AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
TYCO ACQUISITION CORP. XIX (NV)
AND
THE CIT GROUP, INC.
INCLUDING
GUARANTEE
OF
TYCO INTERNATIONAL LTD.
March 12, 2001
TABLE OF CONTENTS
ARTICLE I THE MERGER..................................................7
Section 1.01 The Merger..................................................7
Section 1.02 Effective Time..............................................7
Section 1.03 Effect of the Merger........................................7
Section 1.04 Articles of Incorporation; By-laws..........................7
Section 1.05 Directors and Officers......................................8
Section 1.06 Effect on Securities, Etc...................................8
Section 1.07 Exchange of Shares..........................................9
Section 1.08 Stock Transfer Books.......................................11
Section 1.09 No Further Ownership Rights in Company Common Stock........11
Section 1.10 Lost, Stolen or Destroyed Certificates.....................11
Section 1.11 Tax Consequences...........................................12
Section 1.12 Taking of Necessary Action; Further Action.................12
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............12
Section 2.01 Organization and Qualification; Subsidiaries...............12
Section 2.02 Certificate of Incorporation and By-laws...................13
Section 2.03 Capitalization.............................................13
Section 2.04 Authority Relative to This Agreement.......................14
Section 2.05 Material Contracts; No Conflict; Required
Filings and Consents....................................15
Section 2.06 Compliance; Permits........................................17
Section 2.07 SEC Filings; Financial Statements; Regulatory Filings......17
Section 2.08 Absence of Certain Changes or Events.......................18
Section 2.09 No Undisclosed Liabilities; Certain Assets.................19
Section 2.10 Absence of Litigation......................................19
Section 2.11 Employee Benefit Plans; Employment Agreements..............20
Section 2.12 Employment and Labor Matters...............................24
Section 2.13 Registration Statement; Proxy Statement/Prospectus.........25
Section 2.14 Restrictions on Business Activities; Agreement
with Regulatory Agencies...............................25
Section 2.15 Properties.................................................26
Section 2.16 Taxes......................................................26
Section 2.17 Environmental Matters......................................27
Section 2.18 Brokers....................................................29
Section 2.19 Intellectual Property......................................29
Section 2.20 Interested Party Transactions..............................31
Section 2.21 Insurance..................................................31
Section 2.22 Interest Rate and Foreign Exchange Contracts...............31
Section 2.23 Compliance With The Foreign Corrupt Practices Act..........31
Section 2.24 Opinion of Financial Advisor...............................31
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ACQUIROR.................32
Section 3.01 Organization and Qualification; Subsidiaries...............32
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Section 3.02 Capitalization.............................................32
Section 3.03 Authority Relative to this Agreement.......................33
Section 3.04 No Conflicts; Required Filings and Consents................33
Section 3.05 Compliance; Permits........................................34
Section 3.06 SEC Filings; Financial Statements..........................35
Section 3.07 Absence of Certain Changes or Events.......................35
Section 3.08 No Undisclosed Liabilities.................................36
Section 3.09 Absence of Litigation......................................36
Section 3.10 Registration Statement; Proxy Statement/Prospectus.........36
Section 3.11 Restrictions on Business Activities........................37
Section 3.12 Taxes......................................................37
Section 3.13 Environmental Matters......................................38
Section 3.14 Brokers....................................................38
Section 3.15 Ownership of Acquiror......................................39
Section 3.16 No Prior Activities........................................39
Section 3.17 No Vote Required...........................................39
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER.....................39
Section 4.01 Conduct of Business by the Company.........................39
Section 4.02 No Solicitation............................................42
Section 4.03 Conduct of Business by Guarantor...........................43
ARTICLE V ADDITIONAL AGREEMENTS......................................44
Section 5.01 Proxy Statement/Prospectus; Registration Statement.........44
Section 5.02 Company Stockholders Meeting...............................46
Section 5.03 Access to Information; Confidentiality.....................46
Section 5.04 Consents; Approvals........................................47
Section 5.05 Agreements with Respect to Affiliates......................47
Section 5.06 Indemnification and Insurance..............................48
Section 5.07 Notification of Certain Matters............................49
Section 5.08 Further Action/Tax Treatment...............................49
Section 5.09 Public Announcements.......................................50
Section 5.10 Guarantor Common Shares....................................50
Section 5.11 Stock Options and ESPP.....................................50
Section 5.12 Certain Employee Benefits..................................51
Section 5.13 Accountants Letters........................................53
Section 5.14 Compliance with State Property Transfer Statutes...........53
Section 5.15 Conveyance Taxes...........................................53
Section 5.16 Exchangeco Shares..........................................53
ARTICLE VI CONDITIONS TO THE MERGER...................................54
Section 6.01 Conditions to Obligation of Each Party
to Effect the Merger...................................54
Section 6.02 Additional Conditions to Obligations of Acquiror...........55
Section 6.03 Additional Conditions to Obligation of the Company.........56
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ARTICLE VII TERMINATION................................................57
Section 7.01 Termination................................................57
Section 7.02 Effect of Termination......................................58
Section 7.03 Fees and Expenses..........................................58
ARTICLE VIII GENERAL PROVISIONS.........................................60
Section 8.01 Effectiveness of Representations, Warranties
and Agreements........................................60
Section 8.02 Notices....................................................60
Section 8.03 Certain Definitions........................................62
Section 8.04 Amendment..................................................63
Section 8.05 Waiver.....................................................63
Section 8.06 Headings; Intepretation....................................63
Section 8.07 Severability...............................................64
Section 8.08 Entire Agreement...........................................64
Section 8.09 Assignment.................................................64
Section 8.10 Parties in Interest........................................64
Section 8.11 Failure or Indulgence Not Waiver; Remedies Cumulative......64
Section 8.12 Governing Law; Jurisdiction................................65
Section 8.13 Counterparts...............................................65
Section 8.14 Waiver of Jury Trial.......................................65
Section 8.15 Performance of Guarantee...................................65
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of March 12, 2001, between Tyco Acquisition Corp. XIX (NV) ("Acquiror"),
a Nevada corporation and a direct, wholly-owned subsidiary of Tyco International
Ltd., a Bermuda company ("Guarantor"), and The CIT Group, Inc., a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Acquiror and the Company have each
determined that it is advisable and in the best interests of their respective
stockholders, and consistent with and in furtherance of their respective
business strategies and goals, for Guarantor to acquire the Company through the
merger of the Company with and into Acquiror upon the terms and subject to the
conditions set forth herein;
WHEREAS, in furtherance of such combination, the Boards of Directors of
Acquiror and the Company have each approved and adopted this Agreement providing
for the merger (the "Merger") of the Company with and into Acquiror in
accordance with the applicable provisions of the Nevada General Corporation Law
(the "NGCL") and the Delaware General Corporation Law (the "DGCL") and upon the
terms and subject to the conditions set forth herein;
WHEREAS, Acquiror and the Company intend that (i) the Merger shall
constitute a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended and the regulations promulgated
thereunder (the "Code"), (ii) by approving resolutions authorizing this
Agreement, to adopt this Agreement as a plan of reorganization within the
meaning of Sections 354 and 361 of the Code and (iii) that the transactions
contemplated by this Agreement be undertaken pursuant to such plan;
WHEREAS, pursuant to the Merger, each outstanding share of the Company's
common stock, par value $0.01 per share (the "Company Common Stock" and each
such share, a "Share"), shall be converted into the right to receive the Merger
Consideration (as defined in Section 1.07(b)), upon the terms and subject to the
conditions set forth herein;
WHEREAS, concurrently with the execution and delivery of this Agreement,
and as a condition to the Company's willingness to enter into this Agreement,
Guarantor has agreed fully and unconditionally to guarantee the representations,
warranties, covenants, agreements and other obligations of Acquiror in this
Agreement (the "Guarantee"); and
WHEREAS, concurrently with the execution and delivery of this Agreement,
and as a condition to Acquiror's willingness to enter into the Agreement,
Acquiror has entered into a stock purchase agreement (the "Stock Purchase
Agreement") with The Dai-Ichi Kangyo Bank, Ltd. (the "Stockholder"), which is
the owner of approximately 26.8% of the outstanding Shares, pursuant to which
the Stockholder has agreed to sell, and Acquiror has agreed to purchase, all of
such Stockholder's Shares in accordance with the terms thereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Acquiror and the Company hereby agree as follows:
Definitions:
"Acquiror" is defined in the preamble.
"Acquisition Proposal" is defined in Section 4.02(a)(i).
"Adjusted Option" is defined in Section 5.11(a).
"affiliates" is defined in Section 8.03(a).
"Affiliate Plan" is defined in Section 2.11(a).
"Agreement" is defined in the preamble.
"Alternative Transaction" is defined in Section 4.02(a).
"Alternative Transaction Condition" is defined in Section 7.03(b).
"Articles of Merger" as defined in Section 1.02(a).
"2000 Balance Sheet" is defined in Section 2.09(a)(i).
"Benefits Continuation Period" is defined in Section 5.12(a).
"business day" is defined in Section 8.03(b).
"Certificate of Merger" is defined in Section 1.02(b).
"Certificates" is defined in Section 1.06(f).
"COBRA" is defined in Section 2.11(b)(i).
"Code" is defined in the recitals.
"Company" is defined in the preamble.
"Company Affiliate Agreement" is defined Section 5.05.
"Company Affiliate Letter" is defined in Section 5.05.
"Company Charter Documents" is defined in Section 2.02.
"Company Common Stock" is defined in the recitals.
"Company Disclosure Schedule" is defined in Section 2.01.
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"Company Employee" is defined in Section 5.12(a).
"Company Employee Plans" is defined in Section 2.11(a).
"Company ESPP" is defined in Section 1.06(c).
"Company Financial Advisor" is defined in Section 2.18.
"Company Financing Agreement" is defined in Section 2.06(a).
"Company Intellectual Property Assets" is defined in Section 2.19(a).
"Company Permits" is defined in Section 2.06(b).
"Company Preferred Stock" is defined in Section 2.03.
"Company SEC Documents" is defined in Section 2.03.
"Company Stock Options" is defined in Section 1.06(c).
"Company Stock Option Plans" is defined in Section 1.06(c).
"Company Stockholders Meeting" is defined in Section 2.04(c)(iii).
"Confidentiality Agreement" is defined in section 5.03(a).
"control" is defined in Section 8.03(c).
"Covered Persons" is defined in Section 5.06(c).
"Defined Benefit Plan" is defined in Section 2.11(e).
"DGCL" is defined in the recitals.
"D&O Insurance" is defined in Section 5.06(d).
"DOL" is defined in Section 2.11(a).
"dollars" or "$" is defined in Section 8.03(d).
"Effective Time" is defined in Section 1.02.
"Environmental Claim" is defined in Section 2.17(e)(i).
"Environmental Health and Safety Laws" is defined in Section 2.05(c)(i).
"Environmental Laws" is defined in Section 2.17(e)(ii).
"ERISA" is defined in Section 2.11(a).
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"Exchange Act" is defined in Section 2.05(a)(iii).
"Exchange Agent" is defined in Section 1.07(a).
"Exchange Ratio" is defined in Section 1.06(a)(i).
"Exchangeco" is defined in Section 1.06(a)(ii).
"Exchangeco Documents" is defined in Section 1.06(a)(ii).
"Exchangeco Shares" is defined in Section 1.06(a)(ii).
"Expenses" is defined in Section 7.03(b).
"Fee" is defined in Section 7.03(b).
"GAAP" is defined in Section 2.07(b).
"Governmental Authority" is defined in Section 2.05(c).
"Guarantee" is defined in the recitals.
"Guarantor" is defined in the preamble.
"2000 Guarantor Balance Sheet" is defined in Section 3.08(i).
"Guarantor Charter Documents" is defined in Section 3.01(a).
"Guarantor Common Shares" is defined in Section 1.06(a)(i).
"Guarantor Permits" is defined in Section 3.05.
"Guarantor Preference Shares" is defined in Section 3.02(a).
"Guarantor SEC Documents" is defined in Section 3.05.
"HSR Act" is defined in Section 2.05(c)(i).
"Indemnified Parties" is defined in section 5.06(b).
"Intellectual Property Assets" is defined in Section 2.19(a).
"IRS" is defined in Section 2.11(b)(vi).
"ISO" is defined in Section 2.11(c)(i).
"knowledge" is defined in Section 8.03(e).
"Material Adverse Effect" is defined in Section 8.03(f).
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"Material Agreement" is defined in Section 3.04(b).
"Materials of Environmental Concern" is defined in Section 2.17(e)(iii).
"Merger" is defined in the recitals.
"Merger Consideration" is defined in Section 1.07(b).
"NGCL" is defined in the recitals.
"Non-U.S. Monopoly Laws" is defined in Section 2.05(c).
"NYSE" is defined in Section 1.06(f).
"Ordinary Course Finance Agreements" is defined in Section 2.03.
"PBGC" is defined in Section 2.11(b)(ix).
"PCBs" is defined in Section 2.17(d).
"person" is defined in Section 8.03(g).
"Post-1997 Company SEC Documents" is defined in Section 2.07(a).
"Post-1998 Guarantor SEC Documents" is defined in Section 3.06(a).
"Proxy Statement/Prospectus" is defined in Section 2.13(a)(ii).
"Registration Statement" is defined in Section 3.10(a)(i).
"Regulatory Agency" is defined in Section 2.07(c).
"Regulatory Agreement" is defined in Section 2.14(b).
"Regulatory Approvals" is defined in Section 2.05(c)(ii).
"SEC" is defined in Section 2.03.
"Securities Act" is defined in Section 2.05(c)(i).
"Share" is defined in the recitals.
"significant subsidiary" is defined in Section 8.03(h).
"Special Voting Stock" is defined in Section 1.06(a)(iii).
"Stock Purchase Agreement" is defined in the recitals.
"Stockholder" is defined in the recitals.
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"subsidiary" or "subsidiaries" is defined in Section 8.03(i).
"Subsidiary Documents" is defined in Section 2.02.
"Surviving Corporation" is defined in Section 1.01.
"Tax" is defined in Section 2.16(b).
"Tax Return" is defined in Section 2.16(b).
"Terminating Breach" is defined in Section 7.01(h).
