or federal
27
environmental statute, regulation, ordinance or Law including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, pending or threatened against the Seller, which liability or obligation would reasonably be expected to have, either individually or in the aggregate, a Seller Material Adverse Effect. To the knowledge of the Seller, there is no reasonable basis for any such proceeding, claim, action or governmental investigation that would impose any liability or obligation that would be reasonably likely to have, individually or in the aggregate, a Seller Material Adverse Effect. The Seller is not, and has not been, subject to any agreement, order, judgment, decree, letter or memorandum by or with any Governmental Authority or third party imposing any liability or obligation with respect to the foregoing that would reasonably be expected to have, either individually or in the aggregate, a Seller Material Adverse Effect.
5.18 State Takeover Laws; Required Stockholder Vote; Rights Agreement.
(a) The board of directors of the Seller has approved this Agreement and taken all other requisite action such that the provisions of any anti-takeover laws and regulations of any Governmental Authority, including Section 203 of the DGCL and any provisions of the Seller’s Certificate of Incorporation relating to special voting requirements for certain business combinations, will not apply to this Agreement and the transactions contemplated hereby.
(b) The only vote of holders of any class of capital stock of the Company that may be necessary to adopt this Agreement is adoption of this Agreement by the affirmative vote of a majority of the outstanding shares of Seller Common Stock, voting as a single class, in the event that a vote of Stockholders is required by applicable Law (any such vote, ‘‘Seller Stockholder Approval’’).
(c) The Seller, including the board of directors of Seller, has taken all action to amend and has irrevocably amended the Seller Rights Agreement prior to the execution of this Agreement so that (i) the Parent and Purchaser are exempt from the definition of ‘‘Acquiring Person’’ contained in the Seller Rights Agreement, and no ‘‘Distribution Date’’ or ‘‘Stock Acquisition Date’’ (as such term is defined in the Seller Rights Agreement) will occur as a result of the execution, delivery, approval, adoption or performance of this Agreement or the consummation of the transactions contemplated hereby, (ii) the Seller Rights Agreement will terminate immediately prior to the acceptance for payment and payment for any shares of Seller Common Stock tendered pursuant to the Offer and (iii) the Rights will not become exercisable as a result of the execution, delivery, approval, adoption or performance of this Agreement or the consummation of the transactions as contemplated hereby. Complete copies of the Seller Rights Agreement and all amendments thereto have been previously provided or made available to the Parent.
5.19 Intellectual Property.
(a) Section 5.19 of the Seller Disclosure Schedule contains a complete and accurate list of all Patents owned by the Seller (‘‘Seller Patents’’), registered Marks owned by the Seller (‘‘Seller Marks’’) and registered Copyrights owned by the Seller (‘‘Seller Copyrights’’).
(b) Except as set forth in Section 5.19 of the Seller Disclosure Schedule:
28
(i) all Seller Patents, Seller Marks and Seller Copyrights which are issued by, or registered or the subject of an application filed with, as applicable, the U.S. Patent and Trademark Office, the U.S. Copyright Office or in any similar office or agency anywhere in the world have been duly maintained (including the payment of maintenance fees) and are not expired, cancelled or abandoned, except for such issuances, registrations or applications that the Seller has permitted to expire or has cancelled or abandoned in its reasonable business judgment;
(ii) there are no pending, or, to the knowledge of the Seller, threatened claims against any of the Seller alleging that any of the Seller Intellectual Property Assets or the Seller’s Business (or any work product delivered to Parent’s customers), infringes or conflicts with any Third Party Rights;
(iii) neither the operation of the Seller’s Business nor any Seller Intellectual Property Asset infringes or conflicts with any third party right; other than the rights of any Person under any patent, and to the knowledge of the Seller, neither the operation of the Seller’s Business nor any Seller Intellectual Property Asset infringes or conflicts with any third party right of any Person under any patent.
(iv) the Seller has not received any written communications alleging that the Seller has violated or, by conducting the Seller’s Business, would violate any third party rights or that any of the Seller Intellectual Property Assets is invalid or unenforceable;
(v) no current or former employee or consultant of the Seller owns any rights in or to any of the Seller Intellectual Property Assets;
(vi) to the knowledge of the Seller, there is no violation or infringement by a third party of any of the Seller Intellectual Property Assets;
(vii) Seller has taken reasonable security measures to protect the confidentiality of all Trade Secrets owned by Seller or used by Seller in the operation of Seller’s Business (the ‘‘Seller Trade Secrets’’) and to protect the confidentiality of all confidential information of Seller’s clients possessed or used by Seller in the operation of Seller’s Business (‘‘Seller Client Confidential Information’’);
(c) For purposes of this Agreement,
(i) ‘‘Intellectual Property Assets’’ means:
 | | |
| (A) | patents and patent applications (collectively, ‘‘Patents’’); |
| | |
| (B) | trade names, trademarks, trade name rights, trade dress, logos, slogans, Internet domain names, registered and unregistered trademarks and service marks and related |
29
| | |
| | registrations and applications for registration (collectively, ‘‘Marks’’); |
| | |
| (C) | copyrights in both published and unpublished works, including without limitation all compilations, databases and computer programs, manuals and other documentation and all copyright registrations and applications (collectively, ‘‘Copyrights’’); |
| | |
| (D) | rights under applicable US state trade secret laws as are applicable to know-how and confidential information (collectively, ‘‘Trade Secrets’’); and |
| | |
| (E) | know-how and other proprietary intellectual property rights. |
(ii) ‘‘Seller’s Business’’ means the business of Seller as currently conducted.
(iii) ‘‘Seller Intellectual Property Assets’’ means all Intellectual Property Assets owned by the Seller and used by the Seller in the Seller’s Business. ‘‘Seller Intellectual Property Assets’’ includes, without limitation, the Seller Products, Seller Patents, Seller Marks, Seller Copyrights and Seller Trade Secrets.
(iv) ‘‘Seller Products’’ means those computer programs and/or services and related documentation designed, manufactured, marketed, sold and/or distributed by the Seller.
5.20 Insurance. The Seller and each of its Subsidiaries maintains insurance with financially responsible insurers in such amounts and covering such risks as are in accordance with normal industry practice for companies engaged in businesses similar to those of Seller and its Subsidiaries. All such insurance policies are in full force and effect, all premiums due and payable thereunder have been paid; and none of Seller or any of its Subsidiaries is in material default thereunder. Except as set forth in Section 5.20 of the Seller Disclosure Schedule, neither Seller nor any of its Subsidiaries has received any written notice of cancellation or termination with respect to any such insurance policy of Seller or any of its Subsidiaries.
5.21 Opinion of Financial Advisor. The board of directors of the Seller has received the opinion of Bear Stearns & Co., Inc., to the effect that, subject to the assumptions, qualifications and other matters set forth therein, as of the date hereof, the Offer Price and the Merger Consideration is fair to the Seller Stockholders from a financial point of view.
5.22 Schedule 14D-9; Proxy Statement; Seller Information.
(a) The Seller represents that 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
30
SEC and on the date first published, sent or given to the Seller’s stockholders, shall 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 made therein, in light of the circumstances under which they were made, not misleading, except that no representation is made by the Seller with respect to information supplied by Parent or Purchaser in writing for inclusion in the Schedule 14D-9.
(b) The information relating to the Seller and its subsidiaries to be contained in the Proxy Statement (if any), and any other documents filed with the SEC in connection herewith, will not, on the date the Proxy Statement is first mailed to Stockholders or at the time of Seller Stockholders’ Meeting, contain any untrue statement of any material fact, or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not false or misleading at the time and in light of the circumstances under which such statement is made. The Proxy Statement will comply in all material respects as to form with the requirements of the Exchange Act and the rules and regulations thereunder.
5.23 No Other Representations or Warranties. Except for the representations and warranties contained in this Article V, neither the Seller nor any other person on behalf of Seller makes any express or implied representation or warranty with respect to Seller or with respect to any other information provided to the Parent in connection with the transactions contemplated hereby. Neither the Seller nor any other person nor any other person on behalf of Seller shall be held liable for any actual or alleged damage, liability or loss resulting from the distribution to the Parent, or the Parent’s use of, any such information, including any information, documents, projections, forecasts or other material made available to the Parent in certain ‘‘data rooms’’ or management presentation in expectation of the transaction contemplated by this Agreement, unless any such information is expressly included in a representation or warranty contained in this Article V.
