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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
Dated as of May 20, 2001
By and Among
VIVENDI UNIVERSAL, S.A.,
METRONOME ACQUISITION SUB INC.
And
MP3.COM, INC.
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TABLE OF CONTENTS
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ARTICLE I
The Merger
SECTION 1.01. The Merger.............................................................2
SECTION 1.02. Closing................................................................2
SECTION 1.03. Effective Time.........................................................2
SECTION 1.04. Effects of the Merger..................................................3
SECTION 1.05. Certificate of Incorporation and By-laws...............................3
SECTION 1.06. Directors..............................................................3
SECTION 1.07. Officers...............................................................3
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock................................................3
(a) Capital Stock of Sub..............................................4
(b) Cancelation of Treasury Stock and
Parent-Owned Stock.....................................................4
(c) Conversion of Company Common Stock................................4
(d) Appraisal Rights..................................................5
SECTION 2.02. Anti-Dilution Provisions...............................................6
SECTION 2.03. Exchange of Certificates...............................................6
(a) Exchange Agent....................................................6
(b) Exchange Procedures...............................................7
(c) Distributions with Respect to
Unexchanged Shares................................................8
(d) No Further Ownership Rights in
Company Common Stock..............................................8
(e) No Fractional Shares..............................................9
(f) Termination of Exchange Fund......................................9
(g) No Liability......................................................9
(h) Investment of Exchange Fund.......................................9
(i) Lost Certificates................................................10
(j) Withholding Rights...............................................10
SECTION 2.04. Elections.............................................................10
SECTION 2.05. Proration.............................................................12
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ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company...........................................................13
(a) Organization, Standing and Corporate
Power..........................................................14
(b) Subsidiaries...................................................14
(c) Capital Structure..............................................14
(d) Authority; Noncontravention....................................17
(e) SEC Documents; Undisclosed
Liabilities....................................................20
(f) Information Supplied...........................................21
(g) Absence of Certain Changes or
Events.........................................................21
(h) Litigation.....................................................22
(i) Compliance with Applicable Laws................................23
(j) Absence of Changes in Benefit Plans............................24
(k) ERISA Compliance; Excess Parachute
Payments.......................................................25
(l) Taxes..........................................................29
(m) Voting Requirements............................................30
(n) State Takeover Statutes........................................31
(o) Brokers; Schedules of Fees and
Expenses.......................................................31
(p) Opinion of Financial Advisor...................................32
(q) Intellectual Property..........................................32
(r) Contracts......................................................33
(s) Title to Properties............................................37
(t) Privacy Policy.................................................37
SECTION 3.02. Representations and Warranties of Parent
and Sub...............................................................39
(a) Organization, Standing and
Corporate Power................................................39
(b) Authority; Noncontravention....................................39
(c) SEC Documents..................................................41
(d) Absence of Material Adverse Change.............................42
(e) Information Supplied...........................................42
(f) No Parent Stockholder Vote
Required.......................................................42
(g) Parent Shares..................................................42
(h) Tax Matters....................................................43
(i) Interim Operations of Sub......................................43
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business...................................................43
(a) Conduct of Business by the Company.............................43
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(b) Advice of Changes; Filings.....................................48
SECTION 4.02. No Solicitation by the Company........................................48
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form F-4 and the
Proxy Statement; Stockholders Meeting.................................51
SECTION 5.02. Access to Information; Confidentiality................................52
SECTION 5.03. Reasonable Efforts....................................................53
SECTION 5.04. Stock Options.........................................................54
SECTION 5.05. Employee Matters......................................................56
SECTION 5.06. Indemnification, Exculpation and
Insurance.............................................................57
SECTION 5.07. Fees and Expenses.....................................................58
SECTION 5.08. Public Announcements..................................................58
SECTION 5.09. Affiliates............................................................59
SECTION 5.10. NYSE Listing..........................................................59
SECTION 5.11. Litigation............................................................59
SECTION 5.12. Tax Treatment.........................................................60
SECTION 5.13. Stockholder Agreement Legend..........................................60
SECTION 5.14. Termination of Agreements.............................................60
SECTION 5.15. Resignation of Directors of the Company...............................60
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation To
Effect the Merger.....................................................61
(a) Stockholder Approval.............................................61
(b) HSR Act..........................................................61
(c) No Restraints....................................................61
(d) Form F-4.........................................................61
(e) NYSE Listing.....................................................61
SECTION 6.02. Conditions to Obligations of Parent
and Sub...............................................................62
(a) Representations and Warranties...................................62
(b) Performance of Obligations of the
Company..........................................................62
(c) Tax Opinion......................................................62
SECTION 6.03. Conditions to Obligations of the Company..............................63
(a) Representations and Warranties...................................63
(b) Performance of Obligations of
Parent and Sub...................................................63
(c) Tax Opinion......................................................63
SECTION 6.04. Frustration of Closing Conditions.....................................63
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ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination...........................................................64
SECTION 7.02. Effect of Termination.................................................65
SECTION 7.03. Amendment.............................................................65
SECTION 7.04. Extension; Waiver.....................................................65
SECTION 7.05. Procedure for Termination, Amendment,
Extension or Waiver...................................................65
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties............................................................66
SECTION 8.02. Notices...............................................................66
SECTION 8.03. Definitions...........................................................67
SECTION 8.04. Interpretation........................................................68
SECTION 8.05. Counterparts..........................................................69
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries.........................................................69
SECTION 8.07. Governing Law.........................................................69
SECTION 8.08. Assignment............................................................69
SECTION 8.09. Enforcement...........................................................69
SECTION 8.10. Severability..........................................................70
Annex I - Index of Defined Terms
Exhibit A - Form of Affiliate Letter
Schedule A - Employment Agreement Signatories
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AGREEMENT AND PLAN OF MERGER (this "Agreement")
dated as of May 20, 2001, among VIVENDI UNIVERSAL, a
societe anonyme organized under the laws of France
("Parent"), METRONOME ACQUISITION SUB INC., a Delaware
corporation and a wholly owned subsidiary of Parent
("Sub"), and MP3.COM, INC., a Delaware corporation (the
"Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved, and the Boards of Directors of Sub and the Company have
declared advisable, this Agreement and the merger of the Company with and into
Sub (the "Merger"), upon the terms and subject to the conditions set forth in
this Agreement, whereby each issued and outstanding share of common stock, par
value $0.001 per share, of the Company (the "Company Common Stock"), other than
shares owned by Parent, Sub or the Company, or any wholly owned subsidiary of
Parent, Sub or the Company, will be converted into, at the option of the holder
thereof (upon the terms and subject to the limitations set forth herein), either
(i) the right to receive ordinary shares, nominal value (U)5.50 per share, of
Parent (the "Parent Shares"), which shares will be issued in the form of
American depositary shares representing Parent Shares, each American depositary
share representing one Parent Share (the "Parent ADSs"), or (ii) the right to
receive cash;
WHEREAS simultaneously with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Parent and Sub
to enter into this Agreement, Parent and certain principal stockholders of the
Company (collectively, the "Company Stockholders") are entering into an
agreement (the "Stockholder Agreement") pursuant to which the Company
Stockholders will agree to vote to adopt and approve this Agreement and to take
certain other actions in furtherance of the Merger upon the terms and subject to
the conditions set forth in the Stockholder Agreement;
WHEREAS simultaneously with the execution of this Agreement and
as a condition and inducement to the willingness of Parent and Sub to enter into
this Agreement, Parent, the Company and those employees of the Company
identified on Schedule A have entered into employment agreements, conditioned on
the consummation of the Merger (each, an "Employment Agreement"), pursuant to
which Parent has agreed to employ such individuals following the Effective Time
and such individuals have agreed to certain modifications to the terms of their
Stock Options and to be
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subject to certain non-compete and non-solicitation obligations, in each case
upon the terms and conditions set forth in the applicable Employment Agreement;
WHEREAS for U.S. Federal income tax purposes, it is intended that
(a) the Merger will qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and the
rules and regulations promulgated thereunder and (b) this Agreement constitutes
a plan of reorganization; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the parties
agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), the Company shall be merged with and into
Sub at the Effective Time. At the Effective Time, the separate corporate
existence of the Company shall cease and Sub shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of the Company in accordance with the DGCL.
SECTION 1.02. Closing. The closing of the Merger (the "Closing")
shall take place at 10:00 a.m., New York City time, on the second business day
after satisfaction or (to the extent permitted by applicable law) waiver of the
conditions set forth in Article VI (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the satisfaction or
waiver of those conditions), at the offices of Cravath, Swaine & Moore, 825
Eighth Avenue, New York, New York 10019, or at such other place, time and date
as shall be agreed to in writing by Parent and the Company. The date on which
the Closing occurs is referred to in this Agreement as the "Closing Date".
SECTION 1.03. Effective Time. Upon the terms and subject to the
conditions set forth in this Agreement, as
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soon as practicable on or after the Closing Date, the parties shall prepare and
file with the Secretary of State of the State of Delaware, a certificate of
merger or other appropriate documents (in any such case, the "Certificate of
Merger") executed in accordance with the relevant provisions of the DGCL and
shall make all other filings or recordings required under the DGCL. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with the Secretary of State of the State of Delaware, or at such subsequent date
or time as Parent and the Company shall agree and specify in the Certificate of
Merger (the time the Merger becomes effective being referred to as the
"Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws. (a) The
certificate of incorporation of Sub, as in effect immediately prior to the
Effective Time, shall be the certificate of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
(b) The by-laws of Sub, as in effect immediately prior to the
Effective Time, shall be the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. Directors. The directors of Sub immediately prior
to the Effective Time shall be the directors of the Surviving Corporation until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of the Company immediately
prior to the Effective Time shall be the officers of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any
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action on the part of the holder of any shares of Company Common Stock or any
shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
common stock of Sub shall remain outstanding as one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent-Owned Stock. Each
share of Company Common Stock that is owned by the Company, as treasury
stock, Parent or Sub, or any wholly owned subsidiary of the Company,
Parent or Sub, immediately prior to the Effective Time shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered or deliverable in exchange therefor.
(c) Conversion of Company Common Stock. Except as otherwise
provided in Section 2.05 and subject to Sections 2.01(d) and 2.03(e),
each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares to be canceled in
accordance with Section 2.01(b)) shall be converted into the right to
receive, at the election of the holder thereof, one of the following (as
adjusted pursuant to Section 2.05, the "Merger Consideration"):
(i) for each such share of Company Common Stock with
respect to which an election to receive Parent Shares has been
effectively made, and not revoked or lost, pursuant to Section
2.04 (a "Share Election"), the right to receive a number of fully
paid and nonassessable Parent Shares equal to the Exchange Ratio
(the "Share Consideration"); and
(ii) for each such share of Company Common Stock with
respect to which an election to receive cash has been effectively
made, and not revoked or lost, pursuant to Section 2.04 (a "Cash
Election"), and for each such share of Company Common Stock with
respect to which a Cash Election is deemed to have been made
pursuant to Section 2.04(d), the right to receive $5.00 in cash
(the "Cash Consideration").
The Parent Shares to be issued in the Merger shall be registered in the
name of The Bank of New York, as depositary (the "Depositary") under the
Deposit Agreement dated as of April 19, 1995, as amended and restated as
of September 11, 2000 and as further amended and restated as of December
8, 2000, among
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Parent, The Bank of New York, a New York banking corporation, and all
owners and beneficial owners from time to time of the American
depositary receipts issued thereunder (the "Deposit Agreement"), and
then delivered in the form of Parent ADSs, and such Parent ADSs shall be
issued in accordance with the Deposit Agreement. At the Effective Time,
all such shares of Company Common Stock shall no longer be outstanding
and shall automatically be canceled and shall cease to exist, and each
holder of a certificate or certificates that immediately prior to the
Effective Time represented any such shares of Company Common Stock (the
"Certificates") shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration, certain dividends
or other distributions in accordance with Section 2.03(c) and cash in
lieu of any fractional Parent ADS in accordance with Section 2.03(e)
upon the surrender of such certificate in accordance with Section
2.03(b), without interest. "Exchange Ratio" means the quotient (rounded
to the fourth decimal place) obtained by dividing $5.00 by the Average
Closing Price. "Average Closing Price" means an amount equal to the
average per share closing price of Parent ADSs on the New York Stock
Exchange (the "NYSE"), as reported in The Wall Street Journal,
Northeastern edition (or, if not reported therein in another
authoritative source selected by Parent and reasonably acceptable to the
Company), for the five consecutive trading days ending on the trading
day immediately preceding the date on which the Stockholders Meeting
occurs.
(d) Appraisal Rights. Notwithstanding anything in this Agreement
to the contrary, shares ("Appraisal Shares") of Company Common Stock
that are outstanding immediately prior to the Effective Time and that
are held by any person who is entitled to demand and properly demands
appraisal of such Appraisal Shares pursuant to, and who complies in all
respects with, Section 262 of the DGCL ("Section 262") shall not be
converted into Merger Consideration as provided in Section 2.01(c), but
rather the holders of Appraisal Shares shall be entitled to payment of
the fair market value of such Appraisal Shares in accordance with
Section 262; provided, however, that if any such holder shall fail to
perfect or otherwise shall waive, withdraw or lose the right to
appraisal under Section 262, then the right of such holder to be paid
the fair value of such holder's Appraisal Shares shall cease and such
Appraisal Shares shall be deemed to have been converted as of the
Effective Time into, and to have become exchangeable solely for the
right to
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receive, the Merger Consideration as provided in Section 2.01(c) and in
accordance with 2.04(d). The Company shall serve prompt notice to Parent
of any demands received by the Company for appraisal of any shares of
Company Common Stock, and Parent shall have the right to participate in
and direct all negotiations and proceedings with respect to such
demands. Prior to the Effective Time, the Company shall not, without the
prior written consent of Parent, make any payment with respect to, or
settle or offer to settle, any such demands, or agree to do any of the
foregoing.
SECTION 2.02. Anti-Dilution Provisions. In the event Parent
changes (or establishes a record date for changing) the number of Parent Shares
issued and outstanding prior to the Effective Time as a result of a stock split,
stock dividend, recapitalization, subdivision, reclassification, combination,
exchange of shares or similar transaction with respect to the outstanding Parent
Shares and the record date therefor shall be prior to the Effective Time, the
Exchange Ratio shall be proportionately adjusted to reflect such stock split,
stock dividend, recapitalization, subdivision, reclassification, combination,
exchange of shares or similar transaction.
SECTION 2.03. Exchange of Certificates. (a) Exchange Agent. As of
the Effective Time, Parent shall provide, or cause the Surviving Corporation to
provide, to the Depositary the Parent Shares being issued in the form of Parent
ADSs in accordance with this Article II, and the Depositary shall deposit with
such bank or trust company as may be designated by Parent and reasonably
acceptable to the Company (the "Exchange Agent"), for the benefit of the holders
of shares of Company Common Stock, for exchange in accordance with this Article
II, through the Exchange Agent, receipts issued in accordance with the Deposit
Agreement evidencing the Parent ADSs issuable pursuant to Section 2.01 in
exchange for outstanding shares of Company Common Stock, and Parent shall take
all steps necessary to enable and cause the Surviving Corporation to provide to
the Exchange Agent, on a timely basis, as and when needed after the Effective
Time, cash necessary to pay for the shares of Company Common Stock converted
into the right to receive cash pursuant to Section 2.01 (such receipts
evidencing Parent ADSs and cash, together with any dividends or other
distributions with respect thereto in accordance with Section 2.03(c) and any
cash in lieu of any fractional Parent ADS in accordance with Section 2.03(e),
being hereinafter referred to as the "Exchange Fund"). At the time of such
deposit, Parent shall irrevocably instruct the Exchange Agent to deliver the
Exchange Fund to the Company's stockholders after the Effective Time in
accordance with the
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procedures set forth in this Section 2.03, subject to Sections 2.03(f) and
2.03(g).