"Terminating Change" is defined in Section 7.01(g).
"Terminating Misrepresentation" is defined in Section 7.01(f).
"Third Party" is defined in Section 4.02(a).
"Third Party Intellectual Property Assets" is defined in Section 2.19(c).
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ARTICLE I
THE MERGER
Section 1.01 The Merger. At the Effective Time, and subject to and upon
the terms and conditions of this Agreement, the NGCL and the DGCL, the Company
shall be merged with and into Acquiror, the separate corporate existence of the
Company shall cease, and Acquiror shall continue as the surviving corporation
(hereinafter sometimes referred to as the "Surviving Corporation").
Section 1.02 Effective Time. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 7.01, as promptly as practicable (and in any event within
two business days) after the satisfaction or waiver of the conditions set forth
in Article VI, the parties hereto shall cause the Merger to be consummated by
(a) filing articles of merger as contemplated by the NGCL (the "Articles of
Merger") and (b) filing a properly executed agreement or certificate of merger
as contemplated by the DGCL (the "Certificate of Merger"), each, together with
any required related certificates, with the Secretaries of State of the States
of Nevada and Delaware, as appropriate, in such forms as required by, and
executed in accordance with the relevant provisions of, the NGCL and the DGCL,
respectively. The Merger shall become effective at the time of the later to
occur of such filings or at such later time, which will be as soon as reasonably
practicable, specified in the Articles of Merger and the Certificate of Merger
(the "Effective Time"). Prior to such filing, a closing shall be held at the
offices of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇,
unless another time or place is agreed to in writing by the parties hereto, for
the purpose of confirming the satisfaction or waiver, as the case may be, of the
conditions set forth in Article VI.
Section 1.03 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Articles of Merger, the
Certificate of Merger and the applicable provisions of the NGCL and the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and Acquiror shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Acquiror shall become the debts,
liabilities and duties of the Surviving Corporation.
Section 1.04 Articles of Incorporation; By-laws. (a) Subject to Section
5.06, at the Effective Time, the Articles of Incorporation of the Acquiror, as
in effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation (other than that the name of the
Surviving Corporation reflected in such Articles of Incorporation shall be The
CIT Group, Inc.) until thereafter amended as provided by law and such Articles
of Incorporation of the Surviving Corporation.
(b) Subject to Section 5.06, at the Effective Time, the By-laws of
Acquiror, as in effect immediately prior to the Effective Time, shall be the
By-laws of the Surviving Corporation until thereafter amended.
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Section 1.05 Directors and Officers. The directors of Acquiror immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and By-laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
Section 1.06 Effect on Securities, Etc. At the Effective Time, by virtue
of the Merger and without any action on the part of Acquiror, the Company or the
holders of any securities of the Company:
(a) Conversion of Securities. (i) Each Share issued and outstanding
immediately prior to the Effective Time (excluding any Shares to be canceled
pursuant to Section 1.06(b)) shall be converted, subject to Sections 1.06 (e)
and (f), into the right to receive from Acquiror 0.6907 (such fraction, the
"Exchange Ratio") of a fully paid and nonassessable common share of Guarantor,
par value U.S. $0.20 per share (the "Guarantor Common Shares").
(ii) Each share in the non-voting class of exchangeable shares (the
"Exchangeco Shares") of CIT Exchangeco Inc., a wholly-owned subsidiary of the
Company formed under the laws of the province of Nova Scotia ("Exchangeco"),
shall remain outstanding, and the provisions attaching thereto, the Exchangeable
Share Support Agreement in respect thereof, dated November 15, 1999, between the
Company, 3026192 Nova Scotia Company and Exchangeco and the Voting and Exchange
Trust Agreement in respect thereof, dated November 15, 1999, between the
Company, Exchangeco and Montreal Trust Company of Canada (collectively, the
"Exchangeco Documents"), shall each be modified as required pursuant to the
terms thereof to provide that, from and after the Effective Time, each
Exchangeco Share shall be exchangeable, subject to Sections 1.06(e) and (f), for
a fraction of a Guarantor Common Share equal to the Exchange Ratio, and the
foregoing fraction of a Guarantor Common Share shall be substituted for shares
of Company Common Stock for all other purposes under the Exchangeco Documents.
(iii) The Special Voting Stock of the Company (the "Special Voting Stock")
shall be converted into a special voting preference share of Guarantor, having
the designations, powers, preferences, rights, qualifications and limitations
substantially similar to the designations, powers, preferences, rights,
qualifications and limitations of the Special Voting Stock.
(b) Cancellation. Each Share held in the treasury of the Company and each
Share owned by Guarantor, Acquiror or any direct or indirect, wholly-owned
subsidiary of the Company or Guarantor immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder
thereof, cease to be outstanding, be canceled and retired without payment of any
consideration therefor and cease to exist.
(c) Stock Options; Employee Stock Purchase Plan. At the Effective Time,
all options ("Company Stock Options") to purchase Company Common Stock then
outstanding, whether under the Company's Long-Term Equity Compensation Plan, the
Company's Transition
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Option Plan or otherwise (together, the "Company Stock Option Plans"), shall be
treated in accordance with Section 5.11 of this Agreement. Rights to purchase
shares of Company Common Stock outstanding under any employee stock purchase or
restricted stock plan or any similar U.S. or non-U.S. plan (collectively, the
"Company ESPP") shall be treated as set forth in Section 5.11 of this Agreement.
Any rights to purchase Company Common Stock under the Company's 401(k) plans
shall be treated as set forth in Section 5.12 of this Agreement.
(d) Capital Stock of Acquiror. Each share of common stock, $0.01 par value
per share, of Acquiror issued and outstanding immediately prior to the Effective
Time shall constitute one validly issued, fully paid and nonassessable share of
common stock, par value $0.01 per share, of the Surviving Corporation. Following
the Effective Time, each certificate evidencing ownership of shares of Acquiror
common stock shall evidence ownership of such shares of capital stock of the
Surviving Corporation.
(e) Adjustments to Exchange Ratio, Etc. If, during the period between the
date of this Agreement and the Effective Time, any change in the outstanding
shares of capital stock of Guarantor or the Company shall occur, including by
reason of any reclassification, recapitalization, stock split or combination,
exchange or readjustment of shares, or any stock dividend thereon with a record
date during such period, the Exchange Ratio, the Merger Consideration and any
other amounts payable pursuant to the Merger or otherwise pursuant to this
Agreement shall be appropriately adjusted.
(f) Fractional Shares. No certificates or scrip representing less than one
Guarantor Common Share shall be issued in exchange for Shares or Exchangeco
Shares upon the surrender for exchange of a certificate which immediately prior
to the Effective Time represented outstanding Shares (the "Certificates") or
upon surrender for exchange of a certificate representing Exchangeco Shares. In
lieu of any such fractional share, each holder of Shares or Exchangeco Shares
who would otherwise have been entitled to a fraction of a Guarantor Common Share
upon surrender of Shares or Exchangeco Shares for exchange shall be paid upon
such surrender (and after taking into account all certificates surrendered by
such holder) cash (without interest) in an amount equal to such fraction
multiplied by the closing price of the Guarantor Common Shares on the New York
Stock Exchange (the "NYSE"), as reported by Bloomberg Financial Markets (or if
such service is unavailable, a service providing similar information selected by
Acquiror and the Company) on the trading day immediately preceding the date of
the Effective Time, in the case of the Shares, or the trading day immediately
preceding the date of surrender, in the case of the Exchangeco Shares.
Section 1.07 Exchange of Shares. (a) Exchange Agent. Acquiror shall cause
to be supplied to or for such bank or trust company as shall be designated by
Acquiror and shall be reasonably acceptable to the Company (the "Exchange
Agent"), in trust for the benefit of the holders of Company Common Stock, as
needed for exchange and payment in accordance with this Section 1.07 through the
Exchange Agent, certificates evidencing the Guarantor Common Shares issuable
pursuant to Section 1.06(a), the cash to be paid in lieu of fractional shares in
exchange for outstanding Shares pursuant to Section 1.06(f) and the cash or
other property in respect of any dividends or other distributions payable
pursuant to Section 1.07(c).
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(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Acquiror will cause the Exchange Agent to mail to each holder of
record of Certificates (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as Acquiror may reasonably
specify) and (ii) instructions to effect the surrender of the Certificates in
exchange for the certificates evidencing Guarantor Common Shares and cash in
lieu of fractional shares. Upon surrender of a Certificate for cancellation to
the Exchange Agent together with such letter of transmittal, duly executed, and
such other customary documents as may be required pursuant to such instructions,
the holder of such Certificate shall be entitled to receive in exchange therefor
solely (A) certificates evidencing that number of whole Guarantor Common Shares
which such holder has the right to receive in accordance with Section 1.06(a) in
respect of the Shares formerly evidenced by such Certificate and (B) cash in
respect of fractional shares as provided in Section 1.06(f) (the Guarantor
Common Shares and cash in respect of fractional shares being referred to,
collectively, as the "Merger Consideration"), except that Shares held at the
Effective Time in book-entry form shall be exchanged for Merger Consideration in
accordance with the customary procedures of the Depository Trust Company.
The holder of each Certificate, upon its exchange for Guarantor Common
Shares, shall also receive any dividends or other distributions to which such
holder is entitled pursuant to Section 1.07(c). Certificates surrendered shall
forthwith be canceled following the Effective Time. In the event of a transfer
of ownership of Shares which is not registered in the transfer records of the
Company as of the Effective Time, the Merger Consideration, dividends and
distributions may be issued and paid in accordance with this Article I to a
transferee if the Certificate evidencing such Shares is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer pursuant to this Section 1.07(b) and by evidence that any
applicable stock transfer taxes have been paid. Until so surrendered, each
outstanding Certificate that, prior to the Effective Time, represented Shares
will be deemed from and after the Effective Time, for all corporate purposes,
other than the payment of dividends or other distributions, to evidence the
ownership of the number of full Guarantor Common Shares, and cash in respect of
fractional shares, into which such Shares shall have been so converted.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect to
Guarantor Common Shares with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to the
Guarantor Common Shares such holder is entitled to receive until the holder of
such Certificate shall surrender such Certificate in accordance with the
provisions of Section 1.07(b). Subject to applicable law, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificates representing whole Guarantor Common Shares issued in exchange
therefor, without interest, 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 Guarantor Common Shares.
(d) Transfers of Ownership. If any certificate for Guarantor Common Shares
is to be issued in a name other than that in which the Certificate surrendered
in exchange therefor is registered, it will be a condition of the issuance
thereof that the Certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting
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such exchange shall have paid to Acquiror or any agent designated by it any
transfer or other taxes required by reason of the issuance of a certificate for
Guarantor Common Shares in any name other than that of the registered holder of
the Certificate surrendered, or establish to the satisfaction of Acquiror or any
agent designated by it that such tax has been paid or is not payable.
(e) Escheat. Neither Acquiror nor the Company nor any of their respective
affiliates shall be liable to any holder of Company Common Stock for any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) Withholding Rights. The Exchange Agent shall be entitled to deduct and
withhold from the Merger Consideration otherwise payable pursuant to this
Agreement to any holder of Company Common Stock, and from any cash dividends or
other distributions that the holder is entitled to receive under Section
1.07(c), such amounts as 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 non-United States tax law. To the extent that amounts are so
withheld by the Exchange Agent, such portion of the Merger Consideration and
other such amounts payable under Section 1.07(c) that are withheld shall be
treated for all purposes of this Agreement as having been received by the holder
of the Shares in respect of which such deduction and withholding was made by the
Exchange Agent.
(g) Undistributed Certificates. Any portion of the certificates evidencing
the Guarantor Common Shares, the cash to be paid in lieu of fractional shares
and the cash or other property in respect of dividends or other distributions
supplied to the Exchange Agent which remains undistributed to the holders of the
Certificates for one year after the Effective Time shall be delivered to the
Surviving Corporation, upon demand, and any holders of the Certificates who have
not theretofore complied with this Section 1.07 shall thereafter look only to
the Surviving Corporation for payment of their claim for Merger Consideration
and any dividends or distributions with respect to Guarantor Common Shares.
Section 1.08 Stock Transfer Books. At the close of business on the date of
the Effective Time, the stock transfer books of the Company shall be closed, and
there shall be no further registration of transfers of the Company Common Stock
thereafter on the records of the Company.
Section 1.09 No Further Ownership Rights in Company Common Stock. The
Merger Consideration delivered upon the surrender for exchange of Shares in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the records of the Surviving Corporation of
Shares which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Article I.
Section 1.10 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the
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holder thereof, such Merger Consideration and any dividends or other
distributions as may be required pursuant to this Article I; provided, however,
that the Surviving Corporation may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed Certificates to deliver a bond in such sum as it may reasonably direct
as indemnity against any claim that may be made against Guarantor, the Surviving
Corporation or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
Section 1.11 Tax Consequences. The parties hereto intend that the Merger
shall constitute a reorganization within the meaning of Section 368(a) of the
Code. The parties hereto hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
Section 1.12 Taking of Necessary Action; Further Action. Each of Acquiror
and the Company will take, and cause their affiliates to take, all such
reasonable and lawful actions as may be necessary or appropriate in order to
effectuate the Merger and the other transactions contemplated by this Agreement
in accordance with this Agreement as promptly as possible. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company and Acquiror, the officers and directors of
the Company and Acquiror immediately prior to the Effective Time are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Acquiror as follows:
Section 2.01 Organization and Qualification; Subsidiaries. Each of the
Company and its subsidiaries is an entity duly organized, validly existing and
(to the extent the concept of good standing exists in the applicable
jurisdiction) in good standing under the laws of the jurisdiction of its
organization and has the requisite corporate or other power and authority
necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business as it is now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power or authority would not reasonably be expected to have a Material Adverse
Effect. Each of the Company and its subsidiaries is duly qualified or licensed
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not reasonably be expected to have a Material Adverse
Effect. A list of all subsidiaries of the Company together with the jurisdiction
of organization of each such subsidiary and the percentage of each such
subsidiary's outstanding capital stock owned by the Company or another
subsidiary of the Company (in the case of any non-U.S. subsidiaries, without
giving effect to any qualifying share ownerships of less than 1%) is contained
in Section 2.01 of the written disclosure schedule previously delivered by the
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Company to Acquiror (the "Company Disclosure Schedule"). Except as set forth in
Section 2.01 of the Company Disclosure Schedule or the Company SEC Documents,
neither the Company nor any of its subsidiaries directly or indirectly owns any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity (other than
its wholly-owned subsidiaries), with respect to which interest the Company or a
subsidiary has invested (and currently owns) or is required to invest
$10,000,000 or more, excluding securities in any publicly-traded company held
for investment by the Company and comprising less than five-percent of the
outstanding stock of such company.