ARTICLE VI – COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Conduct of Business Pending the Effective Time. At all times from the execution of this Agreement until the Effective Time, except as set forth in Section 6.1 of the Seller Disclosure Schedule or as expressly permitted elsewhere in this Agreement, the Seller shall, and shall cause each of its subsidiaries to, conduct its business in the ordinary course consistent with past practice and in compliance in all material respects with all applicable Laws and regulations and to use commercially reasonable efforts to preserve substantially intact its business organizations and goodwill and keep available the services of its officers and employees and preserve the relationships with those Persons having business dealings with the Seller. Furthermore, the Seller agrees not to take any of the following actions (and to cause its subsidiaries not to take such actions) without the prior written consent of the Parent (which will not be unreasonably withheld or delayed):
(a) amend its Certificate of Incorporation or Bylaws, and shall cause each of its subsidiaries not to amend its charter, bylaws, joint venture documents, partnership agreements or equivalent organizational documents;
31
(b) (A) except pursuant to the exercise of the Seller Stock Options, issue any shares of its capital stock (other than up to 525,926 shares of restricted stock issued in connection with 2006 year-end bonuses), effect any share split, share combination, reverse share split, share dividend, recapitalization or other similar transaction, or (B) except with respect to grants of Seller Stock Options to new hires in the ordinary course of business and consistent with past practice (up to, in the aggregate, Seller Stock Options for 250,000 shares of Seller Common Stock), grant, confer or award any option, right, warrant, deferred stock unit, conversion right or other right not existing on the date hereof to acquire any of its shares of capital stock (whether or not pursuant to existing Seller Stock Plans);
(c) except to the extent required under existing plans or arrangements set forth in Section 5.13(a) of the Seller Disclosure Schedule or the Seller Change in Control Severance Pay and Retention Bonus Plan as in effect on the date hereof and subject to the limitations referenced in Section 7.4(d) (and without giving any retention awards in addition to those previously disclosed to Parent) (A) increase any compensation (other than in the ordinary course of business consistent with past practice to non-Key Personnel) of, or enter into or amend any employment or severance agreement with (or pay any amounts under any such agreements not otherwise due to), any director, employee or other service provider, (B) except with respect to 2006 year-end bonuses, which shall not exceed in the aggregate $14,000,000, grant any bonuses (x) other than in the ordinary course of business and consistent with past practice (including without limitation, grants of bonuses to new hires), to any of its employees (other than key personnel and directors), or (y) to any of its Key Personnel or directors, (C) adopt any new employee benefit plan (including any stock option, stock benefit or stock purchase plan) or amend any existing employee benefit plan in any material respect, or accelerate the vesting of any compensation (including equity-based awards) for the benefit of any current or former employee or other service provider, or (D) except as set forth in Section 6.1(c) of the Seller Disclosure Schedule, provide any funding for any rabbi trust or similar arrangement, (E) hire or otherwise employ any individual except in the ordinary course of business consistent with past practice so long as such individual is not a Key Personnel, or (F) terminate any Key Personnel other than for cause (including misconduct or breach of company policy);
(d) (A) declare, set aside or pay any dividend or make any other distribution or payment (whether in cash, stock or other property) with respect to any shares of Seller Common Stock or allow any of its subsidiaries to pay or make any such dividend, distribution or payment (other than dividends or distributions from a wholly owned Seller subsidiary to another Seller subsidiary or to the Seller) or (B) directly or indirectly redeem, purchase or otherwise acquire any of its shares of capital stock or any equity interest of any of the Seller subsidiaries, or make any commitment for any such action other than in connection with tax withholdings and exercise price settlement upon the exercise of Seller Stock Options or the lapse of restrictions on any Seller Restricted Shares;
(e) except as set forth in Section 6.1(e) of the Seller Disclosure Schedule, (A) sell, lease, sublease or license (including through a lease, sublease or license) or otherwise dispose of any material assets or properties or any of the capital stock of or other equity interests in any of its subsidiaries or (B) mortgage or pledge any of its property or assets or subject any such property or assets to any security interest or Encumbrance, other than, in the case of both (A) and (B) (and excluding leases, subleases and licenses of real property) in the ordinary course
32
of business consistent with past practice, provided that they do not have a value in excess of $100,000 individually or $500,000 the aggregate;
(f) except with respect to ordinary course contracts with clients, customers, vendors or suppliers of Seller, enter into, or amend or terminate any Seller Contract (excluding contracts with respect to capital expenditures, which are governed by clause (g) below); provided that in no event shall Seller enter into any global procurement contracts which requires or involves the payment by Seller or any of its subsidiaries of more than $100,000 individually or $500,000 in the aggregate;
(g) make or commit to make capital expenditures in excess of $1,000,000 in the aggregate or $250,000 individually;
(h) merge with, enter into a consolidation with or acquire a material interest in any Person or acquire a substantial portion of the assets or business of any Person or any division or line of business thereof, or otherwise acquire (including, through leases, subleases and licenses of real property) any assets with a value of or for consideration in excess of $250,000 individually or $1,000,000 in the aggregate (including, with respect to leases, subleases or licenses of real property, rental or other payments); provided that no acquisitions that make it more difficult to obtain any approval or authorization required in connection with the transactions contemplated hereby under any Regulatory Law or that would reasonably be expected to prevent, delay, or impede consummation of the transactions contemplated hereby shall be permitted without consent;
(i) write down or write up or fail to write down or write up the value of any receivables or revalue any assets of the Seller other than in the ordinary course of business and in accordance with GAAP;
(j) create, incur or assume any indebtedness for borrowed money (including, without limitation, refinancing or modifying any existing indebtedness), assume, guarantee, endorse or otherwise become liable or responsible (whether, directly, contingently or otherwise) for the indebtedness of another Person, enter into any agreement to maintain any financial statement condition of another Person or enter into any arrangement having the economic effect of any of the foregoing, except for (A) letters of credit or replacement letters of credit entered into in the ordinary course of business and consistent with past practice under the Seller’s existing $30 million debt facility or (B) any indebtedness solely involving the Seller and/or any of its direct or indirect wholly owned subsidiaries;
(k) make or change any material Tax election, file any material amended Tax Return, enter into any material closing agreement, settle or compromise any material liability with respect to Taxes, agree to any material adjustment of any Tax attribute, change (or make a request to any taxing authority to change) any of its methods of reporting income or deductions for federal income tax purposes, file any claim for a material refund of Taxes, or consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment;
(l) change any of its methods, principles or practices of financial accounting currently in effect other than as required by GAAP;
33
(m) settle or compromise any pending or threatened suit, action or claim arising out of or in connection with any of the transactions contemplated by this Agreement for an amount in excess of $250,000;
(n) enter into or amend or otherwise modify any agreement or arrangement with Persons that are affiliates or are executive officers or directors of the Seller;
(o) except as otherwise permitted or contemplated by this Agreement, authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution of the Seller or any of its subsidiaries;
(p) knowingly take or fail to take any action in breach of this Agreement for the purpose of (or which would be reasonably expected to) materially delaying or preventing the consummation of the transactions contemplated hereby (other than as required by law); and
(q) agree in writing or otherwise to take any action inconsistent with any of the foregoing.
ARTICLE VII – ADDITIONAL AGREEMENTS
7.1 Third Party Consents and Regulatory Approvals.
(a) Each of Parent and Purchaser, on the one hand, and Seller, on the other hand, agrees promptly to correct any information provided by it for use in the Offer Documents or in Schedule 14D-9 if and to the extent that such information shall have become false or misleading in any material respect and each of Purchaser and the Seller further agrees to take all steps necessary to cause, respectively, the Offer Documents or the Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated to stockholders of Seller, in each case, as and to the extent required by applicable federal securities Laws.
(b) The parties hereto shall cooperate with each other and use reasonable best efforts to promptly (i) prepare and file all necessary documentation, to effect all applications, notices, petitions and filings as soon as reasonably practicable, to obtain as promptly as reasonably practicable all permits, consents, approvals, authorizations and clearances, including under the Hart-Scott-Rodino Antitrust Improvements Act, (the ‘‘HSR Act’’) of all third parties and Governmental Authorities which are necessary or advisable to consummate the transactions contemplated by this Agreement (including, without limitation, each of the Offer and the Merger), and to comply with the terms and conditions of all such permits, consents, approvals and authorizations of all such third parties and Governmental Authorities, including, without limitation, landlord consents; (ii) defend any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated by this Agreement and (iii) execute and deliver any additional instruments necessary to consummate the transactions contemplated by this Agreement. The parties further agree to use reasonable best efforts to offer to take, or cause to be taken, all other actions and do, or cause to be done, all other things necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement, including taking all such further action as reasonably may be necessary to resolve such objections, if any, as the United States
34
Federal Trade Commission, the Antitrust Division of the United States Department of Justice, state antitrust enforcement authorities or competition authorities of any other nation or other jurisdiction or any other person may assert under Regulatory Law (as hereinafter defined) with respect to the transactions contemplated by this Agreement, and to avoid or eliminate each and every impediment under any law that may be asserted by any Governmental Authority with respect to the transactions contemplated by this Agreement so as to enable the Closing to occur as soon as expeditiously possible. The parties agree that, subject to the last sentence of this Section 7.1(b), the use of ‘‘reasonable best efforts’’ by Parent shall include proposing, negotiating, committing to and effecting, by consent decree, hold separate order or otherwise, (x) the sale, divestiture or disposition of such product lines, assets or businesses of either party or its subsidiaries or Affiliates and (y) restrictions or actions that after the Closing Date would limit the Parent’s or its Subsidiaries’ (including the Surviving Corporation’s) freedom of action with respect to, or its ability to retain, one or more of its or its Subsidiaries’ (including the Surviving Corporation’s) businesses, product lines or assets, in each case as may be required in order to avoid the entry of, or to effect the dissolution of, any injunction, temporary restraining order or other order in any suit or proceeding that would otherwise have the effect of preventing or materially delaying the Closing. For purposes of this Agreement, ‘‘Regulatory Law’’ means the Sherman Act of 1890, the Clayton Antitrust Act of 1914, the HSR Act, the Federal Trade Commission Act of 1914 and all other federal, state or foreign statutes, rules, regulations, orders, decrees, administrative and judicial doctrines and other laws, including any antitrust, competition or trade regulation laws that are designed or intended to (i) prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening competition through merger or acquisition or (ii) protect the national security or the national economy of any nation. Notwithstanding anything else contained herein, the provisions of this Section 7.1 shall not be construed to require Parent to undertake any efforts, or to take or consent or commit to any action if the impact of such efforts, action, consent or commitment would be reasonably expected, in the aggregate, to have a Seller Material Adverse Effect if the affected assets and/or operations had been Seller assets and/or operations (regardless of whether the assets or operations are or were, prior to the transaction, Parent’s assets or operations or Seller’s assets or operations). Neither Parent nor Seller shall be required to agree to or affect any divestiture, hold separate any business, or take any action that is not conditioned on the consummation of the transactions contemplated by this Agreement.