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of record of a
Certificate whose shares were converted into the right to receive the applicable
Merger Consideration pursuant to Section 2.01, (i) a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in customary form and have such
other provisions as Parent may reasonably specify) and (ii) instructions for use
in surrendering the Certificates in exchange for the applicable Merger
Consideration with respect thereto. Upon surrender of a Certificate for
cancelation to the Exchange Agent, together with such letter of transmittal,
duly completed and validly executed, and such other documents as may reasonably
be required by the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor a receipt evidencing that number of
whole Parent ADSs (together with cash in lieu of any fractional Parent ADS in
accordance with Section 2.03(e)), if any, and the amount of cash, if any, that
the aggregate number of shares of Company Common Stock previously represented by
such Certificate shall have been converted pursuant to Section 2.01 into the
right to receive, together with certain dividends or other distributions in
accordance with Section 2.02(c), and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Company Common
Stock that is not registered in the transfer records of the Company, a receipt
evidencing the proper number of Parent ADSs may be issued and/or the proper
amount of cash may be paid, as appropriate, in exchange therefor to a person
other than the person in whose name the Certificate so surrendered is registered
if such Certificate shall be properly endorsed or otherwise be in proper form
for transfer and the person requesting such issuance shall pay any transfer or
other taxes required by reason of the issuance of Parent ADSs to a person other
than the registered holder of such Certificate or establish to the satisfaction
of Parent that such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.03(b), each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration that the holder thereof has the right to
receive pursuant to the provisions of this Article II, certain dividends or
other distributions in accordance with Section 2.03(c) and cash in lieu of any
fractional Parent ADS in accordance with
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Section 2.03(e). No interest shall be paid or will accrue on any cash payable
upon surrender of any Certificate.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made with respect to Parent Shares
with a record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the Parent ADSs represented thereby,
if any, and all such dividends and other distributions shall be paid by Parent
to the Exchange Agent and shall be included in the Exchange Fund, until the
surrender of such Certificate in accordance with this Article II. Subject to the
effect of applicable escheat or similar laws, following surrender of any such
Certificate there shall be paid to the holder of the receipt evidencing whole
Parent ADSs issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole Parent
ADSs and (ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and with a payment date subsequent to such surrender payable with
respect to such whole Parent ADSs.
(d) No Further Ownership Rights in Company Common Stock. All
receipts evidencing Parent ADSs issued and cash paid upon the surrender for
exchange of Certificates in accordance with the terms of this Article II
(including any dividends or other distributions paid pursuant to Section 2.03(c)
and any cash in lieu of any fractional Parent ADS paid pursuant to Section
2.03(e)) shall be deemed to have been issued and paid in full satisfaction of
all rights pertaining to the shares of Company Common Stock formerly represented
by such Certificates, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective Time which may have been declared or made by the
Company with respect to such shares of Company Common Stock which remain unpaid
at the Effective Time. At the close of business on the day on which the
Effective Time occurs, the stock transfer books of the Company shall be closed,
and there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Company Common Stock that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation or the
Exchange Agent for transfer or any other reason, they shall be canceled and
exchanged as provided in this Article II.
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(e) No Fractional Shares. (i) No certificates or scrip
representing, or receipts evidencing, fractional Parent ADSs shall be issued
upon the surrender for exchange of Certificates, no dividend or distribution
with respect to Parent Shares shall relate to such fractional shares interests
and such fractional share interests shall not entitle the owner thereof to vote
or to any rights of a stockholder of Parent.
(ii) Notwithstanding any other provision of this Agreement, each
holder of shares of Company Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a
Parent ADS (after taking into account all such shares held by such
holder) shall receive, in lieu thereof, cash (without interest) in an
amount, less the amount of any withholding taxes that may be required
thereon, equal to such fractional part of a Parent ADS (rounded to the
fourth decimal place) multiplied by the Average Closing Price.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund that remains undistributed to the holders of the Certificates for 12 months
after the Effective Time shall be delivered to Parent, upon demand, and any
holders of the Certificates who have not theretofore complied with this Article
II shall thereafter look only to Parent for, and, subject to Section 2.03(g),
Parent shall remain liable for, payment of their claim for the Merger
Consideration, certain dividends and other distributions in accordance with
Section 2.03(c) and any cash in lieu of any fractional Parent ADS in accordance
with Section 2.03(e).
(g) No Liability. None of Parent, Sub, the Company or the
Exchange Agent shall be liable to any person in respect of any receipts
evidencing Parent ADSs (or any dividends or distributions with respect thereto)
or cash from the Exchange Fund, in each case delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificate shall not have been surrendered prior to three years after the
Effective Time (or immediately prior to such earlier date on which any amounts
payable pursuant to this Article II would otherwise escheat to or become the
property of any Governmental Entity), any such amounts shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest
any cash included in the Exchange Fund, as directed by Parent, on a daily basis;
provided that no
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such investment or loss thereon shall affect the amounts payable to the
Company's stockholders pursuant to this Article II. Any interest and other
income resulting from such investments shall be the property of, and shall be
paid to, Parent, and Parent shall be responsible for paying all taxes with
respect to such interest and other income.
(i) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent, the posting by such person of a bond in such reasonable amount as Parent
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent shall issue in exchange for such
lost, stolen or destroyed Certificate the applicable Merger Consideration with
respect thereto, certain dividends and other distributions in accordance with
Section 2.03(c) and any cash in lieu of any fractional Parent ADS in accordance
with Section 2.03(e).
(j) Withholding Rights. Parent, Sub or the Exchange Agent shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as Parent, Sub or the Exchange Agent is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld and
paid over to the appropriate taxing authority by Parent, Sub or the Exchange
Agent, such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the shares of Company Common Stock in
respect of which such deduction and withholding was made by Parent, Sub or the
Exchange Agent.
SECTION 2.04. Elections. (a) Each person who, on or prior to the
Election Date referred to in Section 2.04(b), is a record holder of shares of
Company Common Stock (which for this purpose shall be deemed to include an
authorized representative of the persons entitled to receive the 2,500,000
shares of Company Common Stock reserved for issuance pursuant to the Stipulation
of Settlement in the Company's class action and derivative lawsuits) shall be
entitled, with respect to all or any portion of such shares, to make an
unconditional Share Election or an unconditional Cash Election, in each case
specifying that number of shares of Company Common Stock such holder desires to
have converted into the Share Consideration and that number of shares of Company
Common Stock such holder desires to have converted into the Cash
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Consideration, as applicable, on or prior to such Election Date, on the basis
hereinafter set forth.
(b) Parent shall prepare a form of election, which form shall be
subject to the reasonable approval of the Company (the "Form of Election") and
shall be mailed with the Proxy Statement to the record holders of Company Common
Stock as of the record date for the Stockholders Meeting, which Form of Election
shall be used by each record holder of shares of Company Common Stock who wishes
to elect to receive the Share Consideration or the Cash Consideration, as
applicable, for any or all shares of Company Common Stock held by such holder.
The Company shall use all reasonable efforts to make the Form of Election and
the Proxy Statement available to all persons who become record holders of
Company Common Stock during the period between such record date and the Election
Date and to the authorized representative of the persons entitled to receive the
2,500,000 shares of Company Common Stock reserved for issuance pursuant to the
Stipulation of Settlement in the Company's class action and derivative lawsuits.
Any such holder's (and such authorized representative's) election to receive the
Share Consideration or the Cash Consideration, as applicable, shall have been
properly made only if the Exchange Agent shall have received at its designated
office, by 5:00 p.m., New York City time, on the business day immediately
preceding the date of the Stockholders Meeting (the "Election Date"), a Form of
Election properly completed and signed and (other than in the case of such
authorized representative) accompanied by Certificates for the shares of Company
Common Stock to which such Form of Election relates, duly endorsed in blank or
otherwise in a form acceptable for transfer on the books of the Company (or
accompanied by an appropriate guarantee of delivery of such Certificates as set
forth in such Form of Election from a firm that is a member of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office or
correspondent in the United States).
(c) Any Form of Election may be revoked, by the stockholder who
submitted such Form of Election to the Exchange Agent, only by written notice
received by the Exchange Agent (i) prior to 5:00 p.m., New York City time, on
the Election Date or (ii) after such time, if (and only to the extent that) the
Exchange Agent is legally required to permit revocations and only if the
Effective Time shall not have occurred prior to such date. In addition, all
Forms of Election shall automatically be revoked if the Exchange Agent is
notified in writing by Parent and the Company that the Merger has been
abandoned. If a Form of Election is revoked, the Certificate or Certificates (or
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guarantees of delivery, as appropriate) for the shares of Company Common Stock
to which such Form of Election relates shall be promptly returned to the
stockholder that submitted the same to the Exchange Agent.
(d) The determination of the Exchange Agent in its sole
discretion shall be binding as to whether or not elections to receive the Share
Consideration or the Cash Consideration have been properly made or revoked
pursuant to this Section 2.04 with respect to shares of Company Common Stock and
when elections and revocations were received by it. If no Form of Election is
received with respect to shares of Company Common Stock, or if the Exchange
Agent determines that any election to receive the Share Consideration was not
properly made with respect to shares of Company Common Stock, the holder of such
shares shall be treated by the Exchange Agent as having submitted a Cash
Election with respect to such shares and, subject to Section 2.05, such shares
shall be converted at the Effective Time into the right to receive the Cash
Consideration. The Exchange Agent shall also make all computations as to the
proration contemplated by Section 2.05, and absent manifest error any such
computation shall be conclusive and binding on the holders of shares of Company
Common Stock. The Exchange Agent may, with the mutual agreement of Parent and
the Company, make such rules as are consistent with this Section 2.04 for the
implementation of the elections provided for herein as shall be necessary or
desirable fully to effect such elections and the provisions of this Section
2.04.
SECTION 2.05. Proration. (a) As is more fully set forth below,
the maximum aggregate number of Parent Shares to be issued to holders of Company
Common Stock pursuant to this Article II (the "Share Cap") shall be equal to
that number of Parent Shares having a value (calculated based on the Average
Closing Price) equal to the product of (x) 0.5 and (y) the aggregate Merger
Consideration (calculated by multiplying the aggregate number of outstanding
shares of Company Common Stock as of the Effective Time (excluding any shares of
Company Common Stock to be canceled pursuant to Section 2.01(b)) by the Cash
Consideration).
(b) As is more fully set forth below, the maximum aggregate
amount of cash to be paid to holders of Company Common Stock pursuant to this
Article II (the "Cash Cap") shall be equal to the product of (x) 0.5 and (y) the
aggregate Merger Consideration (calculated by multiplying the aggregate number
of outstanding shares of Company Common Stock as of the Effective Time
(excluding any shares of
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Company Common Stock to be canceled pursuant to Section 2.01(b)) by the Cash
Consideration).
(c) In the event that the aggregate number of Parent Shares
subject to Share Elections received by the Exchange Agent (the "Requested Share
Amount") exceeds the Share Cap, each holder of Company Common Stock that has
made a Share Election shall receive, for each share of Company Common Stock for
which a Share Election has been made, (x) a number of Parent Shares (in the form
of Parent ADSs) equal to the product of the Exchange Ratio and the Share
Proration Factor (such product, the "Prorated Share Amount") and (y) cash in an
amount equal to the product of (A) the Exchange Ratio minus the Prorated Share
Amount and (B) the Average Closing Price. The "Share Proration Factor" shall be
a fraction, the numerator of which is the Share Cap and the denominator of which
is the Requested Share Amount.
(d) In the event that the aggregate amount of cash subject to
Cash Elections received (or deemed to have been received in accordance with
Section 2.04(d)) by the Exchange Agent (the "Requested Cash Amount") exceeds the
Cash Cap, each holder making a Cash Election (and each holder who is deemed to
have made a Cash Election pursuant to Section 2.04(d)) shall receive, for each
share of Company Common Stock with respect to which a Cash Election has been
made, (x) cash in an amount equal to the product of the Cash Consideration and a
fraction, the numerator of which is the Cash Cap and the denominator of which is
the Requested Cash Amount (such product, the "Prorated Cash Amount") and (y) a
number of Parent Shares (in the form of Parent ADSs) equal to a fraction, the
numerator of which is equal to the Cash Consideration minus the Prorated Cash
Amount and the denominator of which is the Average Closing Price.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company.
Except as set forth on the disclosure schedule (each section of which qualifies
the correspondingly numbered representation and warranty or covenant to the
extent specified therein and such other representations and warranties or
covenants to the extent a matter in such section is disclosed in such a way as
to make its relevance to the information called for by such other representation
and warranty or covenant reasonably apparent) delivered by the Company to Parent
prior to the execution of this
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Agreement (the "Company Disclosure Schedule"), the Company represents and
warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The Company and
each of its subsidiaries is a corporation or other legal entity duly
organized, validly existing and in good standing (with respect to
jurisdictions which recognize such concept) under the laws of the
jurisdiction in which it is organized and has the requisite corporate or
other power, as the case may be, and authority to carry on its business
as now being conducted. The Company and each of its subsidiaries is duly
qualified or licensed to do business and is in good standing (with
respect to jurisdictions which recognize such concept) in each
jurisdiction in which the nature of its business or the ownership,
leasing or operation of its assets makes such qualification or licensing
necessary, except for those jurisdictions where the failure to be so
qualified or licensed or to be in good standing individually or in the
aggregate has not had and could not reasonably be expected to have a
material adverse effect on the Company. The Company has made available
to Parent prior to the execution of this Agreement complete and correct
copies of its certificate of incorporation and by-laws, as amended to
the date of this Agreement.
(b) Subsidiaries. Section 3.01(b) of the Company Disclosure
Schedule sets forth a true and complete list of each of the Company's
subsidiaries. All the outstanding shares of capital stock of, or other
equity interests in, each subsidiary of the Company have been validly
issued, are fully paid and nonassessable and are owned directly or
indirectly by the Company, free and clear of all pledges, claims, liens,
charges, encumbrances, mortgages and security interests of any kind or
nature whatsoever (collectively, "Liens") and free of any restriction on
the right to vote, sell or otherwise dispose of such capital stock or
other ownership interests except restrictions under applicable law.
(c) Capital Structure. The authorized capital stock of the
Company consists of 300,000,000 shares of Company Common Stock and
15,000,000 shares of preferred stock, par value $0.001 per share (the
"Company Preferred Stock"). At the close of business on May 17, 2001,
(i) 68,704,430 shares of Company Common Stock were issued and
outstanding; (ii) no shares of Company Common Stock were held by the
Company in its treasury; (iii) no shares of Company Preferred Stock were
issued
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or outstanding or were held by the Company in its treasury; (iv)
26,671,250 shares of Company Common Stock were reserved for issuance
pursuant to the Company's 1998 Equity Incentive Plan, 2000 Equity
Incentive Plan and Founders Stock Option Plan (such plans, collectively,
the "Company Stock Plans"), of which 12,147,489 shares were subject to
outstanding Stock Options); (v) 300,000 shares of Company Common Stock
were reserved for issuance pursuant to the Company's Employee Stock
Purchase Plan (the "ESPP"), of which 184,555 shares of Company Common
Stock had been issued and 36,697 shares of Company Common Stock were
subject to outstanding purchase rights under the ESPP (assuming ESPP
payroll withholdings as of May 17, 2001 and a purchase price of
$4.2234375); (vi) 5,475,000 shares of Company Common Stock were reserved
for issuance upon the exercise of the warrants (the "Warrants") subject
to the warrant agreements listed in Section 3.01(c) of the Company
Disclosure Schedule; and (vii) 2,500,000 shares of Company Common Stock
were reserved for issuance pursuant to the Stipulation of Settlement in
the Company's class action and derivative lawsuits. No shares of Company
Common Stock are owned by any subsidiary of the Company. Except as set
forth above and except for shares of Company Common Stock issued upon
the exercise of Stock Options or Warrants referenced above subsequent to
the close of business on May 17, 2001 and prior to the date of this
Agreement, as of the date of this Agreement no shares of capital stock
or other voting securities of the Company were issued, reserved for
issuance or outstanding. There are no outstanding stock appreciation
rights ("SARs") or rights (other than the Stock Options and purchase
rights under the ESPP) to receive shares of Company Common Stock on a
deferred basis or other rights that are linked to the value of shares of
Company Common Stock granted under the Company Stock Plans or otherwise.