Section 2.02 Certificate of Incorporation and By-laws. The Company has
heretofore made available to Acquiror a complete and correct copy of its Amended
and Restated Certificate of Incorporation and Amended and Restated By-laws, each
as amended to date (the "Company Charter Documents"), and will make available to
Acquiror, as promptly as practicable, the Certificate of Incorporation and
By-laws (or equivalent organizational documents) of each of its subsidiaries
reasonably requested by Acquiror (the "Subsidiary Documents"). All such Company
Charter Documents and Subsidiary Documents are in full force and effect, except
in the case of Subsidiary Documents where the failure to be in full force and
effect would not reasonably be expected, either individually or in the
aggregate, to have a Material Adverse Effect. Neither the Company nor any of its
subsidiaries is in violation of any of the provisions of its Certificate of
Incorporation or By-laws or equivalent organizational documents, except for
violations of the documents which do not and are not reasonably likely to
materially interfere with the operations of such entity.
Section 2.03 Capitalization. The authorized capital stock of the Company
consists of 1,210,000,000 shares of the Company Common Stock and 50,000,000
shares of Preferred Stock, $0.01 par value per share (the "Company Preferred
Stock"), of which one (1) share has been designated as Special Voting Stock. As
of March 12, 2001, (i) 250,649,657 shares of the Company Common Stock were
issued and outstanding, all of which are duly authorized, validly issued, fully
paid and nonassessable (excluding treasury shares which are issued but not
outstanding, all of which are not entitled to vote) and none of which were
issued in violation of preemptive or similar rights, (ii) no shares of the
Company Common Stock were held by subsidiaries of the Company, (iii) one share
of Company Special Voting Stock was issued and outstanding, duly authorized,
validly issued, fully paid and nonassessable, (iv) 11,248,111 Exchangeco Shares
(which are the capital stock of Exchangeco) were issued and outstanding all of
which are duly authorized, validly issued, fully paid and nonassessable, (v)
11,248,111 shares of the Company Common Stock were reserved for the exchange of
the Exchangeco Shares, (vi) 23,276,689 shares of the Company Common Stock were
reserved for existing grants and 5,623,311 shares were reserved for future
grants pursuant to the Company Option Plans, and (vii) 639,525 shares of the
Company Common Stock were reserved and available for future issuance pursuant to
the Company ESPP and the Company's 401(k) plans. Other than the Special Voting
Stock, there are no outstanding shares of Company Preferred Stock. Except as set
forth in Section 2.03 of the Company Disclosure Schedule, no change in such
capitalization has occurred since March 12, 2001, except for changes resulting
from the exercise or termination of Company Stock Options or for purchases
pursuant to the Company ESPP or the Company's 401(k) plans or the conversion of
Exchangeco Shares. Except as set forth in Section 2.01, this Section 2.03 or
Section 2.11 or in Section 2.03 or Section 2.11 of the Company Disclosure
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Schedule or the Company SEC Documents, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character (including,
without limitation, registration rights) binding on the Company or any of its
subsidiaries relating to the issued or unissued capital stock of the Company or
any of its subsidiaries or obligating the Company or any of its subsidiaries,
directly or indirectly, to issue, sell or register any shares of capital stock
of, or other equity interests in, the Company or any of its subsidiaries. All
shares of the Company Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, shall be duly authorized, validly issued, fully-paid
and nonassessable.
Except as set forth in Section 2.03 of the Company Disclosure Schedule or
the reports, schedules, forms, statements, registration statements, proxy
statements and other documents filed by the Company with the Securities and
Exchange Commission ("SEC") since December 31, 1999 and prior to the date of
this Agreement, including those incorporated therein by reference prior to the
date of this Agreement (the "Company SEC Documents"), there are no obligations,
contingent or otherwise, of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of the Company Common Stock
or the capital stock of any subsidiary. Except as set forth in Section 2.03 of
the Company Disclosure Schedule or the Company SEC Documents, there are no
obligations, contingent or otherwise, of the Company or any of its subsidiaries
to provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any such subsidiary or any other entity other than
financing or lending arrangements of the Company or any of its subsidiaries as a
lender or a financing provider entered into in the ordinary course of business
(the "Ordinary Course Finance Agreements") and guarantees of bank obligations of
subsidiaries entered into in the ordinary course of business. Except as set
forth in Section 2.01 or 2.03 of the Company Disclosure Schedule, all of the
outstanding shares of capital stock (other than directors' qualifying shares) of
each of the Company's subsidiaries are duly authorized, validly issued, fully
paid and nonassessable, and all such shares (other than directors' qualifying
shares and a de minimis number of shares owned by employees of such
subsidiaries) are owned by the Company or another subsidiary free and clear of
all security interests, liens, claims, pledges, agreements, limitations in the
Company's voting rights, charges or other encumbrances of any nature whatsoever.
Section 2.04 Authority Relative to This Agreement.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action, and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions so contemplated (other than the adoption of
this Agreement by the Company's stockholders in accordance with the DGCL and the
Company Charter Documents and the Exchangeco Documents and the filing and
recording of appropriate merger documents as required by the NGCL and the DGCL).
(b) The provisions of Section 203 of the DGCL will not apply to the
Merger.
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(c) As of the date hereof, the Board of Directors of the Company has (i)
determined that it is advisable and in the best interest of the Company's
stockholders for the Company to enter into this Agreement and to consummate the
Merger upon the terms and subject to the conditions of this Agreement, (ii)
adopted this Agreement in accordance with the applicable provisions of the DGCL
and (iii) recommended the adoption of this Agreement by holders of the Company
Common Stock and directed that this Agreement be submitted for consideration by
the Company's stockholders at the meeting of the stockholders of the Company to
consider the Merger Agreement (the "Company Stockholders Meeting"). This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Guarantor and Acquiror
of this Agreement and the Guarantee hereof, as applicable, constitutes a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
Section 2.05 Material Contracts; No Conflict; Required Filings and
Consents. (a) Subject to the following sentence, Section 2.05(a) of the Company
Disclosure Schedule includes, as of the date hereof, a list of (i) other than
intercompany and Ordinary Course Finance Agreements, all loan agreements,
indentures, mortgages, pledges, conditional sale or title retention agreements,
security agreements, guaranties, standby letters of credit (to which the Company
or any subsidiary is the responsible party), equipment leases or lease purchase
agreements, each in an amount equal to or exceeding $25,000,000 to which the
Company or any of its subsidiaries is a party or by which any of them is bound;
(ii) all contracts, agreements, commitments or other understandings or
arrangements to which the Company or any of its subsidiaries is a party or by
which any of them or any of their respective properties or assets are bound or
affected, but excluding Ordinary Course Finance Agreements and contracts,
agreements, commitments or other understandings or arrangements entered into in
the ordinary course of business and involving, in the case of any such contract,
agreement, commitment, or other understanding or arrangement, individual
payments or receipts by the Company or any of its subsidiaries of less than
$25,000,000 over the term of such contract, commitment, agreement, or other
understanding or arrangement; and (iii) all agreements which are required to be
filed as "material contracts" with the SEC pursuant to the requirements of the
Securities Exchange Act of 1934, as amended, and the SEC's rules and regulations
thereunder (the "Exchange Act") but have not been so filed with the SEC. With
regard to agreements for licensing or royalty arrangements, the threshold
referred to in clause (ii) of the preceding sentence shall be measured on an
annual basis.
(b) Except as set forth in Section 2.05(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, (i) conflict with
or violate the Company Charter Documents, (ii) conflict with or violate the
Subsidiary Documents or any law, rule, regulation, order, judgment or decree
applicable to the Company or any of its subsidiaries or by which its or any of
their respective properties is bound or affected, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or impair the Company's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of, or cause any, termination, amendment,
redemption, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on (including a right to purchase) any of the properties or
assets of the Company or any of its subsidiaries pursuant to, any note, bond,
mortgage, indenture, credit
-15-
facility, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or its or any of their
respective properties is bound or affected, except, in the case of clause (ii)
or (iii), for any such conflicts, violations, breaches, defaults or other
occurrences that would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(c) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, require the
Company or any of its subsidiaries to make or seek any consent, approval,
authorization or permit of, or filing with or notification to, any governmental,
administrative or regulatory authority, U.S. and non-U.S. (each, a "Governmental
Authority"), except (i) (I) for applicable requirements, if any, of the
Securities Act of 1933, as amended, and the rules and regulations of the SEC
thereunder (the "Securities Act"), (II) the Exchange Act, (III) for applicable
requirements, if any, under state securities laws and of the securities
commissions or similar regulatory authorities in the provinces and territories
of Canada, (IV) the pre-merger notification requirements of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act"), (V) the Toronto Stock Exchange and
the NYSE; (VI) filings and consents under any applicable non-United States laws
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade ("Non-U.S. Monopoly Laws"), including,
without limitation, filings and consents under the Canadian Competition Act, as
amended, and/or with the Canadian Competition Bureau; (VII) filings and consents
as may be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered by the
Merger or the transactions contemplated by this Agreement ("Environmental,
Health and Safety Laws"); and (VIII) the filing and recordation of appropriate
merger or other documents as required by the NGCL and the DGCL, (ii) (I) for the
filing of applications and notices, as applicable, with the U.S. federal and
state regulatory authorities governing banking, consumer and commercial finance,
mortgage lending and insurance, (II) the filing of applications and notices, as
applicable, with federal housing related authorities, and the approval of such
applications by such authorities, and (III) the filing of applications and
notices, as applicable, with foreign governmental authorities (including,
without limitation, in Canada and Japan) regulating banking, consumer and
commercial finance, mortgage lending and insurance in the foreign jurisdictions
in which the Company operates its business or to which it is otherwise subject,
and the approval of such applications by such authorities (all of the foregoing
in this clause (ii), collectively, the "Regulatory Approvals") (iii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or materially delay
consummation of the Merger, or otherwise prevent or materially delay the Company
from performing its material obligations under this Agreement, or would not
otherwise reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, or (iv) as to which any necessary consents, approvals,
authorizations, permits, filings or notifications have heretofore been obtained
or filed, as the case may be, by the Company. All material Regulatory Approvals
which, to the knowledge of the Company, are applicable to the Merger and the
transactions contemplated hereby and thereby are set forth in Section 2.05(c) of
the Company Disclosure Schedule. As of the date hereof, the Company knows of no
reason why all Regulatory Approvals should not be timely obtained.
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Section 2.06 Compliance; Permits. (a) Except as set forth in Section
2.06(a) of the Company Disclosure Schedule or the Company SEC Documents, neither
the Company nor any of its subsidiaries is (or has been as a result of which it
could reasonably be expected now or in the future to have material liability) in
conflict with, or in breach, default or violation of, (i) any law, rule,
regulation, order, judgment or decree applicable to the Company or any of its
subsidiaries or by which its or any of their respective properties is bound or
affected, (ii) any note, bond, debenture, indenture, credit agreement or
facility or commercial paper facility pursuant to which the Company or any of
its subsidiaries has or may incur indebtedness for borrowed money (a "Company
Financing Agreement") or any security, pledge, mortgage or trust agreement or
arrangement in respect of any Company Financing Agreement or (iii) any other
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or its or any of their respective
properties is bound or affected (including any note, bond, debenture, indenture,
credit agreement or facility or commercial paper facility not included in clause
(ii) above or any security, pledge, mortgage or trust agreement or arrangement
in respect of any of the foregoing), except for any such conflicts, defaults or
violations which would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(b) Except as set forth in Section 2.06(b) of the Company Disclosure
Schedule or the Company SEC Documents, the Company and its subsidiaries hold all
permits, licenses, easements, variances, exemptions, consents, certificates,
orders and approvals from governmental authorities which are material to the
operation of the business of the Company and its subsidiaries, taken as a whole,
as it is now being conducted (collectively, the "Company Permits"), except where
the failure to hold such Company Permits would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. The Company
and its subsidiaries are in compliance with the terms of the Company Permits,
and have not failed to comply therewith as a result of which they would
reasonably be expected to have liability now or in the future, except as
described in the Company SEC Documents or where the failure to so comply would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
Section 2.07 SEC Filings; Financial Statements; Regulatory Filings. (a)
Except as set forth in Section 2.07 of the Company Disclosure Schedule, the
Company has filed all reports, schedules, forms, statements and other documents
(including all exhibits to the Company SEC Documents) required to be filed with
the SEC since December 31, 1997 (the "Post-1997 Company SEC Documents"). Except
as disclosed in Section 2.07 of the Company Disclosure Schedule or the Company
SEC Documents, such reports, schedules, forms, statements and other documents
(i) complied in all material respects with the applicable requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. Except as set
forth in Section 2.07 of the Company Disclosure Schedule, none of the Company's
subsidiaries is required to file any forms, reports or other documents with the
SEC. To the Company's
-17-
knowledge, no investigation by the SEC with respect to the Company or any of its
subsidiaries is pending or threatened, except as disclosed in the Company SEC
Documents.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Post-1997 Company SEC
Documents was prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or in the
Post-1997 Company SEC Documents), and each fairly presents in all material
respects the consolidated financial position of the Company and its subsidiaries
at the respective dates thereof and the consolidated results of its operations
and cash flows for the periods indicated, except that for purposes of the
foregoing representation, the unaudited interim financial statements (i) shall
be read in conjunction with the Company's consolidated financial statements
contained in the Company's 1999 Annual Report on Form 10-K, and (ii) were or are
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount.