(c) Subject to and in furtherance of Section 7.1(a) above, Parent and Seller shall have the right to review in advance, and, to the extent practicable, each will consult the other on, in each case subject to applicable Laws relating to the exchange of information, all the information relating to Parent or Seller, as the case may be, and any of their respective subsidiaries, which appear in any filing made with, or written materials submitted to, any third party or any Governmental Authority in connection with the transactions contemplated by this Agreement. In exercising the foregoing right, each of the parties hereto shall act reasonably and as promptly as practicable. The parties hereto agree that they will consult with each other with respect to the obtaining of all permits, consents, approvals and authorizations of all third parties and Governmental Authorities necessary or advisable to consummate the transactions contemplated by this Agreement and each party will keep the other apprised of the status of matters relating to completion of the transactions contemplated herein.
35
(d) The Parent and the Seller shall promptly (i) advise each other of (and the Parent or the Seller shall so advise with respect to communications received by any Subsidiary or Affiliate of the Parent or the Seller, as the case may be) any written or oral communication from any Governmental Authority or third party whose consent or approval is required for consummation of the transactions contemplated by this Agreement; (ii) not participate in any substantive meeting or discussion with any Governmental Authority in respect of any filing, investigation, or inquiry concerning this Agreement or the transactions contemplated by this Agreement unless it consults with the other party in advance, and, to the extent permitted by such Governmental Authority, gives the other party the opportunity to attend; (iii) furnish the other party with copies of all correspondences, filings, and written communications between them and their Subsidiaries and representatives, on the one hand, and any Governmental Authority or its respective staff, on the other hand, with respect to this Agreement and the transactions contemplated by this Agreement, except that materials may be redacted (x) to remove references concerning the valuation of the businesses of the Seller, (y) as necessary to comply with contractual arrangements, and (z) as necessary to address reasonable privilege or confidentiality concerns. Neither the Parent nor Seller shall consent to any voluntary extension of any statutory deadline or waiting period or to any voluntary delay of the consummation of the transactions contemplated by this Agreement at the behest of any Governmental Authority without the consent of the other party, which consent shall not be unreasonably withheld or delayed.
(e) The Seller agrees and acknowledges that, notwithstanding anything to the contrary in this Section 7.1, in connection with any filing or submission required, action to be taken or commitment to be made by the Seller, the Parent, or any of their respective subsidiaries to consummate the transactions contemplated by this Agreement, neither the Seller nor any of the Seller’s subsidiaries shall, without the Parent’s prior written consent, sell, divest, or dispose of any assets, commit to any sale, divestiture or disposal of businesses, product lines, or assets of the Seller and the Seller’s subsidiaries or take any other action or commit to take any action that would limit the Seller’s, the Parent’s or any of their respective subsidiaries’ freedom of action with respect to, or their ability to retain any of, their businesses, product lines or assets or Seller; provided that the foregoing shall not relieve any party of its obligations under this Agreement.
7.2 No Solicitation.
(a) The Seller agrees that, except as authorized or permitted in this Section 7.2, neither it nor any of its Subsidiaries shall, and that it shall not authorize or permit any of its or its subsidiaries’ directors, officers, employees, affiliates, agents, investment bankers, financial advisors, attorneys, accountants, brokers, finders, consultants or representatives (collectively, ‘‘Representatives’’) to, directly or indirectly, (i) solicit, initiate, knowingly encourage or knowingly facilitate (including by way of furnishing or disclosing nonpublic information or permitting access to personnel or facilities) any inquiries, proposals, or the making of any offers (including without limitation any offers to the Stockholders) with respect to any Acquisition Proposal, (ii) participate in any discussions or negotiations with, or provide any information to, any Person (other than Parent) with respect to, or that reasonably may be expected to lead to, an Acquisition Proposal, (iii) enter into any agreement providing for an Acquisition Proposal, or (iv) approve or recommend or consummate an Acquisition Proposal.
36
(b) Notwithstanding Section 7.2(a), the Seller or its Representatives may furnish or cause to be furnished nonpublic information to, and negotiate or otherwise engage in discussions with, any Person that has made, after the date of this Agreement, a bona fide unsolicited Acquisition Proposal if and only to the extent that (i) the Acceptance Date has not occurred and shares of Seller Common Stock have not been purchased in the Offer, (ii) the board of directors of the Seller determines in good faith, after consultation with its financial advisor, that such Acquisition Proposal is, or is reasonably likely to lead to, a Superior Proposal and (iii) prior to furnishing any nonpublic information to such Person, the Seller shall enter into a confidentiality agreement with such Person that contains confidentiality and other provisions that are substantially similar to and no less favorable to Seller than the Confidentiality Agreement dated as of December 7, 2006 by and between Parent and Seller (the ‘‘Confidentiality Agreement’’); provided, however, that Seller shall promptly provide Parent with any nonpublic information provided to any third party under this Section 7.2(b) if such information has not previously been provided to Parent together with a list of all other information provided to any third party.
(c) Upon execution of this Agreement, the Seller shall cease immediately and cause to be terminated any and all existing activities, discussions or negotiations with any parties conducted heretofore with respect to, or that may reasonably be expected to lead to, an Acquisition Proposal and promptly request that all confidential information with respect thereto furnished on behalf of the Seller be returned or destroyed. The Seller shall not modify, amend or terminate, or waive, release or assign any material rights or claims with respect to, any confidentiality or standstill provision entered into with any third party.
(d) Except as otherwise provided in Section 7.2(e), neither the board of directors of the Seller nor any committee of the board of directors of the Seller may (i) withdraw, qualify or modify in a manner adverse to Parent, the approval of the board of directors of this Agreement and the Seller Recommendations, or fail to reaffirm the Seller Recommendations within four (4) Business Days following a request by the Parent or propose publicly to approve or recommend, an Acquisition Proposal (any of the foregoing, including if effected by amendment to the Schedule 14D-9, an ‘‘Adverse Recommendation Change’’), (ii) authorize or permit the Seller or any of its Subsidiaries to enter into any binding agreement (each, an ‘‘Acquisition Agreement’’) contemplating, or that could reasonably be expected to lead to, an Acquisition Proposal (other than a Confidentiality Agreement in compliance with Section 7.2(b)).
(e) Notwithstanding Section 7.2(d), at any time prior to the purchase of any share of Seller Common Stock into the Offer, the board of directors of the Seller or a committee of the board of directors of the Seller may (1) make an Adverse Recommendation Change if, the board of directors of the Seller determines in good faith after consultation with outside legal counsel, that failure to take such action would be inconsistent with the directors’ fiduciary duties to the Seller or its Stockholders under applicable Law or (2), in response to a bona fide written Acquisition Proposal made after the date hereof that was not solicited in violation of Section 7.2(a), terminate this Agreement in accordance with Section 9.1(h) (including termination in connection with entering into an Acquisition Agreement) if, after consultation with its financial advisors, the board of directors of the Seller determines in good faith that such Acquisition Proposal constitutes a Superior Proposal (a ‘‘Subsequent Determination’’); provided, however,
37
that such actions may only be taken at a time that is after, (I) as applicable, the fourth (4th) Business Day following Parent’s receipt of written notice from the Seller that the board of directors of the Seller is prepared to take such action (which notice will specify the material terms of any applicable Acquisition Proposal) and (II) at the end of such period, the board of directors of the Seller determines in good faith, after taking into account all amendments or revisions irrevocably committed to by Parent and after consultation with its financial advisors, that such Acquisition Proposal remains a Superior Proposal relative to the Transaction, as supplemented by any Counterproposal (it is agreed that if the third party making the Acquisition Proposal referred to in this sentence modifies a material term of its proposal, the four (4) Business Day period referred to in this sentence shall recommence). During any such four (4) Business Day period, Parent shall be entitled to deliver to the Seller a counterproposal to such Acquisition Proposal (a ‘‘Counterproposal’’) and the Seller shall in good faith negotiate such Counterproposal with Parent.
(f) From and after the execution of this Agreement, Seller shall notify the Parent promptly (but in any event within twenty four hours) of the receipt, directly or indirectly, of any inquiries, discussions, negotiations, proposals or expressions of interest with respect to, or that may reasonably be expected to lead to, an Acquisition Proposal (including a summary of the material terms and conditions thereof, including price, and the identity of the Person or Persons involved). The Seller shall keep the Parent reasonably informed as to material developments in such discussions or negotiations with, or modifications of the proposals of, other Persons.
(g) Nothing in this Section 7.2 shall prohibit the Seller from complying with Rule 14e-2 or Item 1012(a) of Regulation M-A promulgated under the Exchange Act with regard to an Acquisition Proposal if, in the good faith judgment of the board of directors of the Seller, after consultation with its outside counsel, doing so would be inconsistent with its obligations under applicable Laws.
(h) For the purposes of this Agreement, ‘‘Superior Proposal’’ shall mean any bona fide unsolicited written Acquisition Proposal (with all references to 20% in the definition of Acquisition Proposal being treated as references to 50% for these purposes) made by an unrelated third party which the board of directors of the Seller determines in good faith, after consultation with its financial advisor, to be more favorable to the Stockholders than the transactions contemplated by this Agreement from a financial point of view, taking into account all financial, regulatory, legal and other aspects of such Acquisition Proposal, including the likelihood of consummation.