Section 3.01(c) of the Company Disclosure Schedule sets forth a complete
and correct list, as of May 17, 2001, of each holder of outstanding
stock options or other rights to purchase or receive Company Common
Stock granted under the Company Stock Plans or otherwise (collectively,
the "Stock Options") and the Warrants, the number of shares of Company
Common Stock subject to each such Stock Option and Warrant, the name of
the Company Stock Plan pursuant to which such Stock Options were
granted, the grant dates, expiration dates and exercise prices of such
Stock Options and Warrants and the dates on which such Stock Options and
Warrants become vested. All (i) outstanding shares of Company Common
Stock in respect of which the Company has a right under
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specified circumstances to repurchase such shares at a fixed purchase
price and (ii) outstanding Stock Options, are evidenced by stock option
agreements and restricted stock purchase agreements in the forms
attached as Exhibit A to Section 3.01(c) of the Company Disclosure
Schedule, and no stock option agreement or restricted stock purchase
agreement contains terms that are inconsistent with such forms. No
bonds, debentures, notes or other indebtedness of the Company having the
right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stockholders of the
Company or any of its subsidiaries may vote are issued or outstanding or
subject to issuance. All outstanding shares of capital stock of the
Company are, and all shares which may be issued will be, when issued,
duly authorized, validly issued, fully paid and nonassessable and will
be delivered free and clear of all Liens (other than Liens created by or
imposed upon the holders thereof) and not subject to preemptive rights.
Except as set forth in this Section 3.01(c) (including pursuant to the
conversion or exercise of the securities referred to above), (x) there
are not issued, reserved for issuance or outstanding (A) any shares of
capital stock or other voting securities of the Company or any of its
subsidiaries (other than shares of capital stock or other voting
securities of such subsidiaries that are directly or indirectly owned by
the Company), (B) any securities of the Company or any of its
subsidiaries convertible into or exchangeable or exercisable for shares
of capital stock or other voting securities of, or other ownership
interests in, the Company or any of its subsidiaries or (C) any
warrants, calls, options or other rights to acquire from the Company or
any of its subsidiaries, and no obligation of the Company or any of its
subsidiaries to issue, any capital stock or other voting securities of,
or other ownership interests in, or any securities convertible into or
exchangeable or exercisable for any capital stock or other voting
securities of, or other ownership interests in, the Company or any of
its subsidiaries and (y) there are not any outstanding obligations of
the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any such securities or to issue, deliver or sell, or
cause to be issued, delivered or sold, any such securities. The Company
is not a party to any voting agreement with respect to the voting of any
such securities. As of the date of this Agreement, the Subject Shares
(as such term is defined in the Stockholder Agreement) represent more
than 50% of the shares of Company Common Stock outstanding.
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Section 3.01(c) of the Company Disclosure Schedule sets forth a complete
and correct list of all securities or other beneficial ownership
interests in any other entity beneficially owned, directly or
indirectly, by the Company, other than the capital stock of, or other
equity interests in, its subsidiaries.
(d) Authority; Noncontravention. The Company has all requisite
corporate power and authority to enter into this Agreement and, subject
to obtaining the Stockholder Approval, to consummate the transactions
contemplated by this Agreement. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated by this Agreement have been duly authorized by
all necessary corporate action on the part of the Company and no other
corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated
by this Agreement, subject, in the case of the Merger, to obtaining the
Stockholder Approval. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution
and delivery by Parent and Sub, constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms. The Board of Directors of the Company formed a special
committee of the Board of Directors of the Company, composed of Thomas
A. Heymann, Lawrence F. Probst III and Justice Howard B. Wiener (the
"Special Committee"), to consider this Agreement and the Stockholder
Agreement and the transactions contemplated hereby and thereby and to
make a recommendation with respect thereto to the entire Board of
Directors of the Company. The Special Committee, at a meeting duly
called and held at which all members of the Special Committee were
present either in person or by telephone, duly and unanimously (and
without any abstentions) adopted resolutions (i) approving and declaring
advisable this Agreement, (ii) declaring that it is in the best
interests of the Company's stockholders that the Company enter into this
Agreement and consummate the Merger on the terms and subject to the
conditions set forth in this Agreement, (iii) declaring that the
consideration to be paid to the Company's stockholders in the Merger is
fair to such stockholders, (iv) approving the Stockholder Agreement and
the transactions contemplated thereby and (v) recommending that the
Board of Directors of the Company approve this Agreement and the
Stockholder Agreement and the transactions contemplated hereby and
thereby and that the Board of Directors of the Company
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declare the advisability of this Agreement. After receiving and
considering such resolutions of the Special Committee, the Board of
Directors of the Company, at a meeting duly called and held at which all
directors of the Company were present either in person or by telephone,
duly and unanimously (and without any abstentions) adopted resolutions
(i) approving and declaring advisable this Agreement, (ii) declaring
that it is in the best interests of the Company's stockholders that the
Company enter into this Agreement and consummate the Merger on the terms
and subject to the conditions set forth in this Agreement, (iii)
declaring that the consideration to be paid to the Company's
stockholders in the Merger is fair to such stockholders, (iv) directing
that this Agreement be submitted to a vote at a meeting of the Company's
stockholders to be held as promptly as practicable following the date of
this Agreement, (v) recommending that such stockholders adopt this
Agreement and (vi) approving the Stockholder Agreement and the
transactions contemplated thereby, which resolutions have not been
subsequently rescinded, modified or withdrawn in any way. The execution
and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance by the
Company with the provisions of this Agreement will not, conflict with,
or result in any violation or breach of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancelation or acceleration of any obligation or to the
loss of a benefit under, or result in the creation of any Lien upon any
of the properties or assets of the Company or any of its subsidiaries
under, (i) the certificate of incorporation or by-laws of the Company or
the comparable organizational documents of any of its subsidiaries, (ii)
any loan or credit agreement, note, bond, mortgage, indenture, lease or
other contract, agreement, obligation, commitment, arrangement,
understanding, instrument, permit, concession, franchise, license or
similar authorization (each, a "Contract") to which the Company or any
of its subsidiaries is a party or otherwise applicable to the Company or
any of its subsidiaries or their respective properties or assets or
(iii) subject to the governmental filings and other matters referred to
in the following sentence, (A) any judgment, order or decree or (B) any
statute, law, ordinance, rule or regulation, in each case applicable to
the Company or any of its subsidiaries or their respective properties or
assets, other than, in the case of clauses (ii) and (iii), any such
conflicts, violations, breaches,
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defaults, rights, losses or Liens that individually or in the aggregate
could not reasonably be expected to (x) have a material adverse effect
on the Company, (y) impair in any material respect the ability of the
Company to perform its obligations under this Agreement or (z) prevent
or materially impede, interfere with, hinder or delay the consummation
of the transactions contemplated by this Agreement. No consent,
approval, order or authorization of, action by or in respect of, or
registration, declaration or filing with, any Federal, state, local or
foreign government, any court, administrative, regulatory or other
governmental agency, commission or authority or any non-governmental
self-regulatory agency, commission or authority (each a "Governmental
Entity") is required to be obtained or made by or with respect to the
Company or any of its subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the
Company of the transactions contemplated by this Agreement, except for
(1) the filing of a premerger notification and report form by the
Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and any applicable filings and approvals
under similar foreign antitrust or competition laws and regulations
("Foreign Antitrust Laws"); (2) the filing with the Securities and
Exchange Commission (the "SEC") of (A) a proxy statement relating to the
adoption of this Agreement by the Company's stockholders at the
Stockholders Meeting (such proxy statement, as amended or supplemented
from time to time, the "Proxy Statement"), and (B) such reports under
Section 13(a), 13(d), 15(d) or 16(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as may be required in connection
with this Agreement and the Stockholder Agreement and the transactions
contemplated by this Agreement and the Stockholder Agreement; (3) the
filing of the Certificate of Merger with the Secretary of State of the
State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company or any of its
subsidiaries is qualified to do business; and (4) such other consents,
approvals, orders, authorizations, registrations, declarations and
filings the failure of which to be made or obtained individually or in
the aggregate could not reasonably be expected to (x) have a material
adverse effect on the Company, (y) impair in any material respect the
ability of the Company to perform its obligations under this Agreement
or (z) prevent or materially impede, interfere with, hinder or delay the
consummation of the transactions contemplated by this Agreement.
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(e) SEC Documents; Undisclosed Liabilities. The Company has filed
all required reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) with
the SEC since July 20, 1999 (together with the Company's Registration
Statement on Form S-1 (Registration No. 333-78545), the "Company SEC
Documents"). As of their respective dates, the Company SEC Documents
complied in all material respects with the requirements of the
Securities Act of 1933 (the "Securities Act") or the Exchange Act, as
the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Documents, and none of the
Company SEC Documents when filed contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. Except
to the extent that information contained in any Company SEC Document has
been revised or superseded by a later filed Company SEC Document, none
of the Company SEC Documents contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents comply
as to form, as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto (the
"Accounting Rules"), have been prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated
in the notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal recurring year- end audit
adjustments). Except (i) as reflected in the most recent financial
statements contained in the Company Filed SEC Documents or in the notes
thereto or (ii) for liabilities incurred in connection with this
Agreement or the transactions contemplated hereby, neither the Company
nor any of its subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) which,
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individually or in the aggregate, have had or could reasonably be
expected to have a material adverse effect on the Company.
(f) Information Supplied. (i) None of the information supplied or
to be supplied by the Company specifically for inclusion or
incorporation by reference in (i) the registration statement on Form F-4
to be filed with the SEC by Parent in connection with the issuance of
Parent Shares in the Merger (the "Form F-4") will, at the time the Form
F-4 is filed with the SEC, at any time it is amended or supplemented and
at the time it becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading or (ii) the Proxy Statement will, at the date it
is first mailed to the Company's stockholders or at the time of the
Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy
Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations
promulgated thereunder. No representation or warranty is made by the
Company with respect to statements made or incorporated by reference in
the Proxy Statement based on information supplied by Parent specifically
for inclusion or incorporation by reference in the Proxy Statement.
(ii) The information set forth in Section 3.01(f)(ii) of the
Company Disclosure Schedule is true and correct.
(g) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement or the transactions
contemplated hereby and except as disclosed in the Company SEC Documents
filed and publicly available prior to the date of this Agreement (the
"Company Filed SEC Documents"), since the date of the most recent
audited financial statements included in the Company Filed SEC
Documents, the Company and its subsidiaries have conducted their
business only in the ordinary course, and since such date there has not
been (1) any material adverse change with respect to the Company, (2)
any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with
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respect to any of the Company's capital stock, (3) any split,
combination or reclassification of any of the Company's capital stock or
any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of
the Company's capital stock, (4) (A) any granting by the Company or any
of its subsidiaries to any current or former director, consultant,
executive officer or other employee of the Company or its subsidiaries
of any increase in compensation, bonus or other benefits, except for
normal increases in cash compensation and the granting of Stock Options,
in each case prior to the date of this Agreement in the ordinary course
of business consistent with past practice, or as was required under
employment agreements in effect as of the date of the most recent
audited financial statements included in the Company Filed SEC
Documents, (B) any granting by the Company or any of its subsidiaries to
any such current or former director, consultant, executive officer or
employee of any increase in severance or termination pay, except as was
required under employment agreements in effect as of the date of the
most recent audited financial statements included in the Company Filed
SEC Documents, (C) any entry by the Company or any of its subsidiaries
into, or any amendment of, any Benefit Agreement or (D) any amendment
to, or modification of, any Stock Option, (5) except insofar as may have
been required by a change in GAAP, any change in accounting methods,
principles or practices by the Company or any of its subsidiaries
materially affecting their respective assets, liabilities or businesses,
(6) any tax election that individually or in the aggregate could
reasonably be expected to adversely affect in any material respect the
tax liability or tax attributes of the Company or any of its
subsidiaries or (7) any settlement or compromise of any material income
tax liability.
(h) Litigation. Section 3.01(h) of the Company Disclosure
Schedule sets forth, as of the date of this Agreement, a complete and
accurate list of (i) all suits, actions and proceedings pending or, to
the knowledge of the Company or any of its subsidiaries, threatened
against the Company or any of its subsidiaries and (ii) all judgments,
decrees, injunctions, rules and orders of any Governmental Entity or
arbitrator outstanding against the Company or any of its subsidiaries.
Section 3.01(h) of the Company Disclosure Schedule sets forth, as of the
date of this Agreement, a complete and accurate list of each settlement
or similar agreement in respect of any pending or threatened suit,
action, proceeding,
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judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator which the Company or any of its subsidiaries has entered
into or become bound by since December 31, 1998. Section 3.01(h) of the
Company Disclosure Schedule sets forth a complete and accurate list of
all legal fees in excess of $1,000,000 owed by the Company as of the
date of this Agreement.
(i) Compliance with Applicable Laws. (i) The Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders,
registrations and approvals of all Governmental Entities (collectively,
"Permits") that are required for them to own, lease or operate their
assets and to carry on their businesses as now conducted, except for
failures to hold Permits that individually or in the aggregate have not
had and could not reasonably be expected to have a material adverse
effect on the Company. The Company and its subsidiaries are in
compliance with the terms of the Permits and all applicable statutes,
laws, ordinances, rules and regulations, except for instances of
noncompliance or possible noncompliance that individually or in the
aggregate have not had and could not reasonably be expected to have a
material adverse effect on the Company. The Merger, in and of itself,
would not cause the revocation or cancelation of any Permit that
individually or in the aggregate could reasonably be expected to have a
material adverse effect on the Company. Section 3.01(i) of the Company
Disclosure Schedule sets forth, as of the date of this Agreement, a
complete and accurate list of all actions, demands, requirements or
investigations by any Governmental Entity with respect to the Company or
any of its subsidiaries or any of their respective properties. Other
than the matters set forth on Section 3.01(i) of the Company Disclosure
Schedule, as of the Closing Date there will not be any action, demand,
requirement or investigation by any Governmental Entity with respect to
the Company or any of its subsidiaries or any of their respective
properties pending or, to the knowledge of the Company, threatened that
individually or in the aggregate has had or could reasonably be expected
to have a material adverse effect on the Company.
(ii) To the Company's knowledge, there have been no Releases of
any Hazardous Materials at, on or under any facility or property
currently or formerly owned, leased, or operated by the Company or any
of its subsidiaries that, individually or in the aggregate, have had or
could reasonably be expected to have a
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material adverse effect on the Company. Neither the Company nor any of
its subsidiaries is the subject of any pending or, to the Company's
knowledge, threatened investigation or proceeding under Environmental
Law relating in any manner to the off-site treatment, storage or
disposal of any Hazardous Materials generated at any facility or
property currently or formerly owned, leased or operated by the Company
or any of its subsidiaries. Neither the Company nor any of its
subsidiaries has assumed or otherwise agreed to be responsible for any
liabilities arising under Environmental Law. The term "Environmental
Law" means any and all applicable laws or regulations or other
requirements of any Governmental Entity concerning the protection of
human health or the environment. The term "Hazardous Materials" means
all explosive or regulated radioactive materials, hazardous or toxic
substances, wastes or chemicals, petroleum (including crude oil or any
fraction thereof) or petroleum distillates, asbestos or
asbestos-containing materials, and all other materials or chemicals
regulated under any Environmental Law. The term "Release" means any
spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching, emanation or migration in, into, onto,
or through the environment.
(j) Absence of Changes in Benefit Plans. Except as disclosed in
the Company Filed SEC Documents, since the date of the most recent
audited financial statements included in the Company Filed SEC
Documents, there has not been any adoption or amendment by the Company
or any of its subsidiaries of any collective bargaining agreement or any
bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, thrift, savings, stock bonus, restricted stock,
cafeteria, paid time off, perquisite, fringe benefit, vacation,
severance, disability, death benefit, hospitalization, medical, welfare
benefit or other plan, arrangement or understanding (whether or not
legally binding) maintained, contributed to or required to be maintained
or contributed to by the Company, any of its subsidiaries, or any other
person or entity that, together with the Company, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (a "Commonly
Controlled Entity") providing benefits to any current or former
employee, officer, consultant or director of the Company or any of its
subsidiaries (collectively, the "Benefit Plans"), or any change in the
manner in which contributions to any Benefit Plans of the Company are
made or the basis on which such contributions are
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determined. Except as disclosed in the Company Filed SEC Documents,
there are no currently binding (1) employment, consulting, deferred
compensation, indemnification, severance or termination agreements or
similar arrangements or understandings between the Company or any of its
subsidiaries and any current or former employee, officer, consultant or
director of the Company or any of its subsidiaries or (2) agreements
between the Company or any of its subsidiaries and any current or former
employee, officer, consultant or director of the Company or any of its
subsidiaries, the benefits of which are contingent, or the terms of
which are materially altered, upon the occurrence of a transaction
involving the Company of a nature contemplated by this Agreement
(collectively, the "Benefit Agreements").