(c) Except as set forth in Section 2.07 of the Company Disclosure
Schedule, the Company and each of its subsidiaries have timely filed all
material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
December 31, 1997, with (i) the Board of Governors of the Federal Reserve
System, (ii) the Federal Deposit Insurance Corporation, (iii) any U.S. state
banking commission, any other non-U.S. state regulatory authorities or any
comparable regulatory authorities and (iv) any self-regulatory organization
(each, a "Regulatory Agency"), and have paid all material fees and assessments
due and payable in connection therewith. Except for normal examinations
conducted by a Regulatory Agency in the regular course of the business of the
Company and its subsidiaries, and except as set forth in Section 2.07(c) of the
Company Disclosure Schedule, no Regulatory Agency has initiated any proceeding
or investigation or, to the knowledge of the Company, threatened any
investigation into the business or operations of the Company or any of its
subsidiaries since December 31, 1997, except for such proceedings or
investigations which would not, reasonably be expected individually or in the
aggregate, to have a Material Adverse Effect.
Section 2.08 Absence of Certain Changes or Events. Except as set forth in
Section 2.08 of the Company Disclosure Schedule or the Company SEC Documents,
since September 30, 2000, the Company has conducted its business in the ordinary
course and there has not occurred: (i) any changes, effects or circumstances ,
including any damage to, destruction or loss of any asset of the Company
(whether or not covered by insurance) constituting, individually or in the
aggregate, a Material Adverse Effect; (ii) any amendments or changes in the
Company Charter Documents; (iii) any material changes to any Company Employee
Plans or other employee benefit arrangements or agreements, including the
establishment of any new such plans, arrangements or agreements or the extension
of coverage under any such plans, arrangements or agreements to new groups of
employees or other individuals; (iv) any material change by the Company in its
accounting methods, principles or practices (other than as required by GAAP
subsequent to the date of this Agreement); or (v) other than in the ordinary
course of business, any sale of a material amount of assets of the Company.
Certain recent financial results are as represented in Section 2.08 of the
Company Disclosure Schedule.
-18-
Section 2.09 No Undisclosed Liabilities; Certain Assets.
(a) Except as set forth in Section 2.09 of the Company Disclosure Schedule
or the Company SEC Documents, neither the Company nor any of its subsidiaries
has any liabilities (absolute, accrued, contingent or otherwise), except
liabilities (i) in the aggregate adequately provided for in the Company's
unaudited balance sheet (including any related notes thereto) as of September
30, 2000, included in the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2000 (the "2000 Balance Sheet"), (ii) incurred in
the ordinary course of business and not required under GAAP to be reflected on
the 2000 Balance Sheet, (iii) incurred since September 30, 2000 in the ordinary
course of business, (iv) incurred in connection with this Agreement or the
Merger or the other transactions contemplated hereby or (v) which would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(b) The allowances for loan, credit and lease losses contained in the
financial statements contained in the Company SEC Documents were reasonably
established in accordance with good business judgment and industry practice and
with past practices and experiences of the Company and its subsidiaries, and the
reserve for credit losses shown on the 2000 Balance Sheet is adequate in all
material respects to provide for possible losses on loans, leases and credit
commitments outstanding as of the date of such balance sheet.
(c) Except as may be set forth in Section 2.09(c) of the Company
Disclosure Schedule or with respect to which adequate reserves are reflected in
the financial statements contained in the Company SEC Documents, (i) the loans,
credit commitments and leases shown on the Company financial statements
contained in the Company SEC Documents or which were entered into after the date
of the 2000 Balance Sheet were or will be made in all material respects in the
ordinary course of business in accordance with good business judgment and
industry practice and are not or will not be subject to any material defenses,
setoffs or counterclaims, including without limitation any such as are afforded
by usury, truth-in-lending or similar laws, except as may be provided by
bankruptcy, insolvency or similar laws governing the remedies of creditors or by
general principles of equity as to the enforcement of equitable remedies, (ii)
the notes, leases or other evidences of indebtedness or obligation evidencing
such loans, credit commitments and leases and all forms of pledges, mortgages
and other collateral documents and security agreements are and will be, in all
material respects, valid, true and genuine and what they purport to be, adequate
to evidence the rights and obligations of the parties and enforceable in
accordance with their terms and (iii) the Company and its subsidiaries have
complied and will, prior to the Effective Time, comply with all laws and
regulations relating to such loans, credit commitments and leases (including
without limitation any usury, truth-in-lending or similar laws) or to the
extent, if any, there has not been such compliance, such failure to comply both
(x) is not material to the Company and (y) will not materially interfere with
the timely collection of any material amount of such loans or the timely
enforcement of the rights to payment of the Company or any subsidiary with
respect to any material amount of such credit commitments or leases.
Section 2.10 Absence of Litigation. Except as set forth in Section 2.10 or
Section 2.19(c) of the Company Disclosure Schedule or the Company SEC Documents
or arising out of the transactions contemplated by this Agreement, there are no
claims, actions, suits,
-19-
arbitrations, proceedings or investigations pending or, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries, or any
properties or rights of the Company or any of its subsidiaries, before any
court, arbitrator or Governmental Authority, that would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
Section 2.11 Employee Benefit Plans; Employment Agreements. (a) "Company
Employee Plans" shall mean all "employee pension benefit plans" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), all "employee welfare benefit plans" (as defined in Section 3(1) of
ERISA), all non-U.S. non-statutory plans and all other U.S. and non-U.S.
non-statutory bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar fringe or
employee benefit plans, programs or arrangements (including those which contain
change of control provisions or pending change of control provisions), and any
employment, executive compensation or severance agreements (including those
which contain change of control provisions or pending change of control
provisions), written or otherwise, as amended, modified or supplemented,
currently in effect or currently being maintained or administered for the
benefit of, or relating to, any former or current employee, officer, director or
consultant (or any of their beneficiaries) of the Company or a subsidiary of the
Company. The term "Affiliate Plan" shall mean any other such plan, program or
arrangement with respect to which the Company or any subsidiary of the Company
has or could reasonably be expected to have any liability, either as a member of
a controlled group of corporations or trades or businesses as defined under
Section 414 of the Code and comparable provisions of ERISA, or by contractual
arrangement. Section 2.11(a) of the Company Disclosure Schedule lists each
Company Employee Plan and each Affiliate Plan. The Company shall indicate on
such Company Disclosure Schedule each material plan which contains a change of
control provision. With respect to each Company Employee Plan listed in Section
2.11(a) of the Company Disclosure Schedule, the Company has provided or made
available to Acquiror, or will provide or make available as soon as practicable,
but in no event later than thirty (30) days after the date hereof copies of (i)
each such written Company Employee Plan (or a written description in English of
any Company Employee Plan which is not written and, with respect to Company
Employee Plans which are non-statutory defined benefit or defined contribution
pension plans covering fifty (50) or more participants, a written description in
English of any such plan that is written in a language other than English) and
any related trust agreement, insurance and other contract (including a policy),
the most recently prepared summary plan description, summary of material
modifications the substance of which is not already incorporated in the
corresponding summary plan description, and communications distributed to plan
participants that could reasonably be expected to materially modify the terms of
any Company Employee Plan, whether through information actually conveyed in the
communication or a failure to convey information, (ii) the three most recent
annual reports on Form 5500 series (or equivalent filing with respect to
non-U.S. plans), with accompanying schedules and attachments, filed with respect
to each U.S. or non-U.S. non-statutory Company Employee Plan required to make
such a filing, (iii) the most recent actuarial valuation, if any, for each
Company Employee Plan and Affiliate Plan subject to Title IV of ERISA and all
non-U.S. pension and post-retirement welfare plans, or, with respect to any
non-U.S., non-statutory defined benefit or defined contribution plan for which a
current valuation report is not reasonably available within thirty (30) days of
the date hereof, reasonable access to an actuary or other professional with
knowledge of such plan's liabilities and funding level within such 30-day
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period, (iv) the latest reports which have been filed with the Department of
Labor ("DOL") to satisfy the alternative method of compliance for pension plans
for certain selected employees pursuant to DOL regulation Section 2520.104-23
and (v) the most recent favorable determination letters issued for each Company
Employee Plan and related trust which is intended to be qualified under Section
401(a) of the Code (and, if an application for such determination is pending, a
copy of the application for such determination).
(b) Except as set forth in Section 2.11(b) of the Company Disclosure
Schedule, (i) none of the Company Employee Plans or Affiliate Plans promises or
provides medical or other welfare benefits to any director, officer, employee or
consultant (or any of their beneficiaries) after their service with the Company
or its subsidiary or affiliate terminates, other than as required by Section
4980B of the Code, Part 6 of Subtitle B of Title I of ERISA ("COBRA"), or any
similar state laws; (ii) none of the Company Employee Plans or Affiliate Plans
is a "multiemployer plan" as such term is defined in Section 3(37) of ERISA and
no non-U.S. Company Employee Plan is a multiemployer plan and no Company
Employee Plan or Affiliate Plan has incurred any withdrawal liability that
remains unsatisfied and the transactions contemplated herein will not result in
the assessment of any withdrawal liability; (iii) neither the Company, any of
its subsidiaries nor, to the knowledge of the Company, any other party in
interest (as defined in Section 3(14) of ERISA) or disqualified person (as
defined in Section 4975 of the Code) has engaged in a transaction with respect
to any Company Employee Plan or Affiliate Plan which could subject the Company
or any subsidiary, directly or indirectly, to a tax, penalty or other liability
for prohibited transactions under ERISA or Section 4975 of the Code which would
reasonably be expected to have a Material Adverse Effect; (iv) neither the
Company nor any of its executives, nor to the Company's knowledge, any other
fiduciary of any of the Company Employee Plans has breached any of the
responsibilities or obligations imposed upon fiduciaries under Title I of ERISA
that would reasonably be expected to have a Material Adverse Effect; (v) all
Company Employee Plans and, to the knowledge of the Company, all Affiliate Plans
have been established and maintained in accordance with their terms and have
been operated in compliance in all material respects with the requirements of
applicable law except as would not reasonably be expected to result in a
Material Adverse Effect (including, but not limited to, to the extent
applicable, the notification and other requirements of COBRA, the Health
Insurance Portability and Accountability Act of 1996, the Newborns' and Mothers'
Health Protection Act of 1996, the Mental Health Parity Act of 1996, and the
Women's Health and Cancer Rights Act of 1998); (vi) each Company Employee Plan
which is intended to be qualified under Section 401(a) of the Code is the
subject of a favorable determination letter from the Internal Revenue Service
(the "IRS"), and nothing has occurred which may reasonably be expected to impair
such determination, taking into account available correction programs; (vii) all
contributions required to be made with respect to any Company Employee Plan
(whether pursuant to the terms of such plan, Section 412 of the Code, any
collective bargaining agreement, insurance contract or policy, or otherwise)
have been made on or before their due dates (including any extensions thereof)
or were not materially delayed beyond their due dates and all appropriate
correcting actions were taken with respect to such delay; (viii) with respect to
each Company Employee Plan and Affiliate Plan, no "reportable event" within the
meaning of Section 4043 of ERISA (excluding any such event for which the 30-day
notice requirement has been waived under the regulations to Section 4043 of
ERISA) has occurred with respect to which the Company or one of its subsidiaries
has any outstanding liability and no Company action has occurred that resulted
or will result in any liability for any non-U.S. Company Employee Plan;
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(ix) none among the Company or any subsidiary thereof has incurred (or could
reasonably be expected to incur) any liability that remains unsatisfied, or
reasonably expects to incur any liability, under Title IV of ERISA with respect
to either a Company Employee Plan or an Affiliate Plan including, without
limitation, with respect to an event described in Section 4062, 4063 or 4041 of
ERISA (other than liability for premium payments to the Pension Benefit Guaranty
Corporation (the "PBGC") arising in the ordinary course); (x) other than routine
claims for benefits made in the ordinary course of the operation of the Company
Employee Plans, except as would not reasonably be expected to result in a
Material Adverse Effect there are no pending or to the Company's knowledge
threatened, claims, investigations or causes of action with respect to any U.S.
or non-U.S. non-statutory Company Employee Plan or Affiliate Plan, whether made
by a participant or beneficiary of such a plan, a governmental agency or
otherwise, against the Company or any subsidiary of the Company, any Company
director, officer or employee, any Company Employee Plan, or Affiliate Plan or
any fiduciary of a Company Employee Plan or Affiliate Plan; and (xi) to the best
of the Company's knowledge, each Company Employee Plan that provides for the
provision of post-termination or post-retirement welfare benefits may by its
terms be amended or terminated at any time subject to applicable law.
(c) The Company shall provide, no later than thirty (30) days after the
date hereof, a true and complete list of each current or former employee,
consultant, officer or director of the Company or any of its subsidiaries who
holds (i) any option to purchase Company Common Stock as of the date hereof,
together with the number of shares of Company Common Stock subject to such
option, the exercise price of such option (to the extent determined as of the
date hereof), whether such option is intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code (an "ISO"), and the
expiration date of such option; (ii) any shares of Company Common Stock that are
restricted or subject to performance-based vesting; and (iii) any other award or
right (including share units), directly or indirectly, to receive Company Common
Stock (or any other unit of Company equity) or any amount payable by reference
to Company Common Stock (or any other unit of Company equity), other than under
tax-qualified or tax-conditioned plans, together with the number of shares of
Company Common Stock (or any other unit of Company equity) subject to such
right.
(d) To the extent not already included and so labeled in Section 2.11(a)
or such other section of the Company Disclosure Schedule as is specifically
referenced in Section 2.11(d) of the Company Disclosure Schedule, no later than
thirty (30) days from the date hereof the Company shall provide a true and
complete (i) list of all material outstanding agreements with any consultants
who provide services to the Company or any of its subsidiaries; (ii) list of all
material agreements with respect to the services of independent contractors or
leased employees who provide services to the Company or any of its subsidiaries,
whether or not they participate in any of the Company Employee Plans; (iii)
description of any situation in which a material portion of the workforce of a
component of the Company or its subsidiaries, whether such component is a
subsidiary, unit, work location, line of business or otherwise, is composed of
non-common law employees, whether consultants, independent contractors or
otherwise, which description shall include, if applicable, representative
samples of agreements with such non-common law employees; and (iv) list of all
worker council agreements of the Company or any of its subsidiaries with or
relating to its employees. Section 2.11(d) of the Company
-22-
Disclosure Schedule shall indicate which, if any, of such agreements includes a
change in control provision.