(i) For purposes of this Agreement, ‘‘Acquisition Proposal’’ means any proposal or offer for a direct or indirect (i) merger, tender offer, recapitalization, reorganization, liquidation, dissolution, business combination or consolidation, or any similar transaction, involving the Seller or a subsidiary(ies) thereof, (ii) sale, lease exchange, mortgage, pledge, transfer or other acquisition or assumption of 20% or more of the fair value of the assets of the Seller and subsidiaries, taken as a whole, in one or a series of related transactions, or (iii) purchase, tender offer or other acquisition (including by way of merger, consolidation, share exchange or otherwise) of beneficial ownership (the term ‘‘beneficial ownership’’ for purposes of this Agreement having the meaning assigned thereto in Section 13(d) of the Exchange Act and the rules and regulations thereunder) of securities representing twenty percent (20%) or more of
38
the voting power of the Seller; provided, however, that the term ‘‘Acquisition Proposal’’ shall not include the Transaction or the other transactions contemplated hereby.
7.3 Access to Information.
(a) Upon reasonable notice and subject to applicable laws relating to the exchange of information, the Seller, shall, and shall cause each of its Subsidiaries to, afford to the officers, employees, accountants, counsel and other representatives of the Parent, reasonable access, during normal business hours during the period prior to the Effective Time, to all of its properties, books, contracts, commitments and records. The Seller also shall provide the Parent with reasonable access to the Seller’s officers, employees and agents. Neither the Seller nor any of its Subsidiaries shall be required to provide access to or to disclose information where such access or disclosure would contravene any law, rule, regulation, order, judgment, decree, or binding agreement entered into prior to the date of this Agreement or would reasonably be expected to violate or result in a loss or impairment of any attorney-client or work product privilege. The parties hereto will use commercially reasonably efforts to make appropriate substitute disclosure arrangements under circumstances in which the restrictions of the preceding sentence apply.
(b) With respect to all information furnished by Seller to Parent or its representatives under this Agreement, the parties shall comply with, and shall cause their respective representatives to comply with, all of their respective obligations under the Confidentiality Agreement.
7.4 Employment and Benefit Matters.
(a) Provision of Benefits. For the 12 month period commencing on the Acceptance Date, the Parent agrees to cause the Surviving Corporation to maintain the compensation levels, including base salary, cash-based incentive opportunities (but not particular historic levels of achievement), retirement, health and welfare benefits, but not any stock-based benefits, for the employees of the Seller who remain employed after the Effective Time (the ‘‘Seller Employees’’) at levels which are, in the aggregate, comparable to those in effect for the Seller Employees on the date hereof. The Parent will treat, and cause the applicable benefit plans to treat, the service of the Seller Employees with the Seller or any Subsidiary of the Seller attributable to any period before the Effective Time as service rendered to the Parent or any Subsidiary of the Parent for purposes of eligibility to participate, vesting and for other appropriate benefits including, but not limited to, applicability of minimum waiting periods for participation, but not for benefit accrual (including minimum pension amount) and eligibility for early retirement under any defined benefit plan of Parent or eligibility for retiree welfare benefit plans or as would otherwise result in a duplication of benefits. Without limiting the foregoing, the Parent shall cause any pre-existing conditions or limitations, eligibility waiting periods or required physical examinations under any health or similar plan of the Parent to be waived with respect to the Seller Employees and their eligible dependents, to the extent waived under the corresponding plan in which the Seller Employee participated immediately prior to the Acceptance Date, and any deductibles paid by Seller Employee under any of the Seller’s or its Subsidiaries’ health plans in the plan year in which the Acceptance Date occurs shall be credited towards deductibles under the health plans of the Parent or any Subsidiary of the Parent. The
39
Parent will make appropriate arrangements with its insurance carrier(s) to ensure such result. Except with respect to employees who have entered into employment agreements with Seller or its Subsidiaries listed on Section 7.4(c) of the Seller Disclosure Schedule, and subject to Section 7.4(c) hereof, the Seller Employees who remain employed after the Effective Time shall be considered to be employed by the Parent ‘‘at will’’ and nothing shall be construed to limit the ability of the Parent or the Surviving Corporation to terminate the employment of any such Seller Employee at any time.
(b) Continuation of Plans. Subject to Section 7.4(a) hereof, the Parent shall have sole discretion with respect to the determination as to whether or when to terminate, merge or continue any employee benefit plans and programs of the Seller; provided, however, that the Parent shall continue to maintain the Seller plans (other than stock-based plans) until the Seller Employees are permitted to participate in the plans of the Parent or any Subsidiary of the Parent in accordance with Section 7.4(a).
(c) Existing Compensation Agreements. The Parent shall honor, in accordance with their terms, all compensation agreements listed in Section 7.4(c) of the Seller Disclosure Schedule.
(d) Seller Change in Control Severance Pay and Retention Bonus Plan. The Parent shall maintain the Seller Change in Control Severance Pay and Retention Bonus Plan, in accordance with the terms in effect as of the date hereof, for a period of twelve (12) months following the Closing Date. The estimated costs of the Severance Plan with respect to retention and enhanced severance payments to ‘‘Corporate Employees’’ (as such term is defined in the Severance Plan) previously provided to Parent are accurate in all material respects.
(e) Continuation of Employment. No provision of this Section 7.4 shall create any third-party beneficiary rights in any employee or former employee (including any beneficiary or dependent thereof) of the Seller or any subsidiary of the Seller in any respect, including in respect of continued employment (or resumed employment) with the Parent, the Surviving Corporation or any of the Parent’s subsidiaries, and no provision of this Section 7.4 shall create such rights in any such persons in respect of any benefits that may be provided, directly or indirectly, under any Seller Pension Plan, Seller Benefit Plan, Seller Other Plan, or any employee program or any plan or arrangement of the Parent or any of its Subsidiaries. No provision of this Agreement shall constitute a limitation on the rights to amend, modify or terminate after the Effective Time any such plans or arrangements of the Parent or any of its subsidiaries.
7.5 Directors’ and Officers’ Indemnification and Insurance.
(a) Parent agrees that any rights to indemnification or exculpation now existing in favor of the directors or officers of the Seller and the directors or officers of the Seller’s Subsidiaries (the ‘‘Indemnified Parties’’ and, each, an ‘‘Indemnified Party’’) as provided in their respective organizational documents, in effect as of the date hereof and the indemnification agreements set forth in Section 7.5 of the Seller Disclosure Schedule, with respect to matters occurring at or prior to the Acceptance Date shall survive the Merger (and with respect to the Seller, shall be reflected in the applicable organizational documents of such entity)
40
and shall continue in full force and effect for a period of six years after the Acceptance Date. During such period, the Parent shall not amend, repeal or otherwise modify such provisions for indemnification in any manner that would materially and adversely affect the rights thereunder of individuals who at any time prior to the Acceptance Date were directors or officers of the Seller or directors or officers of any Seller Subsidiary in respect of actions or omissions occurring at or prior to the Acceptance Date (including, without limitation, the transactions contemplated by this Agreement), unless such modification is required by law; provided, however, that in the event any claim or claims are asserted or made either prior to the Acceptance Date or within such six-year period, all rights to indemnification in respect of any such claim or claims shall continue until disposition of any and all such claims.
(b) Prior to the Acceptance Date, the Seller shall, to the fullest extent permitted under applicable Laws and regardless of whether the Merger becomes effective, indemnify and hold harmless, and, after the Acceptance Date, Parent and the Surviving Corporation shall, to the fullest extent permitted under applicable Law, indemnify and hold harmless, each present and former director or officer of the Seller and each Seller Subsidiary and each such person who served at the request of the Seller or any Seller Subsidiary as a director, officer, trustee, partner, fiduciary, employee or agent of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise (collectively, the ‘‘Covered Parties’’) against all costs and expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages, liabilities and settlement amounts paid in connection with any claim, action, suit, proceeding or investigation (whether arising before or after the Acceptance Date), whether civil, administrative or investigative, arising out of or pertaining to any action or omission in their capacities as officers or directors, in each case occurring before the Acceptance Date (including the transactions contemplated by this Agreement). Without limiting the foregoing, in the event of any such claim, action, suit, proceeding or investigation, (i) the Seller or Parent and the Surviving Corporation, as the case may be, shall be entitled to control the defense of such claim, action, suit, proceeding or investigation, (ii) if Seller, Parent or the Surviving Corporation does not elect to control the defense of such claim, action, suit, proceeding or investigation, the Covered Party shall be entitled to select counsel for the Covered Party, which counsel shall be reasonably satisfactory to the Seller or to Parent and the Surviving Corporation, as the case may be, and the Seller or Parent and the Surviving Corporation shall pay the fees and expenses of such counsel promptly after statements therefor are received (unless the Surviving Corporation shall elect to defend such action), (iii) the Covered Party shall cooperate in the defense of any such matter, and (iv) none of the Seller, Parent or the Surviving Corporation shall be liable for any settlement effected without its written consent (which consent shall not be unreasonably withheld or delayed).
(c) At or prior to the Acceptance Date, the Seller shall purchase a ‘‘tail’’ directors’ and officers’ liability insurance policy (which by its terms shall survive the Merger) for its directors and officers, which shall provide such directors and officers with coverage for six (6) years following the Acceptance Date of not less than the existing coverage under, and have other terms not materially less favorable on the whole to, the insured persons than the directors’ and officers’ liability insurance coverage presently maintained by the Seller, so long as the aggregate cost is not greater than 300% of the annual premium paid by the Seller for such existing insurance. In the event that 300% of the annual premium paid by the Seller for such
41
existing insurance is insufficient for such coverage, the Seller may spend up to that amount to purchase such lesser coverage as may be obtained with such amount.
(d) The obligations under this Section 7.5 shall not be terminated or modified in such a manner as to adversely affect any indemnitee to whom this Section 7.5 applies without the consent of such affected indemnitee (it being expressly agreed that the indemnitees to whom this Section 7.5 applies shall be third party beneficiaries of this Section 7.5 and shall be entitled to enforce the covenants contained herein).
(e) In the event Parent or any of their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets, then, and in each such case, to the extent necessary, proper provision shall be made so that the successors and assigns of Parent and the Surviving Corporation, as the case may be, assume the obligations set forth in this Section 7.5.