(k) ERISA Compliance; Excess Parachute Payments. (i) Section
3.01(k) of the Company Disclosure Schedule contains a list of each
Benefit Plan that is an "employee pension benefit plan" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (sometimes referred to herein as a "Pension Plan"),
"employee welfare benefit plan" (as defined in Section 3(1) of ERISA)
and all other Benefit Plans and Benefit Agreements. The Company has made
available to Parent true, complete and correct copies of (a) each
Benefit Plan and Benefit Agreement (or, in the case of any unwritten
Benefit Plan or Benefit Agreement, a description thereof), (b) the two
most recent annual reports on Form 5500 filed with the Internal Revenue
Service with respect to each Benefit Plan (if any such report was
required), (c) the most recent summary plan description for each Benefit
Plan for which such summary plan description is required and (d) each
trust agreement and insurance or group annuity contract relating to any
Benefit Plan.
(ii) Each Benefit Plan has been administered in accordance with
its terms in all material respects. The Company, its subsidiaries and
each Benefit Plan are in compliance in all material respects with the
applicable provisions of ERISA and the Code, and all other applicable
laws, including laws of foreign jurisdictions. All Pension Plans
intended to be tax-qualified have either received a favorable
determination letter from the Internal Revenue Service to the effect
that such Pension Plans are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively, of the Code, or
the remedial amendment period under Section 401(b) of the Code has not
expired, and no such determination letter has been
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revoked nor, to the knowledge of the Company, has revocation been
threatened, nor has any event occurred since the date of its most recent
determination letter, application therefor or Pension Plan's adoption
that would adversely affect its qualification or materially increase its
costs. All Pension Plans required to have been approved by any foreign
Governmental Entity have been so approved; no such approval has been
revoked (or, to the knowledge of the Company, has revocation been
threatened) nor has any event occurred since the date of the most recent
approval or application therefor relating to any such Pension Plan that
would materially affect any such approval relating thereto or materially
increase the costs relating thereto. The Company has delivered to Parent
a true and complete copy of the most recent determination letter
received with respect to each Pension Plan, as well as a true and
complete copy of each pending application for a determination letter, if
any.
(iii) No Pension Plan is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA (a "Multiemployer Pension Plan")
or is subject to the provisions of Title IV of ERISA, and neither the
Company nor any Commonly Controlled Entity could have any liability
under Title IV of ERISA. None of the Company, any of its subsidiaries,
any officer of the Company or any of its subsidiaries or any of the
Benefit Plans which are subject to ERISA, including the Pension Plans,
any trusts created thereunder or any trustee or administrator thereof,
has engaged in a "prohibited transaction" (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) or any other breach of
fiduciary responsibility that could subject the Company, any of its
subsidiaries or any officer of the Company or any of its subsidiaries to
the tax or penalty on prohibited transactions imposed by such Section
4975 or to any liability under Section 502(i) or 502(l) of ERISA. None
of such Benefit Plans and trusts has been terminated. All contributions
and premiums and benefit payments required to be made under the terms of
any Benefit Plan as of the date hereof have been timely made or have
been reflected on the most recent consolidated balance sheet included in
the Company Filed SEC Documents.
(iv) All material reports, returns and similar documents with
respect to all Benefit Plans required to be filed with any Governmental
Entity or distributed to any Benefit Plan participant have been duly and
timely filed or distributed. None of the Company or any of its
subsidiaries has received notice of, and to the
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knowledge of the Company, there are no investigations by any
Governmental Entity with respect to, termination proceedings or other
claims (except claims for benefits payable in the normal operation of
the Benefit Plans), suits or proceedings against or involving any
Benefit Plan or asserting any rights or claims to benefits under any
Benefit Plan that could give rise to any liability, and, to the
knowledge of the Company, there are not any facts that could give rise
to any liability in the event of any such investigation, claim, suit or
proceeding.
(v) The Company and its subsidiaries, with respect to each
Benefit Plan that is a "group health plan" (as such term is defined in
Section 5000(b)(1) of the Code), comply in all material respects with
the applicable requirements of Section 4980B(f) of the Code. Neither the
Company nor any of its subsidiaries has any obligations for retiree
health or life insurance benefits under any Benefit Plan or Benefit
Agreement.
(vi) Except as expressly contemplated by this Agreement or as set
forth in any Employment Agreement, none of the execution and delivery of
this Agreement, the consummation of the Merger or any other transaction
contemplated by this Agreement and the Stockholder Agreement (including
as a result of any termination of employment following the Effective
Time) will (x) entitle any employee, officer, consultant or director of
the Company or any of its subsidiaries to severance or termination pay,
(y) accelerate the time of payment or vesting or trigger any payment or
funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of the Benefit Plans or Benefit
Agreements or (z) result in any breach or violation of, or a default
under, any of the Benefit Plans or Benefit Agreements.
(vii) Other than payments or benefits that may be made or
provided to the persons listed in Section 3.01(k)(vii) of the Company
Disclosure Schedule (the "Primary Company Executives"), no amount or
other entitlement or economic benefit that could be received (whether in
cash or property or the vesting of property) as a result of the Merger
or any other transaction contemplated by this Agreement or the
Stockholder Agreement (including as a result of termination of
employment on or following the Effective Time) by or for the benefit of
any employee, officer, director or consultant of the Company or any of
its
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affiliates who is a "disqualified individual" (as such term is defined
in proposed Treasury Regulation Section 1.280G-1) under any Benefit Plan
or Benefit Agreement or otherwise would be characterized as an "excess
parachute payment" (as defined in Section 280G(b)(1) of the Code), and
no disqualified individual is entitled to receive any additional payment
from the Company or any of its subsidiaries, the Surviving Corporation
or any other person in the event that the excise tax under Section 4999
of the Code is imposed on such disqualified individual. Set forth in
Section 3.01(k)(vii) of the Company Disclosure Schedule is (a) the
estimated maximum amount that could be paid to each Primary Company
Executive as a result of the Merger and the other transactions
contemplated by this Agreement and the Stockholder Agreement based upon
the assumptions set forth therein (including as a result of a
termination of employment on or following the Effective Time) under all
Benefit Plans and Benefit Agreements and (b) the "base amount" (as
defined in Section 280G(b)(3) of the Code) for each Primary Company
Executive calculated as of the date of this Agreement.
(viii) The Company and its subsidiaries are in compliance in all
material respects with all Federal, state and local requirements
regarding employment. Neither the Company nor any of its subsidiaries is
a party to any collective bargaining or other labor union contract
applicable to persons employed by the Company or any of its subsidiaries
and no collective bargaining agreement is being negotiated by the
Company or any of its subsidiaries. As of the date of this Agreement,
there is no labor dispute, strike or work stoppage against the Company
or any of its subsidiaries pending or, to the knowledge of the Company,
threatened which may interfere with the respective business activities
of the Company or its subsidiaries. As of the date of this Agreement, to
the knowledge of the Company, none of the Company, any of its
subsidiaries or any of their respective representatives or employees has
committed an unfair labor practice in connection with the operation of
the respective businesses of the Company or any of its subsidiaries, and
there is no charge or complaint against the Company or any of its
subsidiaries by the National Labor Relations Board or any comparable
governmental agency pending or threatened in writing.
(ix) None of the Company nor any of its subsidiaries has any
material liability or obligations, including under or on account of a
Benefit Plan,
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arising out of the hiring of persons to provide services to the Company
or any of its subsidiaries and treating such persons as consultants or
independent contractors and not as employees of the Company or any of
its subsidiaries.
(l) Taxes. (i) Each of the Company and its subsidiaries has
timely filed all tax returns and reports required to be filed by it, and
all such returns and reports are true, complete and correct in all
material respects. Each of the Company and its subsidiaries has timely
paid all taxes required to be paid by it and withheld and timely paid to
the proper taxing authority all taxes required to be withheld. The most
recent financial statements included in the Company Filed SEC Documents
reflect an adequate reserve for all taxes payable by the Company and its
subsidiaries for all taxable periods and portions thereof accrued
through the date of such financial statements.
(ii) No deficiencies for any taxes have been assessed or, to the
knowledge of the Company, proposed or asserted against the Company or
any of its subsidiaries that are not adequately reserved for in the most
recent financial statements included in the Company Filed SEC Documents.
All assessments for taxes due with respect to any concluded litigation
have been fully paid or have been adequately reserved for in the most
recent financial statements included in the Company Filed SEC Documents.
The statute of limitations for the assessment or collection of tax
liability has not expired with respect to any income tax returns of the
Company or any of its subsidiaries. There is no currently effective
agreement or other document extending, or having the effect of
extending, the period of assessment or collection of any taxes of the
Company or any of its subsidiaries and no power of attorney with respect
to taxes has been executed or filed with any taxing authority. No tax
returns of the Company or any of its subsidiaries are currently under
audit or examination by any taxing authority.
(iii) There are no material Liens for taxes (other than for taxes
not yet due and payable) on the assets of the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries is bound
by any agreement with respect to taxes.
(iv) Neither the Company nor any of its subsidiaries has been a
United States real property holding corporation within the meaning of
Section
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897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
(v) Neither the Company nor any of its subsidiaries has taken any
action or knows of any fact, agreement, plan or other circumstance that
is reasonably likely to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(vi) The Benefit Plans and other employee compensation
arrangements in effect as of the date of this Agreement have been
designed so that the disallowance of a material deduction under Section
162(m) of the Code for employee remuneration will not apply to any
amounts paid or payable by the Company or any of its subsidiaries under
any such plan or arrangement and, to the knowledge of the Company, no
fact or circumstance exists that is reasonably likely to cause such
disallowance to apply to any such amounts.
(vii) Neither the Company nor any of its subsidiaries has
constituted either a "distributing corporation" or a "controlled
corporation" (within the meaning of Section 355(a)(1)(A) of the Code) in
a distribution of stock qualifying for tax-free treatment under Section
355 of the Code (x) in the two years prior to the date of this Agreement
or (y) in a distribution which could otherwise constitute part of a
"plan" or "series of related transactions" (within the meaning of
Section 355(e) of the Code) in conjunction with the Merger.
(viii) As used in this Agreement, "taxes" shall include all (x)
U.S. Federal, state, local or foreign income, property, sales, excise
and other taxes or similar governmental charges, including any interest,
penalties or additions with respect thereto, (y) liability for the
payment of any amounts of the type described in (x) as a result of being
a member of an affiliated, consolidated, combined or unitary group, and
(z) liability for the payment of any amounts as a result of being party
to any tax sharing (or similar) agreement or as a result of any express
or implied obligation to indemnify any other person with respect to the
payment of any amounts of the type described in clause (x) or (y).
(m) Voting Requirements. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock at the
Stockholders Meeting to
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adopt this Agreement (the "Stockholder Approval") is the only vote of
the holders of any class or series of the Company's capital stock
necessary to approve and adopt this Agreement and the transactions
contemplated hereby.
(n) State Takeover Statutes. The approval of this Agreement and
the Merger and the Stockholder Agreement and the transactions
contemplated by this Agreement and the Stockholder Agreement by the
Special Committee and the Board of Directors of the Company referred to
in Section 3.01(d) constitutes approval of this Agreement and the Merger
and the Stockholder Agreement and the transactions contemplated by this
Agreement and the Stockholder Agreement by the Special Committee and the
Board of Directors of the Company under the provisions of Section 203 of
the DGCL and represents all the action necessary to ensure that the
restrictions contained in Section 203 of the DGCL do not apply to Parent
or Sub in connection with the Merger and the other transactions
contemplated by this Agreement and the Stockholder Agreement. To the
knowledge of the Company, except for Section 203 of the DGCL (which has
been rendered inapplicable), no state takeover statute is applicable to
the Merger or the other transactions contemplated by this Agreement and
by the Stockholder Agreement.
(o) Brokers; Schedules of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than Credit
Suisse First Boston Corporation, the fees and expenses of which will be
paid by the Company, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made
by or on behalf of the Company. The Company has furnished to Parent true
and complete copies of all agreements under which any such fees or
expenses are payable and all indemnification and other agreements
related to the engagement of the persons to whom such fees are payable.
The Company's good faith estimates of the fees and expenses of any
accountant, broker, financial advisor, consultant, legal counsel or
other person retained by the Company in connection with this Agreement
or the transactions contemplated hereby incurred or to be incurred by
the Company in connection with this Agreement and the transactions
contemplated by this Agreement have been previously provided to Parent
in writing, identified by category of advisor.
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(p) Opinion of Financial Advisor. The Company has received the
opinion of Credit Suisse First Boston Corporation, as of the date of
this Agreement, to the effect that, as of such date, the consideration
provided for in the Merger is fair to the holders of Company Common
Stock from a financial point of view. A signed copy of such opinion set
forth in writing and dated as of the date of this Agreement will be
delivered to Parent promptly after the date of this Agreement.
(q) Intellectual Property. (i) A complete and accurate list of
all trademarks, service marks, copyrights and patents, and all
applications for registration and registrations for such trademarks,
copyrights and patents (all of the foregoing, together with all trade
names, brands, trade secrets, confidential and proprietary information,
formulas, designs, proprietary rights, know-how and processes
collectively hereinafter referred to as the "Intellectual Property
Rights") owned by or licensed to or used by the Company, and all
licenses and contracts with respect to the foregoing, is set forth in
Section 3.01(q) of the Company Disclosure Schedule. The Company has
furnished or granted access to Parent (or with respect to any patents or
patent applications, to Parent's outside patent counsel) true and
complete copies of each of the foregoing and, to the Company's
knowledge, all the material Intellectual Property Rights owned by or
licensed to the Company are valid, enforceable and in full force and
effect. The Company and its subsidiaries own, free and clear of all
Liens, or are validly licensed or otherwise have the right to use, all
the Intellectual Property Rights which are material to the conduct of
the business of the Company and its subsidiaries.
(ii) To the knowledge of the Company, neither the Company nor any
of its subsidiaries has infringed upon or misappropriated any
Intellectual Property Rights or other proprietary information of any
other person, except for instances of infringement or misappropriation
that individually or in the aggregate have not had and could not
reasonably be expected to have a material adverse effect on the Company.
As of the date of this Agreement, neither the Company nor any of its
subsidiaries has received any written charge, complaint, claim, demand
or notice alleging any such infringement or misappropriation (including
any claim that the Company or any such subsidiary must license or
refrain from using any Intellectual Property Rights or other proprietary
information of any other person)
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which has not been settled or otherwise fully resolved. To the Company's
knowledge, no other person has infringed upon or misappropriated any
Intellectual Property Rights of the Company or any of its subsidiaries,
except for instances of infringement or misappropriation that
individually or in the aggregate have not had and could not reasonably
be expected to have a material adverse effect on the Company.
(iii) As the business of the Company and its subsidiaries is
presently conducted and proposed to be conducted without giving effect
to any change with respect thereto that may be made by Parent, to the
Company's knowledge, Parent's use after the Closing of the Intellectual
Property Rights which are material to the conduct of the business of the
Company and its subsidiaries taken as a whole will not infringe upon or
misappropriate the Intellectual Property Rights or other proprietary
information of any other person.
(iv) The Company has taken, and until the Closing Date, the
Company will take all steps reasonably necessary to preserve the
Company's legal rights in, and the secrecy of, all its Intellectual
Property Rights. In addition, to the Company's knowledge, each employee,
agent, consultant or contractor who has materially contributed to or
participated in the creation or development of any copyrightable,
patentable or trade secret material on behalf of the Company, any of its
subsidiaries or any predecessor-in-interest thereto either (x) is a
party to a "work-for-hire" agreement under which the Company or such
subsidiary is deemed to be the original owner/author of all property
rights therein in substantially the form attached as Exhibit A to
Section 3.01(q) of the Company Disclosure Schedule, or (y) has executed
an assignment or an agreement to assign in favor of the Company, such
subsidiary or such predecessor-in-interest, as applicable, all right,
title and interest in such material in substantially the form attached
as Exhibit B to Section 3.01(q) of the Company Disclosure Schedule.