(e) Except as set forth in Section 2.11(e) of the Company Disclosure
Schedule: (i) the PBGC has not instituted proceedings to terminate any Company
Employee Plan or, to the knowledge of the Company, an Affiliate Plan, that is
subject to Title IV of ERISA (each, a "Defined Benefit Plan"); (ii) no Defined
Benefit Plan has an accumulated or waived funding deficiency within the meaning
of Section 412 of the Code, nor have any extensions of any amortization period
within the meaning of Section 412 of the Code or Section 302 of ERISA been
applied for with respect thereto; (iii) since the date of the most recent
actuarial report prepared by each such plan's actuary with respect to that
plan's most recently completed fiscal year, to the knowledge of the Company,
nothing has occurred that would materially adversely affect the funding status
of such plan; (iv) all applicable premiums required to be paid to the PBGC with
respect to the Defined Benefit Plans have been paid; and (v) no facts or
circumstances exist with respect to any Defined Benefit Plan which would give
rise to a material lien on the assets of the Company under Section 4068 of ERISA
or otherwise; provided that neither clause (iii) nor clause (iv) shall apply to
any event or occurrence that would not reasonably be expected to have a Material
Adverse Effect.
(f) Since December 31, 1999, neither the Company nor any of its
subsidiaries has announced, proposed or agreed to any increase in benefits under
any Company Employee Plan (or to the creation or implementation of new benefits
or new plans), any change in employee coverage which would increase the expense
of maintaining any Company Employee Plan, or the grant of any Company Stock
Options or other equity based awards or benefits that has not been disclosed to
Guarantor (with copies of any relevant documents provided to Guarantor) no later
than thirty (30) days from the date hereof.
(g) Except as set forth in this Agreement or as set forth in Section 2.11
of the Company Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement, either alone or in combination with another
event, will not (i) result in any payment (including, without limitation,
severance, unemployment compensation, golden parachute or bonus payments or
otherwise) becoming due to any current or former director, officer, employee or
consultant of the Company, (ii) result in any increase in the amount of
compensation or benefits payable in respect of any director, officer, employee
or consultant of the Company, or (iii) accelerate the vesting or timing of
payment of any benefits or compensation payable in respect of any director,
officer, employee or consultant of the Company.
(h) Except as set forth in Section 2.11(h) of the Company Disclosure
Schedule and as would not reasonably be expected to have a Material Adverse
Effect, to the knowledge of the Company, each non-U.S. Company Employee Plan has
been maintained in compliance with its terms and with the requirements
prescribed by any and all applicable laws (including any special provisions
relating to registered or qualified plans with which such non-U.S. Company
Employee Plan is intended to qualify), has been maintained in good standing with
applicable regulatory authorities and has sufficient assets (in a trust or other
separate fund) to satisfy all of its liabilities. Except as set forth on Section
2.11(h) of the Company Disclosure Schedule, since the date of the most recent
actuarial report prepared by each such plan's actuary with respect to that
plan's most recently completed fiscal year, nothing has occurred that would
materially
-23-
adversely affect the funding status of such plan other than the effects of
general market conditions.
(i) Except as set forth in Section 2.11(i) of the Company Disclosure
Schedule and as would not reasonably be expected to have a Material Adverse
Effect, there are no complaints, charges or claims against the Company or any of
its subsidiaries pending or threatened to be brought by or filed with any
governmental authority based on, arising out of, in connection with or otherwise
relating to the classification of any individual by the Company as an
independent contractor or "leased employee" (within the meaning of Section
414(n) of the Code) rather than as an employee, and to the knowledge of the
Company no conditions exist under which the Company or any of its subsidiaries
could incur any such liability.
(j) Except as set forth in Section 2.11(j) of the Company Disclosure
Schedule, each Company Employee Plan that provides for deferred compensation and
is not qualified under Section 401(a) of the Code is fully funded through a
rabbi trust, insurance policy or otherwise.
Section 2.12 Employment and Labor Matters. Except as set forth in Section
2.11(b) or Section 2.12 of the Company Disclosure Schedule or the Company SEC
Documents:
(a) Each of the Company and its subsidiaries is in compliance, and has not
failed to be in compliance as a result of which it could reasonably be expected
now or in the future to have liability, with all applicable U.S. and non-U.S.
laws, agreements and contracts relating to employment practices, terms and
conditions of employment, and the employment of former, current, and prospective
employees, independent contractors and "leased employees" (within the meaning of
Section 414(n) of the Code) of the Company or any of its subsidiaries including
all such U.S. and non-U.S. laws, agreements and contracts relating to wages,
hours, collective bargaining, employment discrimination, immigration,
disability, civil rights, human rights, fair labor standards, occupational
safety and health, workers' compensation, pay equity, wrongful discharge and
violation of the potential rights of such former, current, and prospective
employees, independent contractors and leased employees, and has timely prepared
and filed all appropriate forms (including Immigration and Naturalization
Service Form I-9) required by any relevant Governmental Authority, except where
the failure to be in compliance would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(b) There is no litigation, suit, action, proceeding or investigation
pending or, to the knowledge of the Company, threatened between the Company or
any of its subsidiaries and any of their respective employees which in each case
would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
(c) Neither the Company nor any of its subsidiaries is a party to any U.S.
or non-U.S. collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or its subsidiaries, nor, to the
knowledge of the Company, are there any activities or proceedings of any labor
union to organize any employees of the Company or any of its subsidiaries.
-24-
(d) Neither the Company nor any of its subsidiaries is in breach of any
U.S. or non-U.S. collective bargaining agreement or labor union contract, or has
any knowledge of any strikes, slowdowns, work stoppages, lockouts, or threats
thereof, by or with respect to any employees of the Company or any of its
subsidiaries.
Section 2.13 Registration Statement; Proxy Statement/Prospectus.
(a) Subject to the accuracy of the representations of Acquiror in Section
3.10:
(i) the information supplied by the Company for inclusion in the
Registration Statement shall not at the time the Registration Statement is
declared effective by the SEC 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 not misleading; and
(ii) the information supplied by the Company for inclusion in the proxy
statement/prospectus to be sent to the stockholders of the Company in connection
with the Company Stockholders Meeting (such proxy statement/prospectus as
amended or supplemented is referred to herein as the "Proxy
Statement/Prospectus") will not, on the date the Proxy Statement/Prospectus (or
any amendment thereof or supplement thereto) is filed with the SEC or first
mailed to stockholders or at the time of the Company Stockholders Meeting,
contain any statement which, at such time and in light of the circumstances
under which it shall be made, is false or misleading with respect to any
material fact, or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein not false or
misleading, or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Company Stockholders Meeting
which has become false or misleading.
(b) If at any time prior to the Effective Time any event relating to the
Company or any of its respective affiliates, officers or directors should be
discovered by the Company which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement/Prospectus, the
Company shall promptly inform Acquiror.
(c) The Proxy Statement/Prospectus shall comply in all material respects
with the requirements of the Securities Act and the Exchange Act.
(d) Notwithstanding the foregoing, the Company makes no representation or
warranty with respect to any information supplied by Guarantor or Acquiror which
is contained or incorporated by reference in, or furnished in connection with
the preparation of, the Proxy Statement/Prospectus.
Section 2.14 Restrictions on Business Activities; Agreement with
Regulatory Agencies. (a) Except for this Agreement or as set forth in Section
2.14(a) of the Company Disclosure Schedule or the Company SEC Documents, to the
Company's knowledge, there is no agreement, judgment, injunction, order or
decree binding upon the Company or any of its subsidiaries which has or would
reasonably be expected to have the effect of prohibiting or impairing the
conduct of business by the Company or any of its subsidiaries, or restricting
any transactions (including payment of dividends and distributions) between the
Company and its
-25-
subsidiaries, except for any prohibition or impairment as would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect.
(b) Except as set forth in Section 2.14(b) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a party
to any agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from, or
has adopted any board resolutions at the request of (each, whether or not listed
in Section 2.14(b) of the Company Disclosure Schedule, a "Regulatory
Agreement"), any Regulatory Agency or other Governmental Authority that
restricts the conduct of its business or that in any manner relates to its
capital adequacy, its credit policies, its management or its business. None of
the Company or any of its subsidiaries has been advised by any Regulatory Agency
or other Governmental Authority that it is considering issuing or requesting any
Regulatory Agreement.
Section 2.15 Properties. (a) Except as set forth in Sections 2.15(a) or
2.19(b) of the Company Disclosure Schedule or the Company SEC Documents, the
Company and each of its subsidiaries have good title to all of their owned real
properties and other owned assets used in their current operations, free and
clear of all liens, charges and encumbrances, except (i) liens for taxes not yet
due and payable, (ii) such liens or other imperfections of title, if any, as do
not materially interfere with the present use of the property affected thereby
or which would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect, and (iii) liens which secure indebtedness
reflected in the 2000 Balance Sheet and identified as such in the Company SEC
Documents; and all leases pursuant to which the Company or any of its
subsidiaries lease from others material amounts of real or personal property,
are in good standing, valid and effective in accordance with their respective
terms, and there is not, to the knowledge of the Company, under any of such
leases, any existing default or event of default (or event which with notice or
lapse of time, or both, would constitute a default), except where the lack of
such good standing, validity and effectiveness or the existence of such default
or event of default would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(b) Except as set forth in Section 2.15(b) of the Company Disclosure
Schedule or the Company SEC Documents, (i) all buildings, structures, fixtures
and other improvements located on and affixed to the real properties of the
Company and its subsidiaries are structurally sound, are in good operating
condition and repair, ordinary wear and tear excepted, are free from latent and
patent defects, and are adequate for the uses to which they are being put and
(ii) each item of tangible personal property of the Company and its subsidiaries
is in good operating condition and repair, ordinary wear and tear excepted, is
free from latent and patent defects and is suitable for immediate use in the
ordinary course of business, except, in each case, as would not, individually or
in the aggregate, be reasonably expected to have a Material Adverse Effect.
Section 2.16 Taxes. Except as set forth in Section 2.16 of the Company
Disclosure Schedule or as would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect:
-26-
(a) The Company and each of its subsidiaries has timely and accurately
filed, or caused to be timely and accurately filed, all Tax Returns required to
be filed by it, and has paid, collected or withheld, or caused to be paid,
collected or withheld, all Taxes required to be paid, collected or withheld,
other than such Taxes for which adequate reserves in the 2000 Balance Sheet have
been established or which are being contested in good faith. Except as set forth
in Section 2.16(a) of the Company Disclosure Schedule, there are no claims or
assessments pending against the Company or any of its subsidiaries for any
alleged deficiency in any Tax, there are no pending or, to the knowledge of the
Company, threatened audits or investigations for or relating to any liability in
respect of any Taxes, and the Company has not been notified in writing of any
proposed Tax claims or assessments against the Company or any of its
subsidiaries (other than in each case, claims or assessments for which adequate
reserves in the 2000 Balance Sheet have been established or which are being
contested in good faith). Neither the Company nor any of its subsidiaries has
executed any waivers or extensions of any applicable statute of limitations to
assess any Taxes. There are no outstanding requests by the Company or any of its
subsidiaries for any extension of time within which to file any Tax Return or
within which to pay Taxes shown to be due on any Tax Return. To the best
knowledge of the Company, there are no liens for Taxes on the assets of the
Company or any of its subsidiaries except for statutory liens for current Taxes
not yet due and payable. A list of all outstanding powers of attorney enabling
any party to represent the Company or any of its subsidiaries with respect to
Taxes will be provided to Acquiror as soon as practicable, but in no event later
than thirty (30) days after the date hereof. Other than with respect to the
Company and its subsidiaries, neither the Company nor any of its subsidiaries is
liable for Taxes of any other Person, or is currently under any contractual
obligation to indemnify any person with respect to Taxes (except for customary
agreements to indemnify lenders or security holders in respect of Taxes and
except for provisions in agreements for the divestiture of subsidiaries, assets
or business lines of the Company or its subsidiaries that require the Company or
its subsidiaries (as applicable) to indemnify a purchaser or purchase group for
amounts of Taxes of the Company or its subsidiaries (as applicable) in the
nature of sales or similar Taxes incurred as a consequence of any such
divestiture transactions), or is a party to any tax sharing agreement or any
other agreement providing for payments by the Company or any of its subsidiaries
with respect to Taxes.
(b) For purposes of this Agreement, the term "Tax" shall mean any United
States federal, national, state, provincial, local or other jurisdictional
income, gross receipts, property, sales, use, license, excise, franchise,
employment, payroll, estimated, alternative or add-on minimum, ad valorem,
transfer or excise tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge imposed by any Governmental Authority, together
with any interest or penalty imposed thereon. The term "Tax Return" shall mean a
report, return or other information (including any attached schedules or any
amendments to such report, return or other information) required to be supplied
to or filed with a Governmental Authority with respect to any Tax, including an
information return, claim for refund, amended return or declaration of estimated
Tax.
Section 2.17 Environmental Matters. (a) Except as set forth in Section
2.17(a) of the Company Disclosure Schedule or in the Company SEC Documents or as
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, the operations and properties of the Company and its
subsidiaries are in compliance with the
-27-
Environmental Laws, which compliance includes the possession by the Company and
its subsidiaries of all permits and governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof.
(b) Except as set forth in Section 2.17(b) of the Company Disclosure
Schedule or in the Company SEC Documents or as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, there are
no Environmental Claims, including claims based on "arranger liability," pending
or, to the knowledge of the Company, threatened against the Company or any of
its subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries has retained or
assumed.
(c) Except as set forth in Section 2.17(c) of the Company Disclosure
Schedule or in the Company SEC Documents, there are no past or present actions,
circumstances, conditions, events or incidents, including the release, emission,
discharge, presence or disposal of any Materials of Environmental Concern, that
are reasonably likely to form the basis of any Environmental Claim against the
Company or any of its subsidiaries or against any person or entity whose
liability for any Environmental Claim the Company or any of its subsidiaries
have retained or assumed, except for such Environmental Claims that would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(d) Except as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect or as set forth in Section 2.17(d)
of the Company Disclosure Schedule or the Company SEC Documents, (i) there are
no off-site locations where the Company or any of its subsidiaries has stored,
disposed or arranged for the disposal of Materials of Environmental Concern
which have been listed on the National Priority List, CERCLIS, or state
Superfund site list, and the Company and its subsidiaries have not been notified
that any of them is a potentially responsible party at any such location; (ii)
there are no underground storage tanks located on property owned or leased by
the Company or any of its subsidiaries; (iii) there is no friable asbestos
containing material contained in or forming part of any building, building
component, structure or office space owned, leased or operated by the Company or
any of its subsidiaries; and (iv) there are no polychlorinated biphenyls
("PCBs") or PCB-containing items contained in or forming part of any building,
building component, structure or office space owned, leased or operated by the
Company or any of its subsidiaries.