7.6 Additional Agreements. In case at any time after the Acceptance Date (including after the Effective Time) any further action is necessary or desirable to carry out the Transaction or to vest the Surviving Corporation with full title to all properties, assets, rights, approvals, immunities and franchises of any of the parties to the Merger, the proper officers and directors of each party to this Agreement and their respective subsidiaries shall take all such necessary action as may be reasonably requested by, and at the sole expense of, the Parent.
7.7 Advice of Changes. The Parent and the Seller shall each promptly notify the other party of any change or event having a Material Adverse Effect on it or which it believes would otherwise be reasonably likely to cause or constitute a material breach of any of its representations, warranties or covenants contained herein; provided, however, that the delivery of any notice pursuant to this Section 7.7 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice.
7.8 Publicity. Except as otherwise required by applicable Law until Effective Time, neither the Parent nor the Seller shall, or shall permit any of its subsidiaries to, issue or cause the publication of any press release or other public announcement with respect to, or otherwise make any public statement concerning, the transactions contemplated by this Agreement without the consent of the other party, which consent shall not be unreasonably withheld or delayed, except as may be required by applicable Law or the applicable rules of any stock exchange or Nasdaq.
7.9 Rule 16b-3 Actions. Parent and the Seller agree that, in order to most effectively compensate and retain those officers and directors of the Seller who are subject to the reporting requirements of Section 16(a) of the Exchange Act in connection with the Offer and the Merger, both prior to and after the Effective Time, it is desirable that such persons not be subject to a risk of liability under Section 16(b) of the Exchange Act to the fullest extent permitted by applicable Law in connection with the transactions contemplated by this Agreement, and for that compensatory and retentive purpose agree to the provisions of this Section 7.9. Promptly after the date hereof, the Seller shall take all such steps as may be required to cause any dispositions of shares of Seller Common Stock resulting from the
42
transactions contemplated by this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Seller to be exempt under rule 16b-3 promulgated under the Exchange Act, to the extent permitted by applicable Law.
ARTICLE VIII – CONDITIONS PRECEDENT
TO THE CONSUMMATION OF THE MERGER
8.1 Conditions. The respective obligations of Parent, Purchaser and Seller to consummate the Merger are subject to the satisfaction, at or before the Effective Time, of each of the following conditions:
(a) Stockholder Approval. The Seller Stockholder Approval shall have been obtained, if and to the extent required by applicable Laws.
(b) Purchase of Common Shares. Purchaser shall have accepted for payment and paid for shares of Seller Common Stock pursuant to the Offer in accordance with the terms hereof.
(c) Other Approvals. All regulatory approvals required to consummate the transactions contemplated hereby, including under the HSR Act and the German Act against Restraints of Competition, shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired or been terminated (all such approvals and the expiration of all such waiting periods being referred to herein as ‘‘Requisite Regulatory Approvals’’).
(d) No Injunctions or Restraints; Illegality. No order, injunction, judgment, ruling or decree issued by any court or agency of competent jurisdiction or any Governmental Authority or other legal restraint or prohibition preventing the consummation of the Merger shall be in effect. No statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated, deemed applicable to the Merger or enforced by any Governmental Authority which prohibits, or makes illegal consummation of the Merger.
ARTICLE IX – TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the Seller Stockholder Approval:
(a) by mutual written consent of the Seller and the Parent;
(b) by Parent or the Company if (i) Purchaser fails to commence the Offer as provided in Article I or (ii) Purchaser shall not have accepted for payment and paid for the shares of Seller Common Stock tendered pursuant to the Offer in accordance with the terms hereof and of the Offer, in the case of either (i) or (ii), on or before May 31, 2007 (the ‘‘Outside Date’’); provided, however, that a party may not terminate this Agreement pursuant to this Section 9.1(b)
43
if such failure to commence the Offer or accept for payment and pay for the shares of Seller Common Stock is due to such party’s material breach of this Agreement;
(c) by Parent or the Company if the Offer is terminated or withdrawn pursuant to its terms and the terms of this Agreement without any shares of Seller Common Stock being purchased thereunder, other than due to a breach hereof by the terminating party;
(d) by either the Parent or the Seller if any Governmental Authority of competent jurisdiction shall have issued a final and non-appealable order, decree, judgment, injunction or ruling or taken any other action enjoining, restraining or otherwise prohibiting the consummation of the Transaction; provided, that the party seeking to terminate this Agreement shall have used its reasonable best efforts to have such order, decree, judgment, injunction or ruling lifted;
(e) by the Parent prior to the purchase of shares of Seller Common Stock pursuant to the Offer, in the event of a breach by the Seller of any representation, warranty, covenant or other agreement contained herein, or if a representation or warranty of the Seller shall have become untrue, which situation in any case (1) would result in any of the events set forth in clauses (e) or (f) of Annex I to occur, and (2) has not been cured within 30 days following notice by the Parent or, if the Outside Date is less than 60 days from the notice by the Parent, has not been or cannot reasonably be expected to be cured by the Outside Date;
(f) by the Seller prior to the purchase of shares of Seller Common Stock pursuant to the Offer, in the event of a breach by the Parent of any representation, warranty, covenant or other agreement contained herein, or if a representation or warranty of the Parent shall have become untrue, which situation in any case (1) would result in any of the representations and warranties of the Parent and Purchaser set forth in this Agreement not being true and correct (without giving effect to any limitation as to ‘‘materiality’’ or ‘‘Material Adverse Effect’’ or similar terms set forth therein) except where the failure to be so true and correct does not have, and would not reasonably be expected to have, a Parent Material Adverse Effect or would result in a failure by Parent or Purchaser to perform in all material respects its obligations and covenants required to be performed by it under this Agreement and (2) has not been cured within 30 days following notice by the Seller or, if the Outside Date is less than 60 days from the notice by the Seller, has not been or cannot reasonably be expected to be cured by the Outside Date;
(g) by the Parent, if prior to the purchase of shares of Seller Common Stock pursuant to the Offer (i) the board of directors of the Seller shall have failed to publicly recommend to the Stockholders that they tender their shares into the Offer and/or vote in favor of the approval and adoption of this Agreement, (ii) the board of directors of the Seller shall have effected an Adverse Recommendation Change, (iii) the board of directors of the Seller shall have recommended that the stockholders accept or approve an Acquisition Proposal, (iv) the Seller or its board of directors shall have exempted any third party from, or otherwise made inapplicable to any third party, the Seller Rights Agreement or any applicable takeover statute; or (v) the board of directors of Seller shall have resolved to do any of the foregoing; or
44
(h) by the Seller, if prior to the purchase of shares of Seller Common Stock pursuant to the Offer (and provided that it has paid the Termination Amount and the Parent’s Expenses pursuant to Section 9.2) (i) the board of directors of the Seller shall have effected an Adverse Recommendation Change, (ii) the Seller is entering into an Acquisition Agreement or (iii) the board of directors of Seller shall have resolved to do any of the foregoing;
(i) by Parent, if prior to the purchase of shares of Seller Common Stock pursuant to the Offer an Acquisition Proposal has been publicly announced or become publicly known and the Minimum Condition (as defined in Annex I) shall not have been satisfied (at a time when all other conditions to Purchaser’s obligation to close are satisfied) by the close of business on the Business Day immediately preceding the Expiration Date.
9.2 Effect of Termination.
(a) In the event of a termination and abandonment of this Agreement by either the Parent or the Seller as provided in Section 9.1, this Agreement shall immediately become void and have no effect, and none of the Parent, Purchaser, the Seller, any of their respective subsidiaries or any of the officers or directors of any of them shall have any liability or obligation of any nature whatsoever hereunder, or in connection with the transactions contemplated hereby, except that (i) Sections 7.3 (Access to Information), 9.2 (Effect of Termination), and 10.2 (Expenses) and all other obligations of the parties specifically intended to be performed after the termination of this Agreement shall survive any termination of this Agreement; and (ii) notwithstanding anything to the contrary contained in this Agreement, neither the Parent nor the Seller shall be relieved or released from any liabilities or damages arising out of its willful breach of any provision of this Agreement or any other agreement delivered in connection herewith or any fraud.
(b) (i) In the event this Agreement is terminated by:
(A) the Parent pursuant to Section 9.1(g); or
(B) the Seller pursuant to Section 9.1(h),
then Seller shall make a cash payment to the Parent in the amount of $38,850,000 (thirty-eight million eight hundred fifty thousand dollars) (the ‘‘Termination Amount’’) plus an amount equal to Parent’s Expenses.
(ii) In the event this Agreement is terminated by Parent pursuant to Section 9.1(i), (1) then Seller shall make a cash payment to Buyer in the amount equal to the Parent’s Expenses and (2) if within twelve (12) months following such termination, the Seller shall have entered into a definitive agreement to engage in, or there has otherwise occurred, a transaction qualifying as an Acquisition Proposal (with all references to 20% in the definition thereof being treated as references to 50% for purposes hereof) with any Person other than the Parent or any Affiliate of the Parent, which transaction is subsequently consummated, then Seller shall make a cash payment to Buyer of the Termination Amount.
45
(c) If required under this Section 9.2, the Termination Amount and Parent’s Expenses shall be paid in immediately available funds within two (2) Business Days after the date of the event giving rise to the obligation to make such payment, unless the Termination Amount and Parent’s Expenses is payable as a result of a termination pursuant to Section 9.1(h), in which case, the Termination Amount and Parent’s Expenses is payable prior to and as a condition to with the termination. The parties acknowledge and agree that the provisions for payment of the Termination Amount and Parent’s Expenses are an integral part of the transactions contemplated by this Agreement and are included herein in order to induce the Parent to enter into this Agreement and to reimburse the Parent for incurring the costs and expenses related to entering into this Agreement and consummating the transactions contemplated by this Agreement.