(r) Contracts. Except for Contracts filed as exhibits to the
Company Filed SEC Documents and Contracts that have previously expired
or been terminated, none of the Company or any of its
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subsidiaries is a party to or bound by, and none of their respective
properties or assets are bound by or subject to, any written or oral:
(i) material Contract not made in the ordinary course of business
entered into prior to the date of this Agreement;
(ii) Contract pursuant to which the Company or any of its
subsidiaries has agreed not to compete with any person or to engage in
any activity or business, or pursuant to which any benefit is required
to be given or lost as a result of so competing or engaging;
(iii) Contract pursuant to which the Company or any of its
subsidiaries is restricted in any material respect in the development,
marketing or distribution of their respective products or services;
(iv) Contract with (A) any affiliate of the Company or any of its
subsidiaries or (B) any current or former director or officer of the
Company or any of its subsidiaries or of any affiliate of the Company or
any of its subsidiaries or any of the 25 most highly compensated
employees of the Company and its subsidiaries, taken as a whole, or (C)
any affiliate of any such person (other than (w) contracts on arm's-
length terms with companies whose common stock is publicly traded, (x)
offer letters providing solely for "at will" employment, (y) invention
assignment and confidentiality agreements relating to the assignment of
inventions to the Company or any of its subsidiaries not involving the
payment of money and (z) Benefit Plans referred to in Section 3.01(j));
(v) license granted by the Company or any of its subsidiaries
pursuant to which the Company or any of its subsidiaries has agreed to
refrain from granting license rights to any other person;
(vi) Contract under which the Company or any of its subsidiaries
has (i) incurred any indebtedness that is currently owing or (ii) given
any guarantee in respect of indebtedness, in each case having an
aggregate principal amount in excess of $100,000;
(vii) material Contract that requires consent, approval or waiver
of or notice to a third party in the event of or with respect to the
Merger, including in order to avoid termination of or a loss of material
benefit under any such Contract;
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(viii) Contract or other agreement, whether written or oral, that
contains any guarantees as to the Company's or any of its subsidiaries'
future revenues;
(xi) Contract providing for payments of royalties to third
parties in excess of $250,000 per year or $500,000 in the aggregate;
(x) Contract not made in the ordinary course of business granting
a third party any license to Intellectual Property Rights of the Company
or any of its subsidiaries that is not limited to the internal use of
such third party;
(xi) Contract providing confidential treatment by the Company or
any of its subsidiaries of third party information other than (x)
non-disclosure agreements and provisions entered into by the Company in
the ordinary course of business consistent with past practice and (y)
the Confidentiality Agreement;
(xii) Contract granting the other party to such Contract or a
third party "most favored nation" status that, following the Merger,
would in any way apply to Parent or any of its subsidiaries (other than
the Company and its subsidiaries and their products or services or any
similar products or services produced or offered by Parent or its
subsidiaries (other than the Company and its subsidiaries)); or
(xiii) Contract which (i) has aggregate future sums due from the
Company or any of its subsidiaries in excess of $250,000 and is not
terminable by the Company or any such subsidiary for a cost of less than
$250,000 or (ii) is otherwise material to the business of the Company
and its subsidiaries, taken as a whole, as presently conducted or as
proposed by management of the Company to be conducted.
Each Contract of the Company and its subsidiaries is in full force and
effect and is a legal, valid and binding agreement of the Company or
such subsidiary and, to the knowledge of the Company or such subsidiary,
of each other party thereto, enforceable against the Company or such
subsidiary, as the case may be, and, to the knowledge of the Company or
such subsidiary, against the other party or parties thereto, in each
case, in accordance with its terms, except for such failures to be in
full force and effect or enforceable that individually or in the
aggregate have not had and could not reasonably be expected to have a
material adverse effect on the Company. Each of the Company and its
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subsidiaries has performed or is performing all material obligations
required to be performed by it under its Contracts and is not (with or
without notice or lapse of time or both) in breach or default in any
material respect thereunder, and, to the knowledge of the Company or
such subsidiary, no other party to any of its Contracts is (with or
without notice or lapse of time or both) in breach or default in any
material respect thereunder except, in each case, for such breaches that
individually or in the aggregate have not had and could not reasonably
be expected to have a material adverse effect on the Company.
(s) Title to Properties. (i) Section 3.01(s) of the Company
Disclosure Schedule sets forth a complete and accurate list of all real
property and material personal property owned or leased by the Company
or any of its subsidiaries. Each of the Company and its subsidiaries has
good and valid title to, or valid leasehold interests in or valid rights
to, all its material properties and assets except for such as are no
longer used or useful in the conduct of its businesses or as have been
disposed of in the ordinary course of business and except for defects in
title, easements, restrictive covenants and similar encumbrances that
individually or in the aggregate do not materially interfere with its
ability to conduct its business as currently conducted. All such
material assets and properties, other than assets and properties in
which the Company or any of its subsidiaries has a leasehold interest,
are free and clear of all Liens except for Liens that individually or in
the aggregate do not materially interfere with the ability of the
Company and its subsidiaries to conduct their respective businesses as
currently conducted.
(ii) Each of the Company and its subsidiaries has complied in all
material respects with the terms of all real property leases to which it
is a party and under which it is in occupancy, and all such leases are
in full force and effect. Each of the Company and its subsidiaries
enjoys peaceful and undisturbed possession under all such leases, except
for failures to do so that individually or in the aggregate have not had
and could not reasonably be expected to have a material adverse effect
on the Company.
(t) Privacy Policy. (i) For purposes of this Section 3.01(t):
(A) "Privacy Statement" means the Company's privacy policies
published on its web site regarding
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the collection, use and distribution of personal information from
visitors to its web site and consumers of its products and services;
(B) "Terms and Conditions" means the terms and conditions
published on the Company's web site that govern the use of the Company's
products and services.
(ii) The Privacy Statement and Terms and Conditions are posted at
all times on the Company's web site. The Company maintains a link to the
Privacy Statement from its homepage and makes an effort to include a
link from any page on which personal information is collected from
visitors to its web site and users of its products and services. The
Privacy Statement is clearly written and includes at the minimum the
following: (A) notice to users about the Company's web site's
information collection policies and practices prior to disclosing their
personal information; and (B) a description of how users' personal
information will be used, including any uses beyond those for which the
information was provided.
(iii) The Company has adequate technological and procedural
measures in place to protect data collected from visitors and users
against loss, theft, unauthorized access or disclosure. The Company does
not knowingly collect information from or target children under the age
of thirteen. The Company does not sell, rent or otherwise make available
to third parties any personally-identifiable data submitted by users.
(iv) The Privacy Statement is accurate and consistent with the
Terms and Conditions. The Company and its employees have (A) complied at
all times with the then current privacy policy issued by the Company,
all applicable U.S. privacy laws regarding the disclosure and use of
data, (B) not violated the Privacy Statement or the Terms and Conditions
and (C) taken all appropriate and reasonable steps to protect and
maintain the confidential nature of the information provided to the
Company by visitors and users. Neither the Company nor any of its
subsidiaries is party to any Contract or subject to any other obligation
that, following the Merger, would prevent Parent and its affiliates from
using the information covered by the Privacy Statement in a manner
consistent with applicable privacy laws and industry standards regarding
the disclosure and use of data. No claims or controversies have arisen
regarding the Privacy
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Statement, the Terms and Conditions or the implementation of any of the
foregoing.
SECTION 3.02. Representations and Warranties of Parent and Sub.
Except as set forth on the disclosure schedule (each section of which qualifies
the correspondingly numbered representation and warranty or covenant to the
extent specified therein and such other representations and warranties or
covenants to the extent a matter in such section is disclosed in such a way as
to make its relevance to the information called for by such other representation
and warranty or covenant reasonably apparent) delivered by Parent to the Company
prior to the execution of this Agreement (the "Parent Disclosure Schedule"),
Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Parent is a
corporation duly incorporated and validly subsisting under the laws of
France, Sub is a corporation duly incorporated, validly existing and in
good standing under the DGCL, and each of Parent and Sub has the
requisite corporate power and authority to carry on its business as now
being conducted. Each of Parent and Sub is duly qualified or licensed to
do business and is in good standing (with respect to jurisdictions which
recognize such concept) in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its assets makes such
qualification or licensing necessary, except for those jurisdictions
where the failure to be so qualified or licensed or to be in good
standing individually or in the aggregate has not had and could not
reasonably be expected to have a material adverse effect on Parent.
Parent has made available to the Company prior to the execution of this
Agreement complete and correct copies of its certificate of
incorporation and by-laws and the certificate of incorporation and
by-laws of Sub, in each case as amended to the date of this Agreement.
(b) Authority; Noncontravention. Each of Parent and Sub has all
requisite corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by Parent and Sub and the
consummation by Parent and Sub of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on
the part of Parent and Sub and no other corporate proceedings on the
part of Parent or Sub are necessary to authorize this Agreement or to
consummate the transactions contemplated by this Agreement. This
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Agreement has been duly executed and delivered by Parent and Sub and,
assuming the due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of Parent and Sub,
enforceable against each of them in accordance with its terms. The
execution and delivery of this Agreement do not, and the consummation of
the transactions contemplated by this Agreement and compliance by Parent
and Sub with the provisions of this Agreement will not, conflict with,
or result in any violation or breach of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancelation or acceleration of any obligation or loss of a
benefit under, or result in the creation of any Lien upon any of the
properties or assets of Parent or Sub under, (i) the Restated Corporate
Statutes of Parent or the certificate of incorporation or by-laws of
Sub, (ii) any Contract to which Parent or Sub is a party or otherwise
applicable to Parent or Sub or their respective properties or assets or
(iii) subject to the governmental filings and other matters referred to
in the following sentence, (A) any judgment, order or decree or (B) any
statute, law, ordinance, rule or regulation, in each case applicable to
Parent or Sub or any of their respective properties or assets, other
than, in the case of clauses (ii) and (iii), any such conflicts,
violations, breaches, defaults, rights, losses or Liens that
individually or in the aggregate could not reasonably be expected to (x)
have a material adverse effect on Parent, (y) impair in any material
respect the ability of Parent or Sub to perform its obligations under
this Agreement or (z) prevent or materially impede, interfere with,
hinder or delay the consummation of the transactions contemplated by
this Agreement. No consent, approval, order or authorization of, action
by, or in respect of, or registration, declaration or filing with, any
Governmental Entity is required to be obtained or made by or with
respect to Parent or Sub in connection with the execution and delivery
of this Agreement by Parent and Sub or the consummation by Parent and
Sub of the transactions contemplated by this Agreement, except for (1)
the filing of a premerger notification and report form by Parent under
the HSR Act and any applicable filings and approvals under Foreign
Antitrust Laws; (2) the filing with the SEC of (A) the Form S-4 and (B)
such reports under Section 13(a), 13(d), 15(d) or 16(a) of the Exchange
Act as may be required in connection with this Agreement and the
Stockholder Agreement and the transactions contemplated by this
Agreement and the Stockholder Agreement; (3) the filing of the
Certificate of Merger with the Secretary of
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State of the State of Delaware and appropriate documents with the
relevant authorities of other states in which Parent is qualified to do
business; (4) such filings with and approvals of the NYSE to permit the
Parent ADSs that are to be issued in the Merger to be listed on the
NYSE; and (5) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be made
or obtained individually or in the aggregate could not reasonably be
expected to (x) have a material adverse effect on Parent, (y) impair in
any material respect the ability of Parent or Sub to perform its
obligations under this Agreement or (z) prevent or materially impede,
interfere with, hinder or delay the consummation of the transactions
contemplated by this Agreement.
(c) SEC Documents. Parent has filed all required reports,
schedules, forms, statements and other documents (including exhibits and
all other information incorporated therein) with the SEC since September
11, 2000 (collectively, the "Parent SEC Documents"). As of their
respective dates, the Parent SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Parent SEC Documents, and none
of the Parent SEC Documents when filed contained any untrue statement of
a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Except to the extent that information contained in any Parent SEC
Document has been revised or superseded by a later filed Parent SEC
Document, none of the Parent SEC Documents contains any untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
The financial statements of Parent included in the Parent SEC Documents
comply as to form, as of their respective dates of filing with the SEC,
in all material respects with the Accounting Rules, have been prepared
in accordance with French GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and
fairly present in all material respects the consolidated financial
position of Parent and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows
for the periods then
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ended. The notes to the financial statements of Parent included in the
Parent SEC Documents reconciling to U.S. GAAP the consolidated net
income and shareholders' equity of Parent comply in all material
respects with the Accounting Rules applicable to such reconciliation.
(d) Absence of Material Adverse Change. Since the date of the
most recent audited financial statements included in Parent SEC
Documents filed and publicly available prior to the date of this
Agreement, there has not been any material adverse change with respect
to Parent.
(e) Information Supplied. None of the information supplied or to
be supplied by Parent specifically for inclusion or incorporation by
reference in (i) the Form F-4 will, at the time the Form F-4 is filed
with the SEC, at any time it is amended or supplemented and at the time
the Form F-4 becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading or (ii) the Proxy Statement will, at the date it
is first mailed to the Company's stockholders or at the time of the
Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Form F-4
will comply as to form in all material respects with the requirements of
the Securities Act and the rules and regulations thereunder. No
representation or warranty is made by Parent or Sub with respect to
statements made or incorporated by reference in the Form F-4 based on
information supplied by the Company specifically for inclusion or
incorporation by reference in the Form F-4.
(f) No Parent Stockholder Vote Required. This Agreement and the
transactions contemplated hereby, including the issuance of Parent
Shares pursuant to Article II hereof, do not require the approval of the
holders of any shares of capital stock of Parent.
(g) Parent Shares. All outstanding Parent Shares, Parent ADSs
and receipts evidencing Parent ADSs are, and all Parent Shares, Parent
ADSs and receipts evidencing Parent ADSs which may be issued pursuant to
this Agreement shall when issued in accordance with this Agreement be,
duly authorized, validly issued,
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fully paid and nonassessable and not subject to preemptive rights.
(h) Tax Matters. Neither Parent nor any of its subsidiaries has
taken any action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of
the Code.