(e) For purposes of this Agreement:
(i) "Environmental Claim" means any claim, action, cause of action,
investigation or notice (in each case in writing or, if not in writing, to the
knowledge of the Company) by any person or entity alleging potential liability
(including potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, or penalties) arising out of, based on or resulting from the
presence, release or threat of release into the environment, of any Material of
Environmental Concern at any location, whether or not owned or operated by the
Company or any of its subsidiaries.
(ii) "Environmental Laws" means, as they exist on the date hereof, all
applicable United States federal, state, local and non-United States laws,
regulations, codes and
-28-
ordinances, relating to pollution or protection of human health (as relating to
the environment or the workplace) and the environment (including ambient air,
surface water, ground water, land surface or sub-surface strata), including laws
and regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern, including, but not limited to Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq., Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., Toxic Substances
Control Act, 15 U.S.C. ss. 2601 et seq., Occupational Safety and Health Act, 29
U.S.C. ss. 651 et seq., the Clean Air Act, 42 U.S.C. ss. 7401 et seq., the Clean
Water Act, 33 U.S.C. ss. 1251 et seq., each as may have been amended or
supplemented, and any applicable environmental transfer statutes or laws.
(iii) "Materials of Environmental Concern" means chemicals, pollutants,
contaminants, hazardous materials, hazardous substances and hazardous wastes,
medical waste, toxic substances, petroleum and petroleum products and
by-products, asbestos-containing materials, PCBs, and any other chemicals,
pollutants, substances or wastes, in each case regulated under any Environmental
Law.
Section 2.18 Brokers. No broker, finder or investment banker, other than
Credit Suisse First Boston Corporation (the "Company Financial Advisor"), the
fees and expenses of which will be paid by the Company, is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company has heretofore furnished to Acquiror a
complete and correct copy of all agreements between the Company and the Company
Financial Advisor pursuant to which such firm would be entitled to any payment
relating to the transactions contemplated hereunder.
Section 2.19 Intellectual Property
(a) As used herein, the term "Intellectual Property Assets" shall mean all
worldwide intellectual property rights, including, without limitation, patents,
trademarks, service marks, copyrights, and registrations and applications
therefor, licenses, trade names, Internet domain names, know-how, trade secrets,
computer software programs and development tools and proprietary information,
technologies and processes, and all documentation and media describing or
relating to the above, in any format, whether hard copy or machine-readable
only. As used herein, "Company Intellectual Property Assets" shall mean the
Intellectual Property Assets used or owned by the Company or any of its
subsidiaries.
(b) Except as set forth in Section 2.19(b) of the Company Disclosure
Schedule, the Company and/or each of its subsidiaries owns, or is licensed or
otherwise possesses legally enforceable rights to use, all the Company
Intellectual Property Assets that are used in the business of the Company and
its subsidiaries as currently conducted, without infringing or violating the
rights of others.
(c) Except as disclosed in Section 2.19(c) of the Company Disclosure
Schedule, no material claims (i) are currently pending or, to the knowledge of
the Company, are threatened by any person with respect to the Company
Intellectual Property Assets, or (ii) are
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currently pending or, to the knowledge of the Company, threatened by any person
with respect to the Intellectual Property Assets of a third party (the "Third
Party Intellectual Property Assets") to the extent arising out of any
manufacture, importation, offer for sale, reproduction or distribution of, or of
products or methods covered by, such Third Party Intellectual Property Assets by
or through the Company or any of its subsidiaries.
(d) Except as disclosed in Section 2.19(d) of the Company Disclosure
Schedule, to the knowledge of the Company, there are no valid grounds for any
bona fide claim to the effect that the offer for sale, sale, licensing or use of
any product, system or method now used, offered for sale, sold or licensed or
proposed for use, offer for sale, sale, or license by or for the Company or any
of its subsidiaries infringes any Third Party Intellectual Property Assets.
(e) A list of (i) all patents and patent applications owned by the Company
and/or each of its subsidiaries worldwide; (ii) all trademark and service ▇▇▇▇
registrations and all trademark and service ▇▇▇▇ applications, material common
law trademarks, material trade dress and material slogans, and all trade names
owned by the Company and/or each of its subsidiaries worldwide; (iii) all
copyright registrations and copyright applications owned by the Company and/or
each of its subsidiaries worldwide; (iv) all Internet domain name registrations
owned by the Company and/or its subsidiaries worldwide; and (v) to the Company's
knowledge, all licenses of the Company and/or each of its subsidiaries in which
the Company and/or each of its subsidiaries is (A) a licensor with respect to
any of the patents, trademarks, service marks, trade names, copyrights or
Internet domain names which are material to the Company or (B) a licensee of any
other person's patents, trade names, trademarks, service marks, copyrights or
Internet domain names material to the Company except for any licenses of
software programs that are commercially available "off the shelf" will be
provided to Acquiror as soon as practicable, but in no event later than thirty
(30) days after the date hereof.
(f) Except as set forth in Section 2.19(f) of the Company Disclosure
Schedule, the Company and/or each of its subsidiaries has made all necessary
filings and recordations to protect and maintain its interest in the patents,
patent applications, trademark and service ▇▇▇▇ registrations, trademark and
service ▇▇▇▇ applications, copyright registrations and copyright applications,
Internet domain names and licenses used or owned by the Company or its
subsidiaries, except where the failure to so protect or maintain would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(g) To the knowledge of the Company, except as set forth in Section
2.19(f) or 2.19(g) of the Company Disclosure Schedule or the Company SEC
Documents: (i) each patent, trademark, service ▇▇▇▇ and copyright application
and registration of the Company and/or each of its subsidiaries is valid,
subsisting of record in the Company of such subsidiary, and enforceable and (ii)
each material license of the Company Intellectual Property Assets and of any
Third Party Intellectual Property Assets used or owned by the Company or its
subsidiaries is valid, subsisting in the Company or its subsidiaries, and
enforceable.
(h) Except as set forth in Section 2.19(h) of the Company Disclosure
Schedule, to the knowledge of the Company, there is no unauthorized use,
infringement or misappropriation of any of the Company's Intellectual Property
Assets by any third party,
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including any employee, former employee, independent contractor or consultant of
the Company or any of its subsidiaries.
Section 2.20 Interested Party Transactions. Except as set forth in Section
2.20 of the Company Disclosure Schedule or the Company SEC Documents or for
events as to which the amounts involved do not, in the aggregate, exceed
$300,000, since the Company's proxy statement dated March 30, 2000, no event has
occurred that would be required to be reported as a Certain Relationship or
Related Transaction pursuant to Item 404 of Regulation S-K promulgated by the
SEC.
Section 2.21 Insurance. A list of all material fire and casualty, general
liability, business interruption, product liability and sprinkler and water
damage insurance policies maintained by the Company or any of its subsidiaries
will be provided to Acquiror as soon as practicable, but in no event later than
thirty (30) days after the date hereof. Except as set forth in Section 2.21 of
the Company Disclosure Schedule, all such policies are with reputable insurance
carriers and provide coverage amounts which the Company reasonably believes are
both adequate for all normal risks incident to the current business of the
Company and its subsidiaries and their respective properties and assets, and
appropriate for the businesses currently conducted by the Company, except as
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
Section 2.22 Interest Rate and Foreign Exchange Contracts. All interest
rate swaps, caps, floors and option agreements and other interest rate risk
management arrangements and foreign exchange contracts to hedge its investments
in foreign subsidiaries, whether entered into for the account of the Company or
one of its subsidiaries, were entered into in the ordinary course of business
and, to the Company's knowledge, in accordance with prudent business and
applicable rules, regulations and policies of any Governmental Authority and
with counterparties believed to be financially responsible at the time, and are
valid and binding obligations of the Company or one of its subsidiaries
enforceable in accordance with their terms (except as may be limited by
bankruptcy' insolvency, moratorium, reorganization or similar laws affecting the
rights of creditors generally and the availability of equitable remedies), and
are in full force and effect. The Company and each of its subsidiaries have duly
performed in all material respect all of their material obligations thereunder
to the extent that such obligations to perform have accrued, and, to the
Company's knowledge, there are no material breaches, violations or defaults or
allegations or assertions of such by any party thereunder.
Section 2.23 Compliance With The Foreign Corrupt Practices Act. Since
December 31, 1997, none of the Company nor any of its subsidiaries has committed
a material violation of the United States Foreign Corrupt Practices Act or any
law, rule or regulation of any other jurisdiction to the same effect.
Section 2.24 Opinion of Financial Advisor. The Board of Directors of the
Company has been advised by the Company Financial Advisor to the effect that in
its opinion, as of the date of this Agreement, the Exchange Ratio is fair from a
financial point of view to the holders of the Shares, other than the
Stockholder.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby represents and warrants to the Company as follows:
Section 3.01 Organization and Qualification; Subsidiaries. (a) Each of
Guarantor and Acquiror is duly incorporated, validly existing and in good
standing (to the extent the concept of good standing exists in the applicable
jurisdiction) under the laws of its jurisdiction of incorporation and has the
requisite corporate power and authority necessary to own, lease and operate the
properties it purports to own, lease and operate and to carry on its business as
now conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not reasonably be expected to
have a Material Adverse Effect. Each of Guarantor and Acquiror is duly qualified
or licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned, leased or
operated by it or the nature of its activities make such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Acquiror has
heretofore made available to the Company true and complete copies of Guarantor's
Memorandum of Association and Bye-Laws, as amended to date (the "Guarantor
Charter Documents").
(b) Each subsidiary of Guarantor is an entity duly organized, validly
existing and in good standing (to the extent the concept of good standing exists
in the applicable jurisdiction) under the laws of its jurisdiction of
organization, has the requisite corporate or other power and authority necessary
to own, lease and operate the properties it purports to own, lease and operate
and to carry on its business as now conducted, except where the failure to be so
organized, existing and in good standing or to have such power and authority
would not reasonably be expected to have a Material Adverse Effect. Each
subsidiary of Guarantor is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified or in good standing would not reasonably be expected to have a
Material Adverse Effect. All of Guarantor's significant subsidiaries and their
respective jurisdictions of incorporation are included in the subsidiary list
contained in Guarantor's Annual Report on Form 10-K for the fiscal year ended
September 30, 2000.
Section 3.02 Capitalization. (a) The authorized capital stock of Guarantor
consists of 2,500,000,000 Guarantor Common Shares and 125,000,000 Preference
Shares, par value $1.00 per share ("Guarantor Preference Shares"). As of January
26, 2001, (i) 1,752,275,000 Guarantor Common Shares were issued and outstanding,
all of which are duly authorized, validly issued, fully paid and non-assessable
and none of which were issued in violation of preemptive or similar rights, (ii)
no Guarantor Preference Shares were outstanding and (iii) no more than
14,000,000 Guarantor Common Shares and no Guarantor Preference Shares were held
by subsidiaries of Guarantor. As of December 31, 2000, no more than 180,000,000
Guarantor Common Shares were reserved for issuance upon exercise of stock
options issued under Guarantor's stock option plans.
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(b) Except (i) as set forth in Section 3.02(a), (ii) for changes since
December 31, 2000 resulting from the exercise of stock options, (iii) for (I)
Liquid Yield Option Notes (▇▇▇▇▇) issued by Guarantor or its subsidiary and
reflected in the notes to Guarantor's consolidated financial statements included
in Guarantor's 2000 Form 10-K and (II) the zero coupon convertible debentures of
a subsidiary of Guarantor reported in Guarantor's Current Report on Form 8-K
filed February 9, 2001, and changes resulting from the exchange thereof, (iv)
for other rights to acquire immaterial (individually or in the aggregate)
amounts of Guarantor Common Shares and changes resulting from the exercise
thereof, (v) for changes resulting from the grant of stock based compensation to
directors or employees or (vi) for changes resulting from the issuance of stock
in connection with a merger or other acquisition or business combination or an
underwritten public offering or from the issuance of convertible or exchangeable
debt securities in an underwritten public offering or in an offering pursuant to
Rule 144A under the Securities Act, in each case determined by Guarantor's Board
of Directors to be in the best interests of Guarantor and its shareholders and
undertaken in compliance with Section 4.03(b), as applicable, there are no
outstanding (x) shares of capital stock or voting securities of Guarantor, (y)
securities of Guarantor convertible into or exchangeable for shares of capital
stock or voting securities of Guarantor or (z) options or other rights to
acquire from Guarantor or other obligation of Guarantor to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Guarantor. There are no outstanding
obligations of Guarantor or any of its subsidiaries to repurchase, redeem or
otherwise acquire any of its equity securities.
(c) The Guarantor Common Shares to be delivered as Merger Consideration
have been duly authorized and, when issued and delivered in accordance with the
terms of this Agreement, will have been validly issued and will be fully paid
and nonassessable, and the issuance thereof is not subject to any preemptive or
other similar right.
Section 3.03 Authority Relative to this Agreement. (a) The execution,
delivery and performance by Guarantor and Acquiror of this Agreement, and the
execution, delivery and performance by Guarantor of the Guarantee and the
consummation by Guarantor and Acquiror of the transactions contemplated hereby
and thereby, as applicable, are within the respective corporate powers of
Guarantor and Acquiror and have been duly authorized by all necessary corporate
action. This Agreement has been duly and validly executed and delivered and
constitutes a valid and binding agreement of Acquiror, enforceable against it in
accordance with its terms. The Guarantee has been duly and validly executed and
delivered and constitutes a valid and binding agreement of Guarantor enforceable
against it in accordance with its terms.