9.3 Amendment. Subject to compliance with applicable Law, this Agreement may be amended by the parties hereto, by action taken by their respective boards of directors, at any time before or after approval of the matters presented in connection with the Merger to the stockholders of the Seller; provided, however, that after any approval of the transactions contemplated by this Agreement by the stockholders of the Seller, no amendment of this Agreement shall be made which by law requires further approval by the stockholders of the Seller without obtaining such approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto.
9.4 Extension; Waiver. At any time prior to the Effective Time, the parties hereto may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions contained herein; provided, however, that after any approval of this Agreement and the transactions contemplated hereby by the stockholders of the Seller, no extension or waiver of this Agreement or any portion thereof shall be made which by law requires further approval by the stockholders of the Seller without obtaining such approval. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party, but such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
ARTICLE X – MISCELLANEOUS
10.1 Nonsurvival of Representations, Warranties and Agreements. None of the representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time. This Section 10.1 shall not limit any covenant or agreement of the parties which by its terms contemplates performance after the Effective Time or relates to delivery of the Exchange Fund in full.
10.2 Expenses. Except as may otherwise be agreed to hereunder or in other writing by the parties, all legal and other costs and expenses incurred in connection with this
46
Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses.
10.3 Notices. All notices or other communications hereunder shall be in writing and shall be deemed given if delivered personally, sent by nationally recognized overnight courier (providing proof of delivery) or mailed by prepaid registered or certified mail (return receipt requested) or by telecopy (providing confirmation of transmission) addressed as follows:
| |
| (a) | If to the Parent, to: |
Publicis Groupe S.A.
133 Champs-Elysées
75008 Paris, France
Telecopy: +33 1 44 43 75 60
Attn: Russell Kelley, Esq.
with required copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Telecopy: (212) 403-2000
Attn: Elliott V. Stein, Esq.
Joshua R. Cammaker, Esq.
| |
| (b) | If to the Seller, to: |
Digitas Inc.
33 Arch Street
Boston, MA 02110
Telecopy: (617) 369-8240
Attn: David Kenny
Ernest Cloutier
| |
| (c) | with required copies to: |
Goodwin Procter LLP
Exchange Place
Boston, MA 02109
Telecopy: (617) 523-1231
Attn: Stuart M. Cable, Esq.
John T. Haggerty, Esq.
47
or such other address as shall be furnished in writing by any party, and any such notice or communication shall be deemed to have been given as of the date so mailed or otherwise sent as provided above.
10.4 Interpretation. When a reference is made in this Agreement to Sections, Exhibits or Schedules, such reference shall be to a Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words ‘‘include’’, ‘‘includes’’ or ‘‘including’’ are used in this Agreement, they shall be deemed to be followed by the words ‘‘without limitation.’’ No provision of this Agreement shall be construed to require the Seller or the Parent or any of their respective subsidiaries or Affiliates to take any action which would violate applicable Law, rule or regulation.
10.5 Counterparts. This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.
10.6 Entire Agreement. This Agreement, together with, the exhibits and schedules hereto and any documents delivered by the parties in connection herewith and the Confidentiality Agreement constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties hereto, or any of them, with respect to the subject matter hereof and, except as otherwise expressly provided herein, are not intended to confer upon any other person any rights or remedies hereunder.
10.7 Governing Law; Jurisdiction and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to its rules of conflict of laws. Each of the Parent and the Seller hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of the State of Delaware and of the United States of America located in the State of Delaware (the ‘‘Delaware Courts’’) for any litigation arising out of or relating to this Agreement and the transactions contemplated hereby (and agrees not to commence any litigation relating thereto except in such courts), waives any objection to the laying of venue of any such litigation in the Delaware Courts and agrees not to plead or claim in any Delaware Court that such litigation brought therein has been brought in any inconvenient forum. Each of the parties hereto agrees, (a) to the extent such party is not otherwise subject to service of process in the State of Delaware, to appoint and maintain an agent in the State of Delaware as such party’s agent for acceptance of legal process, and (b) that service of process may also be made on such party by prepaid certified mail with a proof of mailing receipt validated by United States Postal Service constituting evidence of valid service. Service made pursuant to (a) or (b) above shall have the same legal force and effect as if served upon such party personally with the State of Delaware.
10.8 Severability. In the event that any one or more provisions of this Agreement shall for any reason be held invalid, illegal or unenforceable in any respect, by any court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement and the parties shall use their reasonable best efforts to
48
substitute a valid, legal and enforceable provision which, insofar as practicable, implements the original purposes and intents of this Agreement.
10.9 Assignment; Reliance of Other Parties. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto in whole or in part (whether by operation of law or otherwise) without the prior written consent of the other parties and any attempt to make any such assignment without such consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns, provided, however, that each of Parent and Purchaser may assign their rights and obligations hereunder to any direct or indirect wholly owned subsidiary of Parent to the extent Purchaser and/or Parent, as applicable, agree to remain liable for the performance of such wholly owned subsidiary of its obligations hereunder. Except (i) as provided in Section 7.5 (Directors’ and Officers’ Indemnification and Insurance) hereof and (ii) the provisions of Article II concerning payment of the Merger Consideration, which shall inure to the Seller’s stockholders but, prior to the Effective Time, may only be enforced by the Seller acting on their behalf, this Agreement (including the documents and instruments referred to herein) is not intended to confer upon any Person other than the parties hereto any rights or remedies under or by reason of this Agreement.
10.10 Specific Performance. The parties hereto agree that irreparable damage would occur in the event that the provisions contained in this Agreement were not performed in accordance with its specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions, without the posting of any bond, to prevent breaches of this Agreement and to enforce specifically the terms and provisions thereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.
10.11 Definitions. Except as otherwise provided herein or as otherwise clearly required by the context, the following terms shall have the respective meanings indicated when used in this Agreement:
‘‘Acceptance Date’’ shall have the meaning ascribed thereto in Section 1.1(a) hereof.
‘‘Acquiring Person’’ shall have the meaning ascribed thereto in the Seller Rights Agreement.
‘‘Acquisition Agreement’’ shall have the meaning ascribed thereto in Section 7.2(d) hereof.
‘‘Acquisition Proposal’’ shall have the meaning ascribed thereto in Section 7.2(i) hereof.
‘‘Adverse Recommendation Change’’ shall have the meaning ascribed thereto in Section 7.2(d) hereof.
‘‘Affiliate’’ shall mean, with respect to any Person, any other Person controlling, controlled by or under common control with such Person. As used in this definition, ‘‘control’’
49
(including, with its correlative meanings, ‘‘controlled by’’ and ‘‘under common control with’’) means the possession, directly or indirectly, of power to direct or cause the direction of the management and policies of a Person whether through the ownership of voting securities, by contract or otherwise.
‘‘Agreement’’ shall have the meaning ascribed thereto in the recitals.
‘‘Appraisal Rights Provisions’’ shall have the meaning ascribed thereto in Section 3.3(a) hereof.
‘‘Arrangements’’ shall have the meaning ascribed thereto in Section 5.13(k) hereof.
‘‘Business Day’’ shall have the meaning ascribed thereto in Rule 14d-1(c)(6) under the Exchange Act.
‘‘Certificate’’ shall have the meaning ascribed thereto in Section 3.2(b) hereof.
‘‘Certificate of Merger’’ shall have the meaning ascribed thereto in Section 2.2 hereof.
‘‘Closing’’ shall have the meaning ascribed thereto in Section 1.3 hereof.
‘‘Code’’ shall mean the Internal Revenue Code of 1986, as amended.
‘‘Confidentiality Agreement’’ shall have the meaning ascribed thereto in Section 7.2(b) hereof.
‘‘Copyrights’’ shall have the meaning ascribed thereto in Section 5.19(c) hereof.
‘‘Counterproposal’’ shall have the meaning ascribed thereto in Section 7.2(e) hereof.
‘‘Covered Parties’’ shall have the meaning ascribed thereto in Section 7.5(b) hereof.
‘‘Covered Securityholders’’ shall have the meaning ascribed thereto in Section 4.7 hereof.
‘‘Delaware Courts’’ shall have the meaning ascribed thereto in Section 10.7 hereof.
‘‘DGCL’’ shall have the meaning ascribed thereto in the recitals.
‘‘Dissenting Shares’’ shall have the meaning ascribed thereto in Section 3.3(a) hereof.
‘‘Dissenting Stockholders’’ shall have the meaning ascribed thereto in Section 3.3(a) hereof.
50
‘‘Distribution Date’’ shall have the meaning ascribed thereto in the Seller Rights Agreement.
‘‘Dollar Exchange Rate’’ shall have the meaning ascribed thereto in Section 3.1(c) hereof.
‘‘Effective Time’’ shall have the meaning ascribed thereto in Section 2.2 hereof.
‘‘Encumbrances’’ shall mean all transfer restrictions, liens, security interests, mortgages, pledges, hypothecations, easements, covenants, declarations, conditions and restrictions in respect of real property; defects in or clouds on title and other encumbrances of every kind and nature (including agreements to grant or create the same, including options, rights of first negotiation and rights of first refusal), whether arising by agreement, operation of law or otherwise.
‘‘ERISA’’ shall mean the Employee Retirement Income Security Act of 1974, as amended.
‘‘ERISA Affiliate’’ means, with respect to any entity, trade or business, any other entity, trade or business that is, or was at the relevant time, a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or included the first entity, trade or business, or that is, or was at the relevant time, a member of the same ‘‘controlled group’’ as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
‘‘Euro Exchange Rate’’ shall have the meaning ascribed thereto in Section 3.1(c) hereof.