(i) Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged
in no other business activities and has conducted its operations only as
contemplated hereby.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of Business by the
Company. Except as set forth in Section 4.01(a) of the Company Disclosure
Schedule, as otherwise expressly contemplated by this Agreement or as consented
to in writing by Parent, during the period from the date of this Agreement to
the Effective Time, the Company shall, and shall cause its subsidiaries to,
carry on their respective businesses only in the ordinary course consistent with
past practice and in compliance in all material respects with all applicable
laws and regulations and, to the extent consistent therewith, use all reasonable
efforts to preserve intact their current business organizations, use reasonable
efforts to keep available the services of their current officers and other key
employees and preserve their relationships with those persons having business
dealings with them to the end that their goodwill and ongoing businesses shall
be unimpaired at the Effective Time. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Effective
Time, except as set forth in Section 4.01(a) of the Company Disclosure Schedule
or as otherwise expressly contemplated by this Agreement, the Company shall not,
and shall not permit any of its subsidiaries to, without Parent's prior written
consent:
(i) other than dividends and distributions (including
liquidating distributions) by a direct or indirect wholly owned
subsidiary of the Company to its parent, (x) declare, set aside or pay
any dividends on, or make any other distributions (whether in cash,
stock, property or otherwise) in respect of, any of its
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capital stock, (y) split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or
(z) purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of the Company or any of its subsidiaries or any
other securities thereof or any rights, warrants or options to acquire
any such shares or other securities, except for repurchases of
outstanding unvested shares of Company Common Stock in respect of which
the Company has a right under specified circumstances to repurchase such
shares at a fixed purchase price (which shall not exceed the Cash
Consideration) pursuant to restricted stock purchase agreements in the
form attached as Exhibit A to Section 3.01(c) of the Company Disclosure
Schedule;
(ii) issue, deliver, sell, pledge or otherwise encumber or
subject to any Lien (w) any shares of its capital stock, (x) any other
voting securities, (y) any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities or (z) any "phantom" stock or stock rights, SARs
or stock-based performance units other than (A) the issuance of Company
Common Stock upon the exercise of Stock Options, purchase rights under
the ESPP or the Warrants, in each case outstanding as of the date hereof
in accordance with their present terms or (B) the issuance of up to
2,500,000 shares of Company Common Stock pursuant to the Stipulation of
Settlement in the Company's class action and derivative lawsuits;
(iii) amend the Company's certificate of incorporation, by-laws or
other comparable organizational documents other than as necessary to
implement the corporate governance enhancements to be entered into in
accordance with the Stipulation of Settlement in the Company's class
action and derivative lawsuits;
(iv) directly or indirectly acquire (x) by merging or
consolidating with, or by purchasing assets of, or by any other manner,
any person or division, business or equity interest of any person or (y)
any assets that, individually, have a purchase price in excess of
$100,000 or, in the aggregate, have a purchase price in excess of
$100,000, except for purchases of components or supplies in the ordinary
course of business consistent with past practice;
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(v) sell, lease, license, sell and leaseback, mortgage or
otherwise encumber or subject to any Lien or otherwise dispose of any of
its properties or assets (including securitizations), other than sales
or licenses of finished goods or services in the ordinary course of
business consistent with past practice;
(vi) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities
or warrants or other rights to acquire any debt securities of the
Company or any of its subsidiaries, guarantee any debt securities of
another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter
into any arrangement having the economic effect of any of the foregoing,
except for short-term borrowings incurred in the ordinary course of
business (or to refund existing or maturing indebtedness) consistent
with past practice not to exceed $100,000 at any time outstanding and
except for intercompany indebtedness between the Company and any of its
subsidiaries or between such subsidiaries;
(vii) make any loans, advances or capital contributions to, or
investments in, any other person;
(viii) make any new capital expenditures, or enter into any
agreements providing for payments which, individually, are in excess of
$100,000 or, in the aggregate, are in excess of $1,000,000;
(ix) make any tax election that, individually or in the
aggregate, is reasonably likely to adversely affect in any material
respect the tax liability or tax attributes of the Company or any of its
subsidiaries or settle or compromise any material income tax liability;
(x) (A) pay, discharge, settle or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), or litigation (whether or not commenced prior to the date of
this Agreement), or modify the terms of any existing settlement
agreement or arrangement, other than the payment, discharge, settlement
or satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of Non-Litigation
Liabilities recognized or disclosed in the most recent consolidated
financial statements (or the notes thereto) of the Company included in
the Company Filed SEC Documents or Non-Litigation Liabilities incurred
since the date of such financial statements in the ordinary course of
business consistent with past
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practice (it being understood and agreed that, without limiting the
generality of the foregoing proscription, all matters relating to the
payment, discharge, settlement or satisfaction of any matters covered by
Section 5.11(b) shall be governed exclusively by such Section 5.11(b)),
(B) cancel any indebtedness, (C) waive or assign any claims or rights of
substantial value, (D) waive any benefit of, agree to modify in any
manner, terminate, release any person from or fail to enforce any
standstill or similar agreement to which the Company or any of its
subsidiaries is a party or of which the Company or any of its
subsidiaries is a beneficiary or (E) waive any material benefit of,
agree to modify in any material respect, terminate, release any person
from or fail to enforce any confidentiality or similar agreement to
which the Company or any of its subsidiaries is a party or of which the
Company or any of its subsidiaries is a beneficiary;
(xi) except as required by law or as otherwise contemplated by
this Agreement, (x) establish, enter into, adopt or amend or terminate
any Benefit Plan or Benefit Agreement, (y) change the manner in which
contributions to any Pension Plan are made or the basis on which such
contributions are determined or (z) take any action to accelerate any
rights or benefits, or make any material determinations not in the
ordinary course of business consistent with past practice, under any
Benefit Plan or Benefit Agreement;
(xii) (w) increase the compensation, bonus or fringe or other
benefits of any current or former director, consultant, officer or other
employee, except for (A) salary increases for non-executive officer
employees as part of an annual review process or part of a promotion in
job title or responsibility in the ordinary course of business
consistent with past practice or (B) after consultation with Parent,
bonuses awarded in the ordinary course of business consistent with past
practice, including bonuses to be awarded in June 2001 and paid in July
2001, (x) grant any current or former director, consultant, officer or
other employee any increase in severance or termination pay, (y) amend
or modify any Stock Option, or (z) or pay any benefit or amount not
required by a plan or arrangement as in effect on the date of this
Agreement to any such person;
(xiii) transfer or license to any person or entity or otherwise
extend, amend or modify any rights to the Intellectual Property Rights
of the Company and its subsidiaries other than in the ordinary course of
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business consistent with past practices; provided that in no event shall
the Company or any of its subsidiaries license on an exclusive basis or
sell any Intellectual Property Rights of the Company and its
subsidiaries;
(xiv) enter into or amend any agreements pursuant to which any
person is granted exclusive marketing, manufacturing or other rights
with respect to any product, process or technology of the Company or any
of its subsidiaries;
(xv) enter into or amend any Contract or other agreement, whether
written or oral, that contains any guarantees as to the Company's or any
of its subsidiaries' future revenues;
(xvi) obtain, through acquisition, lease, sublease or otherwise,
any real property for use as an office or similar facility of the
Company or any of its subsidiaries;
(xvii) increase the headcount of employees of the Company by more
than 5%;
(xviii) except insofar as may be required by a change in GAAP,
make any changes in accounting methods, principles or practices;
(xix) take any action that would, or that could reasonably be
expected to, result in any condition to the Merger set forth in Article
VI not being satisfied; or
(xx) authorize, or commit, resolve or agree to take, any of the
foregoing actions.
For purposes of this Agreement, "Non-Litigation Liabilities" means all
liabilities of the Company and its subsidiaries of a type that would be
disclosed in consolidated financial statements of the Company prepared in
accordance with GAAP, other than (i) liabilities pertaining to the line item
"Reserve for litigation and copyright matters" (or any similar line item) on any
condensed consolidated balance sheet of the Company or the related notes thereto
and (ii) liabilities of a type described in Section 5.11(b).
(b) Advice of Changes; Filings. The Company and Parent shall
promptly advise the other party orally and in writing to the extent it has
knowledge of (i) any representation or warranty made by it (and, in the case of
Parent, made by Sub) contained in this Agreement that is
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qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by it (and, in the case of
Parent, by Sub) to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement and (iii) any change or event having, or which could reasonably be
expected to have, a material adverse effect on such party or on the ability of
the conditions set forth in Article VI to be satisfied; provided, however, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the conditions
to the obligations of the parties under this Agreement. The Company and Parent
shall promptly provide the other copies of all filings made by such party with
any Governmental Entity in connection with this Agreement and the transactions
contemplated hereby, other than the portions of such filings that include
confidential information not directly related to the transactions contemplated
by this Agreement.
SECTION 4.02. No Solicitation by the Company. (a) The Company
shall not, nor shall it permit any of its subsidiaries to, nor shall it
authorize or permit any of its or any of its subsidiaries' directors, officers
or employees or any investment banker, financial advisor, attorney, accountant
or other representative retained by it or any of its subsidiaries to, directly
or indirectly through another person, (i) solicit, initiate or encourage
(including by way of furnishing information), or take any other action intended
to, or which could reasonably be expected to, facilitate, any inquiries or the
making of any proposal that constitutes, or could reasonably be expected to lead
to, any Takeover Proposal or (ii) enter into, continue or otherwise participate
in any discussions or negotiations regarding, or furnish to any person any
information with respect to, or otherwise cooperate in any way with, any
Takeover Proposal. Notwithstanding the foregoing, in the event that,
notwithstanding compliance with the preceding sentence, the Company receives a
bona fide written Takeover Proposal that the Board of Directors of the Company
determines in good faith (after consultation with outside counsel and a
financial advisor of nationally recognized reputation) constitutes or is
reasonably likely to lead to a Superior Proposal, the Company may, to the extent
that the Board of Directors of the Company determines in good faith (after
consultation with outside counsel) that it is required to do so in order to
comply with its fiduciary duties, participate in discussions or negotiations
regarding such Takeover Proposal in order to inform itself in a manner required
to comply with its fiduciary duties with respect to such Takeover
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Proposal so that it may make any determination permitted pursuant to Section
4.02(b)(i) and meet its fiduciary duties of full disclosure to the stockholders
of the Company. In such event, the Company shall, (i) no less than 48 hours
prior to participating in any such discussions or negotiations, inform Parent of
the material terms and conditions of such Takeover Proposal, including the
identity of the person making such Takeover Proposal, (ii) promptly inform
Parent of the substance of any discussions or negotiations relating to such
Superior Proposal and (iii) promptly keep Parent fully informed of the status,
including any change to the details of, any such Takeover Proposal. Without
limiting the foregoing, it is understood that any violation in any material
respect of the restrictions set forth in the first sentence of this Section
4.02(a) by any director, officer or employee of the Company or any of its
subsidiaries or any investment banker, financial advisor, attorney, accountant
or other representative of the Company or any of its subsidiaries shall be
deemed to be a breach of this Section 4.02(a) by the Company.
For purposes of this Agreement, "Superior Proposal" means any
offer not solicited by the Company made by a third party to consummate a tender
offer, exchange offer, merger, consolidation, share exchange or similar
transaction which would result in such third party (or its shareholders) owning,
directly or indirectly, 50% or more of the shares of Company Common Stock then
outstanding (or of the surviving entity in a merger) or 50% or more of the
assets of the Company and its subsidiaries and otherwise on terms which the
Board of Directors of the Company determines in good faith (following receipt of
the advice of a financial advisor of nationally recognized reputation) to be
more favorable to the Company's stockholders from a financial point of view than
the Merger.
For purposes of this Agreement, "Takeover Proposal" means any
inquiry, proposal or offer from any person relating to any direct or indirect
acquisition or purchase of 20% or more of the assets of the Company and its
subsidiaries, taken as a whole, or 20% or more of any class or series of equity
securities of the Company or any of its subsidiaries, any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 20% or more of any class or series of equity securities of the Company or
any of its subsidiaries, or any merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its subsidiaries pursuant to which any person
(or its shareholders) would beneficially own 20% or more of any class or series
of
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equity securities of the Company (or any resulting parent or surviving entity),
other than the transactions contemplated by this Agreement.
(b) Neither the Company nor the Board of Directors of the Company
nor any committee thereof shall (i) withdraw or modify, or propose to withdraw
or modify, in a manner adverse to Parent, the approval or recommendation by such
Board of Directors or such committee of the Merger or this Agreement, except to
the extent that such Board of Directors determines in good faith (after
consultation with outside counsel) that it is required to do so in order to
comply with its fiduciary duties, (ii) approve or recommend, or propose to
approve or recommend, any Takeover Proposal or (iii) approve or recommend, or
propose to approve or recommend, or execute or enter into, any letter of intent,
memorandum of understanding, agreement in principle, merger agreement,
acquisition agreement, option agreement, joint venture agreement, partnership
agreement or other similar agreement or propose or agree to do any of the
foregoing constituting or related to, or which is intended to or could
reasonably be expected to lead to, any Takeover Proposal.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02, the Company shall immediately (and
no later than 48 hours) advise Parent orally and in writing of any request for
information or of any inquiry with respect to a Takeover Proposal, the material
terms and conditions of such request, inquiry or Takeover Proposal and the
identity of the person making such request, inquiry or Takeover Proposal. The
Company shall promptly keep Parent informed of the status and details (including
amendments or changes or proposed amendments or changes) of any such request,
inquiry or Takeover Proposal.
(d) Nothing contained in this Section 4.02 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14d-9 or 14e-2 promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good faith judgment of the
Board of Directors of the Company, after consultation with outside counsel,
failure so to disclose would be inconsistent with its obligations under
applicable law; provided, however, that, subject to Section 4.02(b)(i), neither
the Company nor its Board of Directors nor any committee thereof shall withdraw
or modify, or propose to withdraw or modify, its position with respect to this
Agreement or the Merger or approve or recommend, or propose to approve or
recommend, a Takeover Proposal.
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ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form F-4 and the Proxy
Statement; Stockholders Meeting. (a) As soon as practicable following the date
of this Agreement, Parent and the Company shall prepare and file with the SEC
the Proxy Statement and Parent and the Company shall prepare and Parent shall
file with the SEC the Form F-4, in which the Proxy Statement will be included as
a prospectus. Parent shall use all reasonable efforts to have the Form F-4
declared effective under the Securities Act as promptly as practicable after
such filing. The Company will use all reasonable efforts to cause the Proxy
Statement to be mailed to the Company's stockholders as promptly as practicable
after the Form F-4 is declared effective under the Securities Act. Parent shall
also take any action (other than qualifying to do business in any jurisdiction
in which it is not now so qualified or to file a general consent to service of
process) required to be taken under any applicable state securities laws in
connection with the issuance of Parent Shares in the Merger, and the Company
shall furnish all information concerning the Company and the holders of Company
Common Stock as may be reasonably requested in connection with any such action
and the preparation, filing and distribution of the Proxy Statement. No filing
of, or amendment or supplement to, or correspondence to the SEC or its staff
with respect to, the Form F-4 will be made by Parent, or the Proxy Statement
will be made by the Company, without providing the other party a reasonable
opportunity to review and comment thereon. Parent will advise the Company,
promptly after it receives notice thereof, of the time when the Form F-4 has
become effective or any supplement or amendment has been filed, the issuance of
any stop order, the suspension of the qualification of the Parent Shares
issuable in connection with the Merger for offering or sale in any jurisdiction,
or any request by the SEC for amendment of the Form F-4 or comments thereon and
responses thereto or requests by the SEC for additional information. The Company
will advise Parent, promptly after it receives notice thereof, of any request by
the SEC for the amendment of the Proxy Statement or comments thereon and
responses thereto or requests by the SEC for additional information. If at any
time prior to the Effective Time any information relating to the Company or
Parent, or any of their respective affiliates, officers or directors, should be
discovered by the Company or Parent which should be set forth in an amendment or
supplement to any of the Form F-4 or the Proxy Statement, so that any of such
documents would not include any misstatement of a material fact or omit to state
any material fact necessary
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to make the statements therein, in light of the circumstances under which they
were made, not misleading, the party which discovers such information shall
promptly notify the other parties hereto and an appropriate amendment or
supplement describing such information shall be promptly filed with the SEC and,
to the extent required by law, disseminated to the stockholders of the Company.
(b) The Company shall, as soon as practicable following the date
of this Agreement, establish a record date (which will be as soon as practicable
following the date of this Agreement) for, duly call, give notice of, convene
and hold a meeting of its stockholders (the "Stockholders Meeting") solely for
the purpose of obtaining the Stockholder Approval. The Company shall cause the
Stockholders Meeting to be held as promptly as practicable after the date of
this Agreement. Subject to Section 4.02(b)(i), the Company shall, through its
Board of Directors, recommend to its stockholders that they adopt this Agreement
and shall include such recommendation in the Proxy Statement. Without limiting
the generality of the foregoing, the Company agrees that its obligations
pursuant to this Section 5.01(b) shall not be affected by (i) the commencement,
public proposal, public disclosure or communication to the Company or any other
person of any Takeover Proposal or (ii) the withdrawal or modification by the
Board of Directors of the Company or any committee thereof of such Board of
Directors' or such committee's approval or recommendation of the Merger or this
Agreement.
SECTION 5.02. Access to Information; Confidentiality. Upon
reasonable notice and subject to the Confidentiality Agreement dated as of March
14, 2001, between Parent and the Company (the "Confidentiality Agreement"), the
Company shall, and shall cause each of its subsidiaries to, afford to Parent and
to its officers, employees, accountants, counsel, financial advisors and other
representatives (including insurance providers and consultants), reasonable
access during normal business hours during the period prior to the Effective
Time to all its properties, books, contracts, commitments, personnel and records
(including electronic databases) and, during such period, the Company shall, and
shall cause each of its subsidiaries to, furnish promptly to Parent (a) a copy
of each report, schedule, form, statement and other document filed by it during
such period pursuant to the requirements of Federal or state securities laws and
(b) all other information concerning its business, properties and personnel as
Parent may reasonably request (including the Company's outside accountants' work
papers). The Company shall not be required to provide access to or disclose
information where such access or disclosure would contravene
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any law, rule, regulation, order or decree of any Governmental Entity. No review
pursuant to this Section 5.02 shall have an effect for the purpose of
determining the accuracy of any representation or warranty given by the Company
to Parent and Sub. Parent will hold, and will cause its officers, employees,
accountants, counsel, financial advisors and other representatives and
affiliates to hold, any nonpublic information in accordance with the terms of
the Confidentiality Agreement.
SECTION 5.03. Reasonable Efforts. (a) Upon the terms and subject
to the conditions set forth in this Agreement, each of the parties agrees to use
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement and the Stockholder Agreement, including using
reasonable efforts to accomplish the following: (i) the taking of all reasonable
acts necessary to cause the conditions to Closing to be satisfied as promptly as
practicable; (ii) the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with Governmental
Entities, including under the HSR Act) and the taking of all steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity; (iii) the obtaining of all necessary
consents, approvals or waivers from third parties; (iv) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the Stockholder Agreement or the consummation of
the transactions contemplated by this Agreement or the Stockholder Agreement,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed; and (v) the execution
and delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement and the Stockholder Agreement; provided, however, that Parent will not
be required to agree to, or proffer to, (i) divest or hold separate, or enter
into any licensing or similar arrangement with respect to, any assets (whether
tangible or intangible) or any of Parent's, the Company's or any of their
respective affiliates' businesses or (ii) cease to conduct business or
operations in any jurisdiction in which Parent, the Company or any of their
respective subsidiaries conducts business or operations as of the date of this
Agreement.