(b) At a meeting duly called and held, or by written consent in lieu of a
meeting, the Board of Directors of Acquiror has (i) unanimously determined that
this Agreement and the transactions contemplated hereby are fair to and in the
best interests of Acquiror and its shareholders and (ii) unanimously approved
this Agreement and the transactions contemplated hereby. At a meeting duly
called and held, Guarantor's Board of Directors has approved the Guarantee and
the transactions contemplated thereby and the issuance of the Guarantor Common
Shares to be delivered to the Company's stockholders in connection with the
Merger.
Section 3.04 No Conflicts; Required Filings and Consents. (a) The
execution, delivery and performance by Acquiror of this Agreement, the
execution, delivery and
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performance by Guarantor of the Guarantee and the consummation by Guarantor and
Acquiror of the Merger and the other transactions contemplated hereby and
thereby, as applicable, require no action by or in respect of, or filing with,
any Governmental Authority, other than (i) the filing and recordation of
appropriate merger and other documents as required by the NGCL and the DGCL,
(ii) compliance with any applicable requirements of the HSR Act and applicable
Non-U.S. Monopoly Laws, (iii) compliance with any applicable requirements of the
Securities Act, the Exchange Act, any applicable state securities laws, the
Toronto Stock Exchange, the NYSE, the Bermuda Stock Exchange and the London
Stock Exchange, (iv) compliance with Environmental Health and Safety Laws (v)
the Regulatory Approvals and (vi) any actions or filings the absence of which
would not be reasonably expected, individually or in the aggregate, to have a
Material Adverse Effect or materially impair the ability of Acquiror to
consummate the Merger and the other transactions contemplated by this Agreement
or the ability of Guarantor to fulfill its obligations under the Guarantee. As
of the date hereof, Acquiror does not know of any reason why all Regulatory
Approvals should not be timely obtained.
(b) The execution, delivery and performance by Acquiror of this Agreement,
the execution, delivery and performance by Guarantor of the Guarantee and the
consummation by Guarantor and Acquiror of the transactions contemplated hereby
and thereby, as applicable, do not and will not (i) contravene, conflict with,
or result in any violation or breach of any provision of the Guarantor Charter
Documents or the Articles of Incorporation or By-laws of Acquiror (or equivalent
organizational documents), (ii) assuming compliance with the matters referred to
in Section 3.04(a), contravene, conflict with or result in a violation or breach
of any provision of any law, rule, regulation, judgment, injunction, order or
decree applicable to Guarantor or any of its subsidiaries, (iii) require any
consent or other action by any person under, constitute a default under, or
cause or permit the termination, cancellation, acceleration or other change of
any right or obligation or the loss of any benefit to which Guarantor or any of
its subsidiaries is entitled under any provision of any Material Agreement or
instrument binding upon Guarantor or any of its subsidiaries or any material
license, franchise, permit, certificate, approval or other similar authorization
affecting, or relating in any way to, the assets or business of the Acquiror and
its subsidiaries; provided that, for purposes of this Subsection 3.04(b)(iii),
"Material Agreement" shall mean any agreement identified in Guarantor's Annual
Report on Form 10-K for the fiscal year ended September 30, 2000 or any
agreement entered into since September 30, 2000 that would be required to be so
identified in Guarantor's Annual Report on Form 10-K for the fiscal year ended
September 30, 2001 or with respect to which the failure to obtain such consent
or take such action, or the occurrence of such default, termination,
cancellation, acceleration, change or loss, would reasonably be expected to have
a Material Adverse Effect, or (iv) result in the creation or imposition of any
encumbrance on any material asset of Guarantor or any of its subsidiaries.
Section 3.05 Compliance; Permits. Except as set forth in the reports,
schedules, forms, statements and other documents (the "Guarantor SEC Documents")
filed by the Guarantor with the SEC since September 30, 2000 and prior to the
date of this Agreement, neither Guarantor nor any of its subsidiaries is in
conflict with, or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree applicable to Guarantor or any of its subsidiaries or
by which its or any of their respective properties is bound or affected or (ii)
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Guarantor or any of
its subsidiaries is a party or by which
-34-
Guarantor or any of its subsidiaries or its or any of their respective
properties is bound or affected, except for any such conflicts, defaults or
violations which would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. Except as set forth in the
Guarantor SEC Documents, the Guarantor and its subsidiaries hold all permits,
licenses, easements, variances, exemptions, consents, certificates, orders and
approvals from governmental authorities which are material to the operation of
the business of the Guarantor and its subsidiaries, taken as a whole, as it is
now being conducted (collectively, the "Guarantor Permits"), except where the
failure to hold such Guarantor Permits would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. The
Guarantor and its subsidiaries are in compliance with the terms of the Guarantor
Permits, and have not failed to comply therewith as a result of which they would
reasonably be expected to have liability now or in the future, except as
described in the Guarantor SEC Documents or where the failure to so comply would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
Section 3.06 SEC Filings; Financial Statements. (a) Guarantor has filed
with the SEC all reports, schedules, forms, statements and other documents
(including all exhibits thereto) required to be filed with the SEC since
September 30, 1998 (the "Post-1998 Guarantor SEC Documents"). Except as set
forth in the Guarantor SEC Documents, such reports, schedules, forms statements
and other documents were prepared in all material respects in accordance with
the applicable requirements of the Securities Act or the Exchange Act, as the
case may be; and did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. With the exception of TyCom Ltd., none of the Guarantor's
subsidiaries is required to file with the SEC periodic reports pursuant to the
Exchange Act. To Acquiror's knowledge, no investigation by the SEC with respect
to Guarantor or any of its subsidiaries is pending or threatened.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Post-1998 Guarantor SEC
Documents were prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
or in the Post-1998 Guarantor SEC Documents), and each fairly presents in all
material respects, the consolidated financial position of Guarantor and its
consolidated subsidiaries as at the respective dates thereof and the
consolidated results of operations and cash flows for the periods indicated,
except that for purposes of the foregoing representation, the unaudited interim
financial statements (i) shall be read in conjunction with the Guarantor's
consolidated financial statements contained in the Guarantor's 2000 Annual
Report on Form 10-K, and (ii) were or are subject to normal and recurring year
end adjustments which were not or are not expected to be material in amount.
Section 3.07 Absence of Certain Changes or Events. Except as set forth in
the Guarantor SEC Documents, since September 30, 2000, the business of Guarantor
and its subsidiaries has been conducted in the ordinary course and there has not
occurred: (i) any changes, effects or circumstances, including any damage to,
destruction or loss of any asset of the Company (whether or not covered by
insurance) constituting, individually or in the
-35-
aggregate, a Material Adverse Effect; (ii) any amendments or changes in the
Guarantor Charter Documents, except as contemplated by Section 4.03(a); (iii)
any material change by Guarantor in its accounting methods, principles or
practices (other than as required by GAAP subsequent to the date of this
Agreement); or (iv) any sale of a material amount of assets of Guarantor, except
in the ordinary course of business.
Section 3.08 No Undisclosed Liabilities. Except as set forth in the
Guarantor SEC Documents, neither Guarantor nor any of its subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise), except liabilities (i)
in the aggregate adequately provided for in Guarantor's balance sheet (including
any related notes thereto) as of September 30, 2000 included in Guarantor's 2000
Form 10-K for the fiscal period ended September 30, 2000 (the "2000 Guarantor
Balance Sheet"), (ii) incurred in the ordinary course of business and not
required under GAAP to be reflected on the 2000 Guarantor Balance Sheet, (iii)
incurred since September 30, 2000 in the ordinary course of business, (iv)
incurred in connection with this Agreement, or the Merger or the other
transactions contemplated hereby, or (v) which would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
Section 3.09 Absence of Litigation. Except as set forth in the Guarantor
SEC Documents or arising out of the transactions contemplated by this Agreement,
there are no claims, actions, suits, proceedings or investigations pending or,
to the knowledge of Guarantor, threatened against Guarantor or any of its
subsidiaries, or any properties or rights of Guarantor or any of its
subsidiaries, before any court, arbitrator or Governmental Authority, that would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
Section 3.10 Registration Statement; Proxy Statement/Prospectus. (a)
Subject to the accuracy of the representations of the Company in Section 2.13:
(i) the registration statement on Form S-4 (or on such other form as shall
be appropriate) (as it may be amended, the "Registration Statement"), pursuant
to which the Guarantor Common Shares to be delivered to the stockholders of the
Company by Acquiror in connection with the Merger will be registered with the
SEC, shall not, at the respective times the Registration Statement (including
any amendments or supplements thereto) is filed with the SEC or is declared
effective by the SEC, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements included
therein not misleading; and
(ii) the information supplied by Guarantor or Acquiror for inclusion in
the Proxy Statement/Prospectus will not, on the date the Proxy
Statement/Prospectus (or any amendment thereof or supplement thereto) is filed
with the SEC or first mailed to stockholders or at the time of the Company
Stockholders Meeting, contain any statement which, at such time and in light of
the circumstances under which it shall be made, is false or misleading with
respect to any material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein not
false or misleading, or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Company
Stockholders Meeting which has become false or misleading.
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(b) If at any time prior to the Effective Time any event relating to
Acquiror or any of its affiliates, officers or directors should be discovered by
Acquiror which should be set forth in an amendment to the Registration Statement
or a supplement to the Proxy Statement/Prospectus, Acquiror will promptly inform
the Company.
(c) The Registration Statement and the Proxy Statement/Prospectus shall
comply in all material respects with the requirements of all applicable laws,
including the Securities Act and the Exchange Act and the rules and regulations
thereunder.
(d) Notwithstanding the foregoing, Acquiror makes no representation or
warranty with respect to any information supplied by the Company which is
contained or incorporated by reference in, or furnished in connection with the
preparation of, the Registration Statement or the Proxy Statement/Prospectus.
Section 3.11 Restrictions on Business Activities. Except for this
Agreement or as set forth in the Guarantor SEC Documents, to the Guarantor's
knowledge, there is no agreement, judgment, injunction, order or decree binding
upon the Guarantor or any of its subsidiaries which has or would reasonably be
expected to have the effect of prohibiting or impairing the conduct of business
by the Guarantor or any of its subsidiaries, or restricting any transactions
(including payment of dividends and distributions) between the Guarantor and its
subsidiaries, except for any prohibition or impairment as would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect.
Section 3.12 Taxes. Except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect:
(a) Guarantor and each of its subsidiaries has timely and accurately
filed, or caused to be timely and accurately filed, all Tax Returns required to
be filed by it, and has paid, collected or withheld, or caused to be paid,
collected or withheld, all Taxes required to be paid, collected or withheld,
other than such Taxes for which adequate reserves in the 2000 Guarantor Balance
Sheet have been established or which are being contested in good faith. There
are no claims or assessments pending against the Company or any of its
subsidiaries for any alleged deficiency in any Tax, there are no pending or, to
the knowledge of the Guarantor, threatened audits or investigations for or
relating to any liability in respect of any Taxes, and the Guarantor has not
been notified in writing of any proposed Tax claims or assessments against the
Guarantor or any of its subsidiaries (other than in each case, claims or
assessments for which adequate reserves in the 2000 Guarantor Balance Sheet have
been established or which are being contested in good faith). Neither the
Guarantor nor any of its subsidiaries has executed any waivers or extensions of
any applicable statute of limitations to assess any Taxes. There are no
outstanding requests by the Guarantor or any of its subsidiaries for any
extension of time within which to file any Tax Return or within which to pay any
Taxes shown to be due on any Tax Return. To the best knowledge of the Guarantor,
there are no liens for Taxes on the assets of the Guarantor or any of its
subsidiaries except for statutory liens for current Taxes not yet due and
payable. Other than with respect to the Guarantor and its subsidiaries, neither
the Guarantor nor any of its subsidiaries is liable for Taxes of any other
person, or is currently under any contractual obligation to indemnify any person
with respect to Taxes (except for customary agreements to indemnify lenders or
security holders in respect of Taxes and except for provisions in agreements
-37-
for the divestiture of subsidiaries, assets or business lines of the Guarantor
or its subsidiaries that require the Guarantor or its subsidiaries (as
applicable) to indemnify a purchaser or purchase group for amounts of Taxes of
the Guarantor or its subsidiaries (as applicable) in the nature of sales or
similar Taxes incurred as a consequence of any such divestiture transactions),
or is a party to any tax sharing agreement or any other agreement providing for
payments by the Guarantor or any of its subsidiaries with respect to Taxes.
Section 3.13 Environmental Matters. (a) Except as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect,
the operations and properties of the Guarantor and its subsidiaries are in
compliance with the Environmental Laws, which compliance includes the possession
by the Guarantor and its subsidiaries of all permits and governmental
authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof.
(b) Except as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, there are no Environmental Claims,
including claims based on "arranger liability," pending or, to the knowledge of
the Guarantor, threatened against the Guarantor or any of its subsidiaries or
against any person or entity whose liability for any Environmental Claim the
Guarantor or any of its subsidiaries has retained or assumed.
(c) Except as set forth in the Guarantor SEC Documents, there are no past
or present actions, circumstances, conditions, events or incidents, including
the release, emission, discharge, presence or disposal of any Materials of
Environmental Concern, that are reasonably likely to form the basis of any
Environmental Claim against the Guarantor or any of its subsidiaries or against
any person or entity whose liability for any Environmental Claim the Guarantor
or any of its subsidiaries have retained or assumed, except for such
Environmental Claims that would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
(d) Except as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect or as set forth in the Guarantor
SEC Documents, (i) there are no off-site locations where the Guarantor or any of
its subsidiaries has stored, disposed or arranged for the disposal of Materials
of Environmental Concern which have been listed on the National Priority List,
CERCLIS, or state Superfund site list, and the Guarantor and its subsidiaries
have not been notified that any of them is a potentially responsible party at
any such location; (ii) there are no underground storage tanks located on
property owned or leased by the Guarantor or any of its subsidiaries; (iii)
there is no friable asbestos containing material contained in or forming part of
any building, building component, structure or office space owned, leased or
operated by the Guarantor or any of its subsidiaries; and (iv) there are no PCBs
or PCB-containing items contained in or forming part of any building, building
component, structure or office space owned, leased or operated by the Guarantor
or any of its subsidiaries.