‘‘Exchange Act’’ shall mean the Securities Exchange Act of 1934, as amended.
‘‘Exchange Fund’’ shall have the meaning ascribed thereto in Section 3.2(a) hereof.
‘‘Expiration Date’’ shall have the meaning ascribed thereto in Section 1.1(b) hereof.
‘‘fully diluted basis’’ shall have the meaning ascribed thereto in Annex I.
‘‘GAAP’’ shall mean generally accepted accounting principles and practices in effect from time to time within the United States applied consistently throughout the period involved.
‘‘Governmental Authority’’ shall mean any United States or foreign, federal, state or local governmental commission, board, body, bureau, or other regulatory authority, agency, including courts and other judicial bodies, or any self-regulatory body or authority, including any instrumentality or entity designed to act for or on behalf of the foregoing.
‘‘HSR Act’’ shall have the meaning ascribed thereto in Section 7.1(b) hereof.
51
‘‘Indemnified Parties’’ shall have the meaning ascribed thereto in Section 7.5 hereof.
‘‘Intellectual Property Assets’’ shall have the meaning ascribed thereto in Section 5.19(c) hereof.
‘‘IRS’’ shall mean the Internal Revenue Service.
‘‘Key Personnel’’ shall mean (i) any director or executive officer of Seller or any of its subsidiaries, and (ii) any employee of Seller and its Subsidiaries whose base salary exceeds $300,000 or whose total compensation for the most recently completed fiscal year exceeds $400,000.
‘‘Laws’’ shall mean any federal, state, local or foreign law, statute or ordinance, common law, or any rule, regulation, standard, judgment, order, writ, injunction, decree, arbitration award, agency requirement, license or permit of any Governmental Authority.
‘‘leases and subleases’’ shall have the meaning ascribed thereto in Section 5.16(a) hereof.
‘‘Marks’’ shall have the meaning ascribed thereto in Section 5.19(c) hereof.
‘‘Merger’’ shall have the meaning ascribed thereto in the recitals.
‘‘Merger Consideration’’ shall have the meaning ascribed thereto in Section 3.1(c) hereof.
‘‘Minimum Condition’’ shall have the meaning ascribed thereto in Annex I.
‘‘Offer’’ shall have the meaning ascribed thereto in the recitals.
‘‘Offer Documents’’ shall have the meaning ascribed thereto in Section 1.1(a) hereof.
‘‘Offer Price’’ shall have the meaning ascribed thereto in the recitals.
‘‘Outside Date’’ shall have the meaning ascribed thereto in Section 9.1(b) hereof.
‘‘Parent’’ shall have the meaning ascribed thereto in the recitals.
‘‘Parent Arrangements’’ shall have the meaning ascribed thereto in Section 4.7 hereof.
‘‘Parent Disclosure Schedule’’ shall have the meaning ascribed thereto in Article IV hereof.
‘‘Parent Material Adverse Effect’’ means, with respect to Parent, an effect, event or change which would reasonably be expected to prevent or materially delay the consummation of the Transaction and the other transactions contemplated by this Agreement or prevent or
52
materially impair or delay the ability of the Parent to perform its obligations under this Agreement.
‘‘Parent’s Expenses’’ shall mean an amount equal to Parent’s out-of-pocket fees and expenses actually incurred or paid by or on behalf of Parent in connection with this Agreement and the transactions contemplated hereby, including fees and expenses of counsel, financial advisors, accountants, experts and consultants, up to a maximum aggregate cap of $4,600,000 (four million six hundred thousand dollars).
‘‘Parent Ordinary Shares’’ shall mean the ordinary shares, nominal value Euro .40 per share, of Parent.
‘‘Patents’’ shall have the meaning ascribed thereto in Section 5.19(c) hereof.
‘‘Paying Agent’’ shall have the meaning ascribed thereto in Section 3.2(a) hereof.
‘‘Person’’ shall mean any individual, corporation, partnership, joint venture, association, trust, unincorporated organization or other legal entity, or any governmental agency or political subdivision thereof.
‘‘Proxy Statement’’ shall have the meaning ascribed thereto in Section 2.6(a) hereof.
‘‘Purchaser’’ shall have the meaning ascribed thereto in the recitals.
‘‘Purchaser Insiders’’ shall have the meaning ascribed thereto in Section 1.3(a) hereof.
‘‘Reclassified Stock Option’’ shall have the meaning ascribed thereto in Section 3.1(e) hereof.
‘‘Representatives’’ shall have the meaning ascribed thereto in Section 7.2(a) hereof.
‘‘Requisite Regulatory Approvals’’ shall have the meaning ascribed thereto in Section 8.1(c) hereof.
‘‘Rights’’ shall have the meaning ascribed thereto in the recitals.
‘‘Schedule 14D-9’’ shall have the meaning ascribed thereto in Section 1.2(a) hereof.
‘‘SEC’’ shall mean the U.S. Securities and Exchange Commission.
‘‘Seller’’ shall have the meaning ascribed thereto in the recitals.
‘‘Seller Balance Sheet’’ shall have the meaning ascribed thereto in Section 5.5 hereof.
53
‘‘Seller Benefit Plans’’ shall have the meaning ascribed thereto in Section 5.13(a) hereof.
‘‘Seller Change in Control Severance Pay and Retention Bonus Plan’’ shall mean the Seller Change in Control Severance Pay and Retention Bonus Plan, dated as of December 20, 2006.
‘‘Seller Client Confidential Information’’ shall have the meaning ascribed thereto in Section 5.19(b) hereof.
‘‘Seller Common Stock’’ shall have the meaning ascribed thereto in the recitals.
‘‘Seller Companies’’ shall have the meaning ascribed thereto in Section 5.12(a) hereof.
‘‘Seller Contracts’’ shall have the meaning ascribed thereto in Section 5.15 hereof.
‘‘Seller Copyrights’’ shall have the meaning ascribed thereto in Section 5.19(a) hereof.
‘‘Seller Disclosure Schedule’’ shall have the meaning ascribed thereto in Article V hereof.
‘‘Seller Employees’’ shall have the meaning ascribed thereto in Section 7.4(a) hereof.
‘‘Seller ESPP’’ shall have the meaning ascribed thereto in Section 3.1(f) hereof.
‘‘Seller Intellectual Property Assets’’ shall have the meaning ascribed thereto in Section 5.19(c) hereof.
‘‘Seller Marks’’ shall have the meaning ascribed thereto in Section 5.19(a) hereof.
‘‘Seller Material Adverse Effect’’ shall mean, with respect to Seller, a change, event or effect that, individually or in the aggregate, has a material adverse effect on the business, operations, assets, results of operations, or financial condition of Seller and its subsidiaries taken as a whole or would reasonably be expected to prevent or materially delay the consummation of the Transaction and the other transactions contemplated hereby or prevent or materially impair or delay the ability of the Seller to perform its obligations under this Agreement; provided, however, that, ‘‘Material Adverse Effect’’ shall be deemed not to include the impact of (a) general changes in the economy or financial markets of the United States or any other region outside of the United States (to the extent such changes do not affect the Seller in a disproportionate manner as compared to its industry peers) (b) changes in political, economic or business conditions, including the commencement, continuation or escalation of a war or material armed hostilities, acts of terrorism, or the occurrence of natural disasters (to the extent such changes do not affect the Seller in a disproportionate manner as compared to its industry peers), (c) the announcement or pendency of the Transaction (d) the termination by clients of their
54
relationship with Seller or any of its Subsidiaries, or (e) the termination by employees of their employment with Seller or any of its Subsidiaries.
‘‘Seller Other Plans’’ shall have the meaning ascribed thereto in Section 5.13(a) hereof.
‘‘Seller Patents’’ shall have the meaning ascribed thereto in Section 5.19(a) hereof.
‘‘Seller Pension Plans’’ shall have the meaning ascribed thereto in Section 5.13(a) hereof.
‘‘Seller Permits’’ shall have the meaning ascribed thereto in Section 5.11 hereof.
‘‘Seller Preferred Stock’’ shall have the meaning ascribed thereto in Section 5.2(a) hereof.
‘‘Seller Products’’ shall have the meaning ascribed thereto in Section 5.19(c) hereof.
‘‘Seller Recommendations’’ shall have the meaning ascribed thereto in Section 1.2(a) hereof.
‘‘Seller Reports’’ shall have the meaning ascribed thereto in Section 5.9(a) hereof.
‘‘Seller Restricted Share’’ shall have the meaning ascribed thereto in Section 3.1(c) hereof.
‘‘Seller Rights Agreement’’ shall mean that certain Rights Agreement, dated as of June 18, 2001, between the Seller and Equiserve Trust, as Rights Agent.
‘‘Seller SEC Reports’’ shall have the meaning ascribed thereto in Section 5.9 hereof.
‘‘Seller Stock Option’’ shall mean options to purchase Seller Common Stock issued under any of the Seller Stock Options Plans.
‘‘Seller Stock Option Plans’’ shall mean those stock option plans of Seller listed as the 1998 Stock Option Plan, the 1999 Stock Option Plan and the 2000 Stock Option and Incentive Plan (including the UK subplans thereunder), the Bronner Slosberg Humphrey Co. 1999 Option Plan, the Bronner Slosberg Humphrey Co. 1998 Option Plan, the Modem Media Advertising Limited Partnership 1996 Option Plan, the Modem Media . Poppe Tyson, Inc. Amended and Restated 1997 Stock Option Plan, the Modem Media . Poppe Tyson, Inc. Amended and Restated 1999 Stock Option Plan, the Modem Media 2000 Stock Incentive Plan, the Medical Broadcasting, LLC Key Employee Incentive Plan, the Medical Broadcasting, LLC 2000 Equity Compensation Plan, Amended and Restated 2000 Medical Broadcasting, LLC Equity Compensation Plan, and related Non-Qualified Option Grant Agreements and the 2005 Seller Stock Purchase Plan.