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(b) In connection with and without limiting the foregoing, the
Company and its Board of Directors shall (i) take all action necessary to ensure
that no state takeover statute or similar statute or regulation is or becomes
applicable to the Merger, this Agreement, the Stockholder Agreement or any of
the other transactions contemplated by this Agreement or the Stockholder
Agreement and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Merger, this Agreement, the Stockholder
Agreement or any other transaction contemplated by this Agreement or the
Stockholder Agreement, take all action necessary to ensure that the Merger and
the other transactions contemplated by this Agreement and the Stockholder
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and the Stockholder Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger and the other
transactions contemplated by this Agreement and the Stockholder Agreement.
SECTION 5.04. Stock Options. (a) As soon as practicable following
the date of this Agreement, the Board of Directors of the Company (or, if
appropriate, any committee thereof administering the Stock Plans) shall adopt
such resolutions or take such other actions as may be required to effect the
following:
(i) adjust the terms of all outstanding Stock Options granted
under the Company Stock Plans, whether vested or unvested, as necessary
to provide that, at the Effective Time, each Stock Option outstanding
immediately prior to the Effective Time shall be amended and converted
into an option to acquire, on the same terms and conditions as were
applicable under such Stock Option, the number of Parent Shares (rounded
down to the nearest whole share) equal to (A) the number of shares of
Company Common Stock subject to such Stock Option immediately prior to
the Effective Time multiplied by (B) the Exchange Ratio, at an exercise
price per Parent Share (rounded up to the nearest whole cent) equal to
(x) the exercise price per share of Company Common Stock otherwise
purchasable pursuant to such Stock Option immediately prior to the
Effective Time divided by (y) the Exchange Ratio (each, as so adjusted,
an "Adjusted Option"); and
(ii) make such other changes to the Company Stock Plans as the
Company and Parent may agree are appropriate to give effect to the
Merger.
(b) The adjustments provided in this Section 5.04 with respect to
any Stock Option to which Section 421(a) of
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the Code applies shall be and are intended to be effected in a manner which is
consistent with Section 424(a) of the Code. As soon as practicable after the
Effective Time, Parent shall deliver to the holders of Stock Options appropriate
notices setting forth such holders' rights pursuant to the respective Company
Stock Plans and the agreements evidencing the grants of such Stock Options and
that such Stock Options and agreements shall be assumed by Parent and shall
continue in effect on the same terms and conditions (subject to the adjustments
required by this Section 5.04 after giving effect to the Merger).
(c) A holder of an Adjusted Option may exercise such Adjusted
Option in whole or in part in accordance with its terms by following procedures
to be communicated by Parent with the notice contemplated by Section 5.04(b),
together with the consideration therefor and the Federal withholding tax
information, if any, required in accordance with the related Company Stock Plan
or Stock Option Agreement.
(d) Except to the extent required under the respective terms of
the Stock Options, all restrictions or limitations on transfer and vesting with
respect to Stock Options awarded under the Company Stock Plans or any other
plan, program or arrangement of the Company or any of its subsidiaries, to the
extent that such restrictions or limitations shall not have already lapsed, and
all other terms thereof, shall remain in full force and effect with respect to
such options after giving effect to the Merger and the assumption by Parent as
set forth above.
(e) Prior to the Effective Time, Parent shall take all necessary
action to assume as of the Effective Time all obligations undertaken by Parent
under this Section 5.04, including the reservation, issuance and listing of a
number of Parent ADSs at least equal to the number of Parent Shares subject to
the Adjusted Options. No later than one business day after the Effective Time,
Parent shall prepare and file with the SEC a registration statement on Form S-8
(or another appropriate form) registering a number of Parent ADSs representing
the number of Parent Shares subject to the Adjusted Options and shall maintain
the effectiveness of such registration statement (and maintain the current
status of the prospectus contained therein) for so long as such Adjusted Options
remain outstanding. The Company shall cooperate with, and assist Parent in the
preparation of, such registration statement.
SECTION 5.05. Employee Matters. (a) For a period ending not
earlier than December 31, 2002, employees of the Company and its subsidiaries
who continue their
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employment after the Effective Time (the "Affected Employees") shall receive
employee benefits that are substantially comparable in the aggregate to the
employee benefits provided to the Affected Employees immediately prior to the
Effective Time; provided, that neither Parent nor the Surviving Corporation
shall have any obligation to issue, or adopt any plans or arrangements providing
for the issuance of, shares of capital stock, warrants, options, SARs or other
rights in respect of any shares of capital stock of any entity or any securities
convertible or exchangeable into such shares pursuant to any such plans or
arrangements; provided, further, that no plans or arrangements of the Company or
any of its subsidiaries providing for such issuance shall be taken into account
in determining whether employee benefits are substantially comparable in the
aggregate. Affected Employees shall be given credit under each employee benefit
plan, program, policy or arrangement of Parent or any of its affiliates in which
the Affected Employees are eligible to participate for all service with the
Company or any predecessor employer (to the extent such credit was given by the
Company) for purposes of eligibility, vesting, severance and vacation
entitlement.
(b) With respect to the ESPP, the Company shall take all actions
necessary to provide that (i) no offerings that would commence on a date
following the date of this Agreement shall be permitted, (ii) with respect any
offering thereunder that is in effect immediately prior to the Effective Time,
each participant's accumulated payroll deductions shall be used to purchase
shares of Company Common Stock immediately prior to the Effective Time in
accordance with the terms of the ESPP and (iii) the ESPP shall terminate at the
Effective Time.
(c) Parent and the Company agree to implement the arrangements
described in Section 5.05(c) of the Company Disclosure Schedule. In addition,
Parent agrees that, if it offers a one-year written employment agreement to any
employee of the Company or the Surviving Corporation, such employment agreement
will be in the form previously agreed to by Parent and the Company.
(d) Nothing contained in this Section 5.05 or elsewhere in this
Agreement shall be construed to prevent the termination of employment of any
individual Company Employee or any change in the employee benefits available to
any individual Company Employee or the amendment or termination of any
particular Benefit Plan or Benefit Agreement to the extent permitted by its
terms as in effect immediately prior to the Effective Time.
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SECTION 5.06. Indemnification, Exculpation and Insurance. (a)
Parent agrees that all rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the Effective Time
now existing in favor of the current or former directors or officers of the
Company and its subsidiaries as provided in their respective articles of
organization or by-laws (or comparable organizational documents) and any
indemnification agreements of the Company (as each is in effect on the date
hereof), the existence of which does not constitute a breach of this Agreement,
shall be assumed by the Surviving Corporation in the Merger, without further
action, as of the Effective Time and shall survive the Merger and shall continue
in full force and effect in accordance with their terms, and Parent shall cause
the Surviving Corporation to honor all such rights.
(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, or Parent otherwise dissolves the Surviving
Corporation, then, and in each such case, Parent shall cause proper provision to
be made so that the successors and assigns of the Surviving Corporation assume
the obligations set forth in this Section 5.06.
(c) The Surviving Corporation shall, at its option, for a period
of not less than six years after the Effective Time, either (i) maintain the
Company's current directors' and officers' liability insurance covering acts or
omissions occurring at or prior to the Effective Time ("D&O Insurance") with
respect to those persons who are currently covered by the Company's directors'
and officers' liability insurance policy on terms with respect to such coverage
and amount no less favorable than those of such policy in effect on the date
hereof or (ii) cause to be provided coverage no less favorable to such directors
or officers, as the case may be, than the D&O Insurance, in each case so long as
the annual premium therefor would not be in excess of 200% of the last annual
premium paid for the D&O Insurance prior to the date of this Agreement (such
200% amount the "Maximum Premium"); provided that if the annual premium for such
coverage exceeds the Maximum Premium, Parent shall be obligated to obtain a
policy with the greatest coverage available for a cost not exceeding the Maximum
Premium. If the existing or substituted directors' and officers' liability
insurance expires, is terminated or canceled during such six-year period, the
Surviving Corporation will obtain as much D&O Insurance as can be
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obtained for the remainder of such period for an annualized premium not in
excess of the Maximum Premium. The Company represents that the Maximum Premium
is $3,874,800.
(d) The provisions of this Section 5.06 (i) are intended to be
for the benefit of, and will be enforceable by, each indemnified party, his or
her heirs and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
SECTION 5.07. Fees and Expenses. All fees and expenses incurred
in connection with the Merger, this Agreement, the Stockholder Agreement and the
transactions contemplated by this Agreement and the Stockholder Agreement shall
be paid by the party incurring such fees or expenses, whether or not the Merger
is consummated, except that each of Parent and the Company shall bear and pay
one-half of the costs and expenses incurred in connection with the filing,
printing and mailing of the Form F-4 and the Proxy Statement (including SEC
filing fees).
SECTION 5.08. Public Announcements. Parent and the Company will
consult with each other before issuing, and provide each other the opportunity
to review, comment upon and concur with, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Merger and the Stockholder Agreement, and shall not issue any such
press release or make any such public statement prior to such consultation,
except as either party may determine is required by applicable law, the SEC or
any similar foreign regulatory authority, court process or by obligations
pursuant to any listing or similar foreign regulatory authority or quotation
agreement with any national securities exchange or national trading system. The
parties agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement and the Stockholder Agreement shall
be in the form heretofore agreed to by the parties.
SECTION 5.09. Affiliates. The Company shall deliver to Parent at
least 15 days prior to the Closing Date a letter identifying all persons who
are, at the time this Agreement is submitted for adoption by the stockholders of
the Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act. The Company shall use reasonable efforts to cause each such
person who makes or proposes to make a Share Election to deliver to Parent prior
to the Closing Date a written agreement substantially in the form attached as
Exhibit A hereto.
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SECTION 5.10. NYSE Listing. Parent shall use reasonable efforts
to cause the Parent ADSs issuable in the Merger and issuable upon exercise of
the Adjusted Options to be approved for listing on the NYSE, subject to official
notice of issuance, as promptly as practicable after the date hereof, and in any
event prior to the Closing Date.
SECTION 5.11. Litigation. (a) The Company shall give Parent the
opportunity to participate in the defense or settlement of any litigation
against the Company and/or its directors relating to the transactions
contemplated by this Agreement and the Stockholder Agreement, and no such
settlement shall be agreed to without Parent's prior written consent, which
consent shall not be unreasonably withheld.
(b) The Company shall keep Parent fully informed of the status
and details of any discussions, negotiations or litigation relating to any of
the matters set forth in Section 3.01(h) of the Company Disclosure Schedule (and
shall promptly provide Parent with copies of any relevant documents or materials
related thereto), and shall give Parent and its counsel the opportunity to
participate in any such discussions or negotiations and in the defense of any
litigation in respect of any such matters. The Company shall also inform Parent
promptly of the commencement of any suit, action or proceeding (whether or not
relating to any matter set forth in Section 3.01(h) of the Company Disclosure
Schedule) against the Company, and of the assertion or threatened assertion of
any claim against, or demand made upon, the Company by any person (and promptly
provide Parent with copies of all complaints, briefs, claims, demands,
correspondence and other documents relating thereto), shall keep Parent fully
informed of the status and details of all such litigation claims and demands and
of any settlement discussions or negotiations relating thereto and shall give
Parent the opportunity to participate in the defense thereof and in any such
discussions or negotiations. The Company shall not enter into any agreement that
has the effect of settling, releasing or otherwise disposing of any such
litigation, claim or demand (or enter into any licensing agreement relating
thereto) without Parent's prior written consent.
SECTION 5.12. Tax Treatment. Each of Parent and the Company shall
use reasonable efforts to cause the Merger to qualify as a reorganization under
the provisions of Section 368(a) of the Code and to obtain the tax opinions
referred to in Sections 6.02(c) and 6.03(c), including the execution of the
letters of representation referred to therein. Neither Parent nor the Surviving
Corporation shall take any action after the Effective Time that is reasonably
likely to prevent the Merger from qualifying as a
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reorganization under the provisions of Section 368(a) of the Code.
SECTION 5.13. Stockholder Agreement Legend. The Company will
inscribe upon any certificate representing Subject Shares (as defined in the
Stockholder Agreement) tendered by the Company Stockholders in connection with
any proposed transfer of any Subject Shares by the Company Stockholders in
accordance with the terms of the Stockholder Agreement the following legend:
"THE SHARES OF COMMON STOCK, PAR VALUE $0.001 PER SHARE, OF MP3.COM, INC.,
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDER AGREEMENT DATED AS
OF MAY 20, 2001, AND ARE SUBJECT TO THE TERMS THEREOF. COPIES OF SUCH AGREEMENT
MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF MP3.COM, INC."; and the
Company will return such certificate containing such inscription to the Company
Stockholders within three business days following the Company's receipt thereof.
SECTION 5.14. Termination of Agreements. The Company shall cause
all provisions of all purchase agreements, stockholder agreements, registration
rights agreements, investors' rights agreements, co-sale agreements, rights of
first refusal and similar agreements between any stockholder of the Company and
the Company to terminate and be of no further force and effect upon consummation
of the Merger. A list of all of such agreements is set forth in Section 5.14 of
the Company Disclosure Schedule.
SECTION 5.15. Resignation of Directors of the Company. Prior to
the Effective Time, the Company shall cause each member of its Board of
Directors to execute and deliver a letter effectuating his or her resignation as
a director of such Board effective immediately prior to the Effective Time.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Stockholder Approval shall have
been obtained.
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(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired, and any required approvals under Foreign Antitrust
Laws applicable to the Merger shall have been obtained.
(c) No Restraints. No judgment, order, decree, statute, law,
ordinance, rule or regulation, entered, enacted, promulgated, enforced
or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") shall be in effect preventing the consummation of the
Merger; provided, however, that each of the parties shall have used its
reasonable efforts to prevent the entry of any such Restraints and to
appeal as promptly as possible any such Restraints that may be entered.
(d) Form F-4. The Form F-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(e) NYSE Listing. The Parent ADSs issuable to the Company's
stockholders and optionholders as contemplated by this Agreement shall
have been approved for listing on the NYSE, subject to official notice
of issuance.
SECTION 6.02. Conditions to Obligations of Parent and Sub. The
obligation of Parent and Sub to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of the Company contained in Section 3.01(h) shall have been
true and correct in all material respects as of the date of this
Agreement and the representations and warranties of the Company
contained in Section 3.01(c) shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as
though made on the Closing Date, except to the extent such
representations and warranties expressly speak as of an earlier date, in
which case as of such earlier date and (ii) each of the other
representations and warranties of the Company contained in this
Agreement, disregarding all qualifications and exceptions contained
therein relating to materiality or material adverse effect, shall be
true and correct as of the date of this Agreement and as of the Closing
Date as
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though made on the Closing Date (except to the extent such
representations and warranties expressly speak as of an earlier date, in
which case as of such earlier date), except to the extent that the facts
or matters as to which such representations and warranties are not so
true and correct as of such dates, individually or in the aggregate,
have not had and could not reasonably be expected to have a material
adverse effect on the Company. Parent shall have received a certificate
signed on behalf of the Company by the chief executive officer of the
Company to such effect.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date.
Parent shall have received a certificate signed on behalf of the Company
by the chief executive officer of the Company to such effect.
(c) Tax Opinion. Parent shall have received from Cravath, Swaine
& Moore, counsel to Parent, an opinion dated as of the Closing Date,
stating that the Merger will qualify for U.S. Federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the
Code. The issuance of such opinion shall be conditioned upon the receipt
by such tax counsel of customary representation letters from each of the
Company and Parent, in each case, in form and substance reasonably
satisfactory to such tax counsel.
SECTION 6.03. Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) Representations and Warranties. Each of the representations
and warranties of Parent and Sub contained in this Agreement,
disregarding all qualifications and exceptions contained therein
relating to materiality or material adverse effect, shall be true and
correct as of the date of this Agreement and as of the Closing Date as
though made on the Closing Date (except to the extent such
representations and warranties expressly speak as of an earlier date, in
which case as of such earlier date), except to the extent that the facts
or matters as to which such representations and warranties are not so
true and correct as of such dates, individually or in the aggregate,
have not had and could not reasonably be expected to have a material
adverse effect on Parent. The Company shall have received a certificate
signed on
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behalf of Parent by an authorized signatory of Parent to such effect.
(b) Performance of Obligations of Parent and Sub. Parent and Sub
shall have performed in all material respects all obligations required
to be performed by them under this Agreement at or prior to the Closing
Date. The Company shall have received a certificate signed on behalf of
Parent by an authorized signatory of Parent to such effect.
(c) Tax Opinion. The Company shall have received from Ernst &
Young LLP, tax advisors to the Company, an opinion dated as of the
Closing Date, stating that the Merger will qualify for U.S. Federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code. The issuance of such opinion shall be conditioned
upon the receipt by such tax advisor of customary representation letters
from each of the Company and Parent, in each case, in form and substance
reasonably satisfactory to such tax advisor.
SECTION 6.04. Frustration of Closing Conditions. None of Parent,
Sub or the Company may rely on the failure of any condition set forth in Section
6.01, 6.02 or 6.03, as the case may be, to be satisfied if such failure was
caused by such party's failure to use reasonable efforts to consummate the
Merger and the other transactions contemplated by this Agreement and the
Stockholder Agreement, as required by and subject to Section 5.03.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after receipt of the
Stockholder Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated by
November 30, 2001; provided, however, that the right to terminate
this Agreement pursuant to this Section 7.01(b)(i) shall not be
available to any party whose failure to perform any of its
obligations under this
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Agreement results in the failure of the Merger to be consummated
by such time;
(ii) if the Stockholder Approval shall not have been
obtained at the Stockholders Meeting duly convened therefor or at
any adjournment or postponement thereof; or
(iii) if any Restraint having any of the effects set forth
in Section 6.01(c) shall be in effect and shall have become final
and nonappealable; provided that the party seeking to terminate
this Agreement pursuant to this Section 7.01(b)(iii) shall have
used reasonable efforts to prevent the entry of and to remove
such Restraint;
(c) by Parent, if the Company shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach
or failure to perform (A) would give rise to the failure of a condition
set forth in Section 6.02(a) or (b), and (B) is incapable of being or
has not been cured by the Company within 30 calendar days after giving
written notice to the Company of such breach or failure to perform; or
(d) by the Company, if Parent shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach
or failure to perform (A) would give rise to the failure of a condition
set forth in Section 6.03(a) or (b), and (B) is incapable of being or
has not been cured by Parent within 30 calendar days after giving
written notice to Parent of such breach or failure to perform.
SECTION 7.02. Effect of Termination. In the event of termination
of this Agreement by either the Company or Parent as provided in Section 7.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent or the Company, other than the
provisions of Section 3.01(o), the last sentence of Section 5.02, Section 5.07,
this Section 7.02 and Article VIII, which provisions survive such termination,
and except to the extent that such termination results from the willful and
material breach by a party of any of its representations, warranties, covenants
or agreements set forth in this Agreement.
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SECTION 7.03. Amendment. This Agreement may be amended by the
parties at any time prior to the Effective Time; provided, however, that after
the Stockholder Approval has been obtained, there shall not be made any
amendment that by law requires further approval by the stockholders of the
Company without the further approval of such stockholders. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties.
SECTION 7.04. Extension; Waiver. At any time prior to the
Effective Time, a party may (a) extend the time for the performance of any of
the obligations or other acts of the other parties, (b) waive any inaccuracies
in the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to the proviso to the first sentence of Section 7.03, waive compliance by the
other party with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of such
rights.
SECTION 7.05. Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 7.01, an amendment
of this Agreement pursuant to Section 7.03 or an extension or waiver pursuant to
Section 7.04 shall, in order to be effective, require, in the case of Parent or
the Company, action by its Board of Directors or, except with respect to a
termination of this Agreement, the duly authorized committee of its Board of
Directors to the extent permitted by law.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.02. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if
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delivered personally, telecopied (which is confirmed) or sent by overnight
courier (providing proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Vivendi Universal
42, avenue de Friedland
75380 Paris cedex 08
FRANCE
Telecopy No.: +33-1-71-71-14-14
Attention: Gerard Ries
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Telecopy No.: (212) 474-3700
Attention: Faiza J. Saeed; and
(b) if to the Company, to
MP3.com, Inc.
4790 Eastgate Mall
San Diego, CA 92121-1970
Telecopy No.: (858) 623-7010
Attention: Paul Ouyang
with a copy to:
Latham & Watkins
12636 High Bluff Drive
Suite 300
San Diego, CA 92130
Telecopy No.: (858) 523-5450
Attention: Scott N. Wolfe
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SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person, where
"control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of a person,
whether through the ownership of voting securities, by contract, as
trustee or executor, or otherwise;
(b) "business day" means any day other than Saturday, Sunday or
any other day on which banks are legally permitted to be closed in New
York;
(c) "knowledge" of any person which is not an individual means
the knowledge of such person's executive officers after reasonable
inquiry;
(d) "material adverse change" or "material adverse effect" means,
when used in connection with the Company or Parent, any change, effect,
event, occurrence, condition or development or state of facts that is
materially adverse to the business, assets, or results of operations or
financial condition of such party and its subsidiaries taken as a whole,
other than any change, effect, event, occurrence, condition, development
or state of facts relating to (i) the economy or securities markets in
general, (ii) the industries in which such party operates in general and
not having a materially disproportionate effect on such party relative
to most other industry participants, (iii) the announcement or existence
of this Agreement, (iv) any claim, suit, action, proceeding or other
litigation in respect of copyright infringement matters instituted or
threatened against the Company following the announcement of this
Agreement, (v) any settlement or judgment with respect to any of the
matters set forth on Section 3.01(h) of the Company Disclosure Schedule
or (vi) the failure by the Company to meet or exceed any third-party or
internal, revenue, earnings or other financial estimates or projections,
in and of itself;
(e) "person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust,
unincorporated organization or other entity; and
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(f) a "subsidiary" of any person means another person, an amount
of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person.
SECTION 8.04. Interpretation. (a) When a reference is made in
this Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. References to a person
are also to its permitted successors and assigns.
(b) To the extent any matter contained in the Company Disclosure
Schedule or the Parent Disclosure Schedule expressly qualifies or modifies a
covenant or definition contained in this Agreement, such covenant or definition
shall be construed and interpreted as so qualified or modified. Each covenant
set forth in the Company Disclosure Schedule or the Parent Disclosure Schedule
shall be binding on Parent and the Company, as applicable, to the same extent as
if such covenant were set forth in full in this Agreement.
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SECTION 8.05. Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents and instruments referred to herein), the
Stockholder Agreement and the Confidentiality Agreement (a) constitute the
entire agreement, and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of this
Agreement and (b) except for the provisions of Article II and Section 5.06, are
not intended to confer upon any person other than the parties any rights or
remedies.
SECTION 8.07. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of conflict
of laws thereof.
SECTION 8.08. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties hereto
without the prior written consent of the other parties. Any assignment in
violation of the preceding sentence shall be void. Subject to the preceding two
sentences, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
SECTION 8.09. Enforcement. Each of the parties hereto agrees that
irreparable damage would occur and that the parties would not have any adequate
remedy at law in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Delaware or in Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (a) consents to submit itself to the personal jurisdiction
of any Federal court located in the State of Delaware or any Delaware state
court in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not attempt
to deny or defeat such
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personal jurisdiction by motion or other request for leave from any such court,
(c) agrees that it will not bring any action relating to this Agreement or any
of the transactions contemplated by this Agreement in any court other than a
Federal court sitting in the State of Delaware or a Delaware state court and (d)
waives any right to trial by jury with respect to any claim or proceeding
related to or arising out of this Agreement or any transaction contemplated by
this Agreement.
SECTION 8.10. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
VIVENDI UNIVERSAL, S.A.,
by /s/ JEAN-MARIE MESSIER
------------------------------------
Name: Jean-Marie Messier
Title: Chairman and Chief Executive
Officer
METRONOME ACQUISITION SUB INC.,
by /s/ GEORGE E. BUSHNELL III
------------------------------------
Name: George E. Bushnell III
Title: Vice President,Corporate Counsel
MP3.COM, INC.,
by /s/ ROBIN D. RICHARDS
------------------------------------
Name: Robin D. Richards
Title: President
76
ANNEX I
TO THE MERGER AGREEMENT
Index of Defined Terms
Term Page
- ---- ----
Accounting Rules.............................................................20
Adjusted Option..............................................................54
Affected Employees...........................................................56
affiliate....................................................................66
Agreement..............................................................Preamble
Appraisal Shares..............................................................5
Average Closing Price.........................................................5
Benefit Agreements...........................................................25
Benefit Plans................................................................25
business day.................................................................66
Cash Cap.....................................................................13
Cash Consideration............................................................4
Cash Election.................................................................4
Certificate of Merger........................................................ 3
Certificates................................................................. 5
Closing...................................................................... 2
Closing Date................................................................. 3
Code...................................................................Preamble
Commonly Controlled Entity...................................................25
Company................................................................Preamble
Company Common Stock...................................................Preamble
Company Disclosure Schedule................................................. 14
Company Filed SEC Documents..................................................21
Company Preferred Stock......................................................15
Company SEC Documents........................................................20
Company Stockholders...................................................Preamble
Company Stock Plans .........................................................15
Confidentiality Agreement....................................................52
Contract.....................................................................18
control......................................................................66
Deposit Agreement.............................................................5
Depositary....................................................................5
D & O Insurance..............................................................57
DGCL......................................................................... 2
Effective Time............................................................... 3
Election Date................................................................11
Employment Agreement...................................................Preamble
Environmental Law............................................................24
ERISA........................................................................25
ESPP.........................................................................15
Exchange Act.................................................................19
Exchange Agent............................................................... 6
Exchange Fund................................................................ 7
Exchange Ratio............................................................... 5
Foreign Antitrust Laws.......................................................19
Form F-4.....................................................................21
Form of Election.............................................................11
GAAP.........................................................................20
Governmental Entity..........................................................19
Hazardous Materials..........................................................24
HSR Act......................................................................19
Intellectual Property Rights.................................................32
knowledge....................................................................66
Liens........................................................................15
material adverse change......................................................67
material adverse effect......................................................67
Maximum Premium..............................................................58
Merger.................................................................Preamble
Merger Consideration..........................................................4
Multiemployer Pension Plan...................................................26
Non-Litigation Liabilities...................................................46
NYSE..........................................................................5
Parent.................................................................Preamble
Parent ADSs............................................................Preamble
Parent Disclosure Schedule...................................................39
Parent SEC Documents.........................................................41
Parent Shares..........................................................Preamble
Pension Plan.................................................................25
Permits......................................................................23
person.......................................................................67
Primary Company Executives...................................................28
Privacy Statement............................................................37
Prorated Cash Amount.........................................................13
Prorated Share Amount........................................................13
Proxy Statement..............................................................19
Release......................................................................24
Requested Cash Amount........................................................13
Requested Share Amount.......................................................13
Restraints...................................................................60
SARs.........................................................................16
SEC..........................................................................19
Section 262...................................................................5
Securities Act...............................................................20
Share Cap....................................................................12
Share Consideration...........................................................4
Share Election................................................................4
Share Proration Factor.......................................................13
Special Committee............................................................17
Stockholder Agreement..................................................Preamble
Stockholder Approval.........................................................31
Stockholders Meeting.........................................................51
Stock Options................................................................16
Sub....................................................................Preamble
subsidiary...................................................................67
Superior Proposal............................................................49
Surviving Corporation.........................................................2
Takeover Proposal............................................................49
taxes........................................................................31
Terms and Conditions.........................................................37
Warrants.....................................................................15
77
EXHIBIT A
Form of Affiliate Letter
Dear Sirs:
The undersigned, a holder of shares of common stock, par value $0.001
per share ("Company Common Stock"), of MP3.com, Inc., a Delaware corporation
(the "Company"), is entitled to receive in connection with the merger (the
"Merger") of the Company with and into a subsidiary of Parent, a societe anonyme
organized under the laws of France ("Parent"), securities of Parent, as the
parent of the surviving corporation in the Merger (the "Parent Securities"). The
undersigned acknowledges that the undersigned may be deemed an "affiliate" of
the Company within the meaning of Rule 145 ("Rule 145") promulgated under the
Securities Act of 1933 (the "Securities Act") by the Securities and Exchange
Commission (the "SEC"), although nothing contained herein should be construed as
an admission of such fact.
If in fact the undersigned were an affiliate under the Securities Act,
the undersigned's ability to sell, assign or transfer the Parent Securities
received by the undersigned in exchange for any shares of Company Common Stock
in connection with the Merger may be restricted unless such transaction is
registered under the Securities Act or an exemption from such registration is
available. The undersigned understands that such exemptions are limited and the
undersigned has obtained or will obtain advice of counsel as to the nature and
conditions of such exemptions, including information with respect to the
applicability to the sale of such securities of Rules 144 and 145(d) promulgated
under the Securities Act. The undersigned understands that Parent will not be
required to maintain the effectiveness of any registration statement under the
Securities Act for the purposes of resale of Parent Securities by the
undersigned.
The undersigned hereby represents to and covenants with Parent that the
undersigned will not sell, assign or transfer any of the Parent Securities
received by the undersigned in exchange for shares of Company Common Stock in
connection with the Merger except (i) pursuant to an effective registration
statement under the Securities Act, (ii) in conformity with the volume and other
limitations of Rule 145 or (iii) in a transaction which, in the opinion of
counsel to Parent or the undersigned reasonably acceptable to Parent or as
described in a "no-action" or interpretive letter from the Staff of the SEC
specifically issued with respect to a transaction to be engaged in by the
undersigned, is not required to be registered under the Securities Act.
In the event of a sale or other disposition by the undersigned of Parent
Securities pursuant to Rule 145, the undersigned will supply Parent with
evidence of compliance with such Rule, in the form of a letter in the form of
Annex I
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2
hereto or the opinion of counsel or no-action letter referred to above. The
undersigned understands that Parent may instruct its transfer agent to withhold
the transfer of any Parent Securities disposed of by the undersigned, but that
(provided such transfer is not prohibited by any other provision of this letter
agreement) upon receipt of such evidence of compliance, Parent shall cause the
transfer agent to effectuate the transfer of the Parent Securities sold as
indicated in such letter.
Parent covenants that it will take all such actions as may be reasonably
available to it to permit the sale or other disposition of Parent Securities by
the undersigned under Rule 145 in accordance with the terms thereof.
The undersigned acknowledges and agrees that the legends set forth below
will be placed on certificates representing Parent Securities received by the
undersigned in connection with the Merger or held by a transferee thereof, which
legends will be removed by delivery of substitute certificates upon receipt of
an opinion in form and substance reasonably satisfactory to Parent from
independent counsel reasonably satisfactory to Parent to the effect that such
legends are no longer required for purposes of the Securities Act.
There will be placed on the certificates for Parent Securities issued to
the undersigned, or any substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a transaction
to which Rule 145 promulgated under the Securities Act of 1933 (the
"Securities Act") applies. The shares have not been acquired by the holder
with a view to, or for resale in connection with, any distribution thereof
within the meaning of the Securities Act. The shares may not be sold, pledged
or otherwise transferred except (i) pursuant to an effective registration
under the Securities Act, (ii) in conformity with the volume and other
limitations of Rule 145 or (iii) in accordance with an exemption from the
registration requirements of the Securities Act."
The undersigned acknowledges that (i) the undersigned has carefully read
this letter and understands the requirements hereof and the limitations imposed
upon the distribution, sale, transfer or other disposition of Parent Securities
and (ii) the receipt by Parent of this letter is an inducement to Parent's
obligations to consummate the Merger.
Very truly yours,
Dated:
79
ANNEX I
TO EXHIBIT A
[Name] [Date]
On ________________, the undersigned sold the securities of Parent,
a societe anonyme organized under the laws of France ("Parent"), described below
in the space provided for that purpose (the "Securities"). The Securities were
received by the undersigned in connection with the merger of MP3.com, Inc., a
Delaware corporation, with and into a subsidiary of Parent.
Based upon the most recent report or statement filed by Parent with the
Securities and Exchange Commission, the Securities sold by the undersigned were
within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933 (the "Securities Act").
The undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Securities Act
or in transactions directly with a "market maker" as that term is defined in
Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents that the undersigned has not solicited or
arranged for the solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer or sale of the
Securities to any person other than to the broker who executed the order in
respect of such sale.
Very truly yours,
[Space to be provided for description of the Securities.]
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SCHEDULE A
Employment Agreement Signatories
Derrick Oien
Greg Kostello
Steve Sheiner