55
‘‘Seller Stock Plans’’ shall mean the equity-based compensation plans of the Seller.
‘‘Seller Stockholder Approval’’ shall have the meaning ascribed thereto in Section 5.18(b) hereof.
‘‘Seller Stockholders’’ shall mean the holders of Seller Common Stock.
‘‘Seller Trade Secrets’’ shall have the meaning ascribed thereto in Section 5.19(b) hereof.
‘‘Seller’s Advisor’’ shall have the meaning ascribed thereto in Section 5.6 hereof.
‘‘Seller’s Business’’ shall have the meaning ascribed thereto in Section 5.19(c) hereof.
‘‘Special Meeting’’ shall have the meaning ascribed thereto in Section 2.6(a) hereof.
‘‘Subsequent Determination’’ shall have the meaning ascribed thereto in Section 7.2(e) hereof.
‘‘Subsidiaries’’ or ‘‘subsidiaries’’ shall mean, when used with reference to a party, any corporation or other organization, whether incorporated or unincorporated, of which such party or any other subsidiary of such party is a general partner (excluding partnerships the general partnership interests of which held by such party or any subsidiary of such party do not have a majority of the voting interests in such partnership) or serves in a similar capacity, or, with respect to such corporation or other organization, at least fifty percent (50%) of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions is directly or indirectly owned or controlled by such party or by any one or more of its subsidiaries, or by such party and one or more of its subsidiaries.
‘‘Superior Proposal’’ shall have the meaning ascribed thereto in Section 7.2(h) hereof.
‘‘Surviving Corporation’’ shall have the meaning ascribed thereto in Section 2.1 hereof.
‘‘Tax’’ shall mean (a) any and all taxes, customs, duties, tariffs, imposts, charges, deficiencies, assessments, levies or other like governmental charges, including, without limitation, income, gross receipts, excise, real or personal property, ad valorem, value added, estimated, alternative minimum, stamp, sales, withholding, social security, occupation, use, service, service use, license, net worth, payroll, franchise, transfer and recording taxes and charges, imposed by the IRS or any other taxing authority (whether domestic or foreign including, without limitation, any state, county, local or foreign government or any subdivision or taxing agency thereof (including a United States possession)), whether computed on a separate, consolidated, unitary, combined or any other basis; and such term shall include any
56
interest, fines, penalties or additional amounts attributable to, or imposed upon, or with respect to, any such amounts, (b) any liability for the payment of any amounts described in (a) as a result of being a member of an affiliated, consolidated, combined, unitary, or similar group or as a result of transferor or successor liability, and (c) any liability for the payment of any amounts as a result of being a party to any tax sharing agreement or as a result of any obligation to indemnify any other person with respect to the payment of any amounts of the type described in (a) or (b).
‘‘Tax Return’’ shall mean any report, return, document, declaration, election or other information or filing required to be supplied to any taxing authority or jurisdiction (foreign or domestic) with respect to Taxes, including, without limitation, information returns and any documents with respect to or accompanying payments of estimated Taxes or requests for the extension of time in which to file any such report, return, document, declaration or other information.
‘‘Tender Offer Conditions’’ shall have the meaning ascribed thereto in Section 1.1(a) hereof.
‘‘Termination Amount’’ shall have the meaning ascribed thereto in Section 9.2(b) hereof.
‘‘Trade Secrets’’ shall have the meaning ascribed thereto in Section 5.19(c) hereof.
‘‘Transaction’’ shall have the meaning ascribed thereto in the recitals.
‘‘Unaudited Balance Sheet’’ shall have the meaning ascribed thereto in Section 5.5 hereof.
‘‘U.S.’’ shall mean the United States.
‘‘Warrant Agreement’’ shall have the meaning ascribed thereto in Section 3.1(d) hereof.
‘‘Warrants’’ shall have the meaning ascribed thereto in Section 5.2(a) hereof.
[SIGNATURE PAGE FOLLOWS]
57
IN WITNESS WHEREOF, the Parent, Purchaser and the Seller have caused this Agreement to be executed as a sealed instrument by their duly authorized officers as of the day and year first above written.
| | | | | | |
| | | | PUBLICIS GROUPE S.A. |
| | | | | | | |
| | | | By: | | | /s/ Maurice Lévy |
| | | | Name: | | | Maurice Lévy |
| | | | Title: | | | Chairman of the Management Board and
Chief Executive Officer |
| | | | | | | |
| | | | PACIFIC ACQUISITION CORP. |
| | | | | | | |
| | | | By: | | | /s/ Maurice Lévy |
| | | | Name: | | | Maurice Lévy |
| | | | Title: | | | Director |
| | | | | | | |
| | | | DIGITAS INC. |
| | | | | | | |
| | | | By: | | | /s/ David Kenny |
| | | | Name: | | | David Kenny |
| | | | Title: | | | Chairman of the Board and
Chief Executive Officer |
|
[Signature Page to Agreement and Plan of Merger]
ANNEX I
CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, the Parent shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated under the Exchange Act, pay for any tendered shares of Seller Common Stock and may terminate or, subject to the terms of the Agreement, amend the Offer, if (i) there shall not be validly tendered and not withdrawn prior to the Expiration Date for the Offer that number of shares of Seller Common Stock which, when added to any shares of Seller Common Stock already owned by Parent or any of its controlled Subsidiaries, represents at least a majority of the total number of outstanding shares of Seller Common Stock on a ‘‘fully diluted basis’’ (which assumes conversion or exercise of all derivative securities regardless of the conversion or exercise price, the vesting schedule or other terms and conditions thereof) on the Expiration Date (the ‘‘Minimum Condition’’), (ii) any applicable waiting period or approval under the HSR Act or other applicable foreign statutes or regulations, including the German Act against Restraints of Competition, shall not have expired or been terminated or obtained prior to the Expiration Date, or (iii) at any time on or after the date of the Agreement and prior to the time of acceptance for payment for any shares of Seller Common Stock, any of the following events shall occur:
(a) there shall be any action taken, or any statute, rule, regulation, legislation, interpretation, judgment, order or injunction enacted, enforced, amended, issued or deemed applicable to the Offer, by any legislative body, court, government or governmental, administrative or regulatory authority or agency, domestic or foreign, other than the application of the waiting period provisions of the HSR Act to the Offer or to the Merger, that would reasonably be expected to, directly or indirectly: (i) make illegal or otherwise prohibit or materially delay consummation of the Offer or the Merger, (ii) except to the extent required by Section 7.1 of the Agreement, restrict, prohibit or limit the ownership or operation by Parent or Purchaser or their subsidiaries of all or any significant portion of the business or assets of the Seller or any of their respective subsidiaries or compel Parent or the Purchaser or their subsidiaries or any of their respective subsidiaries to dispose of or hold separately all or any significant portion of the business or assets of Parent or the Purchaser or the Seller or any of their respective subsidiaries, or impose any limitation, restriction or prohibition on the ability of Parent or the Purchaser or their subsidiaries to conduct its business or own such assets, (iii) impose material limitations on the ability of Parent or the Purchaser or their subsidiaries effectively to acquire, hold or exercise full rights of ownership of the shares of Seller Common Stock, including, without limitation, the right to vote any shares of Seller Common Stock acquired or owned by the Purchaser or Parent or their subsidiaries pursuant to the Offer on all matters properly presented to the Seller’s shareholders, (iv) require divestiture by Parent or the Purchaser or their subsidiaries of any shares of Seller Common Stock; or
(b) there shall be instituted or pending any action or proceeding by any Governmental Authority that would reasonably be expected to result in, any of the consequences referred to in clauses (i) through (iv) of paragraph (a) above; or
(c) (A) an Adverse Recommendation Change shall have occurred, or (B) the board of directors of the Seller or any committee of the board of directors of the Seller shall have
I-1
authorized or permitted the Seller or any of its subsidiaries to enter into an Acquisition Agreement; or
(d) the Seller and the Purchaser and Parent shall have reached an agreement that the Offer or the Agreement be terminated, or the Agreement shall have been terminated in accordance with its terms; or
(e) (i) any of the representations and warranties of the Seller set forth in Section 5.2(a) of this Agreement shall not be true and correct in all material respects, (ii) any of the representations or warranties of the Seller in Section 5.13(k) of this Agreement shall not be true and correct or (iii) any of the other representations and warranties of the Seller set forth in this Agreement shall not be true and correct (without giving effect to any limitation as to ‘‘materiality’’ or ‘‘Material Adverse Effect’’ or similar terms set forth therein) except where the failure to be so true and correct does not have, and would not reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect, in each of the cases provided under clause (i), (ii), and (iii) as if such representations and warranties were made at the time of such determination (except to the extent such representations and warranties relate to an earlier date, in which case only as of such earlier date); or
(f) the Seller shall have failed to perform in all material respects any obligation, agreement or covenant required to be performed by it under this Agreement; or
(g) there shall have occurred any change, event, effect or occurrence arising after the time of this Agreement which has had or would reasonably be expected have, either individually or in the aggregate, a Seller Material Adverse Effect; or
(h) the employment agreement and related letter agreement with David Kenny shall not be in full force and effect or such individual shall not remain employed by the Seller.
The foregoing conditions are for the benefit of Parent and the Purchaser and may be asserted by Parent or the Purchaser regardless of the circumstances giving rise to any such conditions and may be waived by Parent or the Purchaser in whole or in part at any time and from time to time in their sole discretion, in each case, subject to the terms of the Agreement. The failure by Parent or the Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time.
I-2