Section 3.14 Brokers. Except for ▇▇▇▇▇▇ Brothers and ▇▇▇▇▇▇▇, Sachs & Co.,
the fees and expenses of which will be paid by Acquiror, there is no investment
banker, broker, finder or other intermediary that has been retained by or is
authorized to act on behalf of Acquiror or Guarantor who might be entitled to
any fee or commission from Acquiror, Guarantor
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or any of their respective affiliates in connection with the transactions
contemplated by this Agreement.
Section 3.15 Ownership of Acquiror. Acquiror is a direct, wholly-owned
subsidiary of Guarantor.
Section 3.16 No Prior Activities. (a) Acquiror was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement.
(b) Except for obligations or liabilities incurred by Acquiror in
connection with its incorporation or organization and the transactions
contemplated by this Agreement and except for this Agreement and any other
agreements or arrangements contemplated by this Agreement, Acquiror has not
incurred, directly or indirectly, through any subsidiary or affiliate, any
obligations or liabilities or engaged in any business activities of any type or
kind whatsoever or entered into any agreements or arrangements with any person.
Section 3.17 No Vote Required. No vote of the shareholders of Guarantor is
required by law, Guarantor's Charter Documents or otherwise in order for
Acquiror to consummate the Merger and the other transactions contemplated
hereby, as applicable.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
Section 4.01 Conduct of Business by the Company. The Company covenants and
agrees that, during the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective Time,
unless Acquiror shall otherwise agree in writing, and except as set forth in
Section 4.01 of the Company Disclosure Schedule, the Company shall conduct its
business and shall cause the businesses of its subsidiaries to be conducted only
in, and the Company and its subsidiaries shall not take any action except in,
the ordinary course of business and in a manner consistent with past practice;
and the Company shall use reasonable commercial efforts, subject to the terms of
this Agreement, to preserve substantially intact the business organization of
the Company and its subsidiaries, to keep available the services of the present
officers, employees and consultants of the Company and its subsidiaries and to
preserve the present relationships of the Company and its subsidiaries with
customers, suppliers and other persons with which the Company or any of its
subsidiaries has significant business relations. By way of amplification and not
limitation, except as contemplated by this Agreement, neither the Company nor
any of its subsidiaries shall, during the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement or the
Effective Time, and except as set forth in Section 4.01 of the Company
Disclosure Schedule, directly or indirectly do, or propose to do, any of the
following without the prior written consent of Acquiror, which, in the case of
clauses (c), (d)(iv), (e), (f), (h) or (i), will not be unreasonably withheld or
delayed:
(a) amend or otherwise change the Company Charter Documents;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options,
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warrants, convertible securities or other rights of any kind to acquire any
shares of capital stock, or any other ownership interest (including, without
limitation, any phantom interest) in the Company, any of its subsidiaries or
affiliates (except for the issuance of shares of Company Common Stock issuable
pursuant to Company Stock Options outstanding on the date hereof or pursuant to
the Company Employee Plans set forth in Section 4.01(b) of the Company
Disclosure Schedule or in exchange for the Exchangeco Shares);
(c) sell, pledge, dispose of or encumber any assets of the Company or any
of its subsidiaries (except for (i) sales of assets in the ordinary course of
business and in a manner consistent with past practice, (ii) dispositions of
obsolete or worthless assets, and (iii) sales of immaterial assets not in excess
of $20 million in the aggregate);
(d) (i) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock, except that a wholly-owned subsidiary of the Company
may declare and pay a dividend to its parent that is not a cross-border dividend
and except that the Company may declare and pay prior to the Effective Time
quarterly cash dividends of up to $0.10 per Share and equivalent dividends on
the Exchangeco Shares consistent with past practice, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, (iii) except (A) as contemplated by this
Agreement, (B) as required by the terms of any security as in effect on the date
hereof and set forth in Section 4.01(d) of the Company Disclosure Schedule and
(C) to the extent necessary to effect withholding to meet minimum tax
withholding obligations or pay the exercise price in connection with the
exercise of any Company Stock Option, amend the terms or change the period of
exercisability of, purchase, repurchase, redeem or otherwise acquire, or permit
any subsidiary to amend the terms or change the period of exercisability of,
purchase, repurchase, redeem or otherwise acquire, any of its securities or any
securities of its subsidiaries, including, without limitation, shares of Company
Common Stock or Exchangeco Shares, or any option, warrant or right, directly or
indirectly, to acquire any such securities, or propose to do any of the
foregoing, (iv) settle, pay or discharge any claim, suit or other action brought
or threatened against the Company with respect to or arising out of a
stockholder equity interest in the Company, or (v) make any cross-border capital
contributions to a subsidiary;
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership, limited liability company or other
business organization or division thereof; (ii) incur any indebtedness for
borrowed money, except for (x) aggregate borrowings and reborrowings under the
Company's or any of its subsidiaries' medium term note and commercial paper
programs (but not under the credit facilities used to support the commercial
paper program) and (y) other borrowing, not in excess of $500 million in the
aggregate; (iii) issue any debt securities or assume, guarantee (other than
guarantees of the Company's subsidiaries entered into in the ordinary course of
business and except as required by any agreement in effect as of the date hereof
and identified in Section 4.01(e) of the Company Disclosure Schedule) or
endorse, or otherwise as an accommodation become responsible for, the
obligations of any person, or make any loans or advances, except in the ordinary
course of business consistent with past practice (but not loans or advances to
employees of the Company to fund the exercise price of Company Stock Options or
otherwise to purchase shares of the Company Common Stock); or (iv) authorize any
capital expenditures or purchases of fixed assets
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(other than assets acquired to be leased) which are, in the aggregate, in excess
of $15 million over the next 12 month period; or (v) enter into or materially
amend any contract, agreement, commitment or arrangement to effect any of the
matters prohibited by this Section 4.01(e);
(f) (i) increase the compensation or severance payable or to become
payable to its directors, officers, employees or consultants, except for
increases in salary or wages of employees of the Company or its subsidiaries,
including in connection with promotions, in accordance with past practices; or
(ii) grant any severance or termination pay to (except to make payments required
to be made under obligations existing on the date hereof in accordance with the
terms of such obligations), or enter into or amend any employment or severance
agreement, with any current or prospective employee of the Company or any of its
subsidiaries, except for new hire employees in the ordinary course of business
whose annual salary does not exceed $200,000 and whose severance benefits do not
exceed one times annual salary (base and bonus); or (iii) establish, adopt,
enter into or amend any collective bargaining agreement, Company Employee Plan,
including, without limitation, any plan that provides for the payment of bonuses
or incentive compensation, trust, fund, policy or arrangement for the benefit of
any current or former directors, officers, employees or consultants or any of
their beneficiaries, except, in each case, as may be required by law;
(g) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue recognition,
payments of accounts payable and collection of accounts receivable) except as
required by a change in GAAP or the interpretations thereof occurring after the
date hereof;
(h) make any tax election or settle or compromise any United States
federal, state, local or non-United States tax liability;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise) in excess
of $10 million in the aggregate, other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with past
practice of liabilities reflected or reserved against in the financial
statements contained in the Company SEC Documents or incurred in the ordinary
course of business and consistent with past practice;
(j) materially restructure or materially change its gap position, through
purchases, sales, ▇▇▇▇▇▇, swaps, caps or collars or otherwise or the manner in
which any current ▇▇▇▇▇▇ are classified or reported; or
(k) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.01(a) through (j) above, or any action which would make
any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect or prevent the Company from performing or cause
the Company not to perform its covenants hereunder or cause any condition to the
Company's obligations to consummate the transactions contemplated hereby set
forth in Article VI not to be satisfied.
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Section 4.02 No Solicitation.
(a) The Company shall not, directly or indirectly through any officer,
director, employee, representative or agent of the Company or any of its
subsidiaries (including any investment banker, attorney or accountant retained
by it or any of its subsidiaries), (i) solicit or encourage the initiation of
(including by way of furnishing information) any inquiries or proposals
regarding any merger, sale of assets, sale of shares of capital stock
(including, without limitation, by way of a tender offer) or similar
transactions involving the Company or any subsidiaries of the Company that if
consummated would constitute an Alternative Transaction (as defined below) (any
of the foregoing inquiries or proposals being referred to herein as an
"Acquisition Proposal"), (ii) have any discussion with or provide any
confidential information or data to any third party that would encourage,
facilitate or further an Acquisition Proposal, or engage in any negotiations
concerning an Acquisition Proposal, or knowingly facilitate any effort or
attempt to make or implement an Acquisition Proposal, (iii) approve or
recommend, or propose publicly to approve or recommend, any Acquisition Proposal
or (iv) approve or recommend, or propose to approve or recommend, or execute or
enter into, any letter of intent, agreement in principle, merger agreement,
acquisition agreement, option agreement or other similar agreement or propose
publicly or agree to do any of the foregoing related to any Acquisition
Proposal.
For purposes of this Agreement, "Alternative Transaction" means any of (w)
a transaction pursuant to which any person (or group of persons) other than
Acquiror or its affiliates (a "Third Party") acquires or would acquire more than
20% of the outstanding shares of any class of equity securities of the Company,
whether from the Company or pursuant to a tender offer or exchange offer or
otherwise, (x) a merger or other business combination involving the Company
pursuant to which any Third Party acquires or would acquire more than 20% of the
outstanding equity securities of the Company or the entity surviving such merger
or business combination, (y) any transaction pursuant to which any Third Party
acquires or would acquire control of assets (including for this purpose the
outstanding equity securities of subsidiaries of the Company and securities of
the entity surviving any merger or business combination including any of the
Company's subsidiaries) of the Company, or any of its subsidiaries having a fair
market value (as determined by the Board of Directors of the Company in good
faith) equal to more than 20% of the fair market value of all the assets of the
Company and its subsidiaries, taken as a whole, immediately prior to such
transaction, or (z) any other consolidation, business combination,
recapitalization or similar transaction involving the Company or any significant
subsidiary of the Company, other than the transactions contemplated by this
Agreement; provided, however, that the term Alternative Transaction shall not
include any acquisition of securities by a broker dealer in connection with a
bona fide public offering of such securities.
(b) The Company shall notify Acquiror promptly (but in no event later than
24 hours) after receipt of any Acquisition Proposal, or any modification of or
amendment to any Acquisition Proposal, or any request for nonpublic information
relating to the Company or any of its subsidiaries in connection with an
Acquisition Proposal or for access to the properties, books or records of the
Company or any subsidiary by any person or entity that informs the Board of
Directors of the Company or such subsidiary that it is considering making, or
has made, an Acquisition Proposal. Such notice to Acquiror shall be made orally
and in writing, and shall
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indicate the identity of the person making the Acquisition Proposal or intending
to make an Acquisition Proposal or requesting non-public information or access
to the books and records of the Company, the terms of any such Acquisition
Proposal or modification or amendment to an Acquisition Proposal. The Company
shall keep Acquiror fully informed, on a current basis, of any material changes
in the status and any material changes or modifications in the material terms of
any such Acquisition Proposal, indication or request.
(c) Neither the Company nor the Board of Directors of the Company shall
withdraw or modify, or publicly propose to withdraw or modify, in a manner
adverse to Acquiror, the approval by such Board of Directors of this Agreement
or the Merger.
(d) The Company and the Board of Directors of the Company shall not enter
into any agreement with respect to, or otherwise approve or recommend, or
propose to approve or recommend, any Acquisition Proposal or Alternative
Transaction, unless this Agreement has been terminated in accordance with its
terms.
(e) Nothing contained in this Section 4.02, Section 5.01(c) or Section
5.02 shall prohibit the Company from taking and disclosing to its stockholders a
position required by Rule 14e-2(a) promulgated under the Exchange Act or from
making any disclosure to its stockholders required by applicable law, rule or
regulation, by the NYSE or the Toronto Stock Exchange or from providing
information to, or engaging in discussions with, third parties to the extent
that providing such information or engaging in such discussions is expressly
required by applicable Delaware law and the Board of Directors of the Company
has received a written opinion of independent counsel of nationally recognized
standing that such action is so expressly required.
(f) The Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any persons (other than Acquiror)
conducted heretofore with respect to any of the foregoing. The Company agrees
not to release any third party from the confidentiality and standstill
provisions of any agreement to which the Company is a party, other than
agreements with the Company's customers and suppliers entered into in the
ordinary course of business.
(g) The Company shall ensure that the officers and directors of the
Company and the Company subsidiaries and any investment banker or other advisor
or representative retained by the Company, or providing services to the Company,
in connection with the transactions contemplated hereby are aware of the
restrictions described in this Section 4.02. It is understood that any violation
of the restrictions set forth in this Section 4.02 by any officer or director of
the Company or the Company subsidiaries and any investment banker, attorney or
other advisor or representative of the Company shall be deemed to be a breach of
this Section 4.02 by the Company.
Section 4.03 Conduct of Business by Guarantor. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Effective Time, Acquiror covenants and agrees that, unless
the Company shall otherwise agree in writing, Acquiror shall take all action
necessary so that (i) Guarantor shall conduct its business, and cause the
businesses of its subsidiaries to be conducted, in the ordinary course of
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business and consistent with past practice, including actions taken by Guarantor
or its subsidiaries in contemplation of consummation of the Merger or other
business acquisitions otherwise in compliance with this Agreement, and (ii)
Guarantor shall not directly or indirectly do, or propose to do, any of the
following without the prior written consent of the Company:
(a) amend or otherwise change the Guarantor Charter Documents, except as
contemplated by this Agreement or as proposed in Guarantor's proxy statement for
its 2001 annual general meeting of shareholders filed with the SEC on January
29, 2001;
(b) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets of any other person, or dispose of any assets, which, in any
such case, would, or would reasonably be expected to, materially delay or
prevent the consummation of the Merger and the other transactions contemplated
by this Agreement;
(c) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock, except that a wholly owned subsidiary of Guarantor may
declare and pay a dividend to its parent, and except that Guarantor may declare
and pay quarterly cash dividends on the Guarantor Common Shares of up to $0.0125
per share consistent with past practice;
(d) take any action to change its accounting policies or procedures
(including, without limitation, procedures with respect to revenue recognition,
payments of accounts payable and collection of accounts receivable), except as
required by a change in GAAP occurring after the date hereof; or
(e) take or agree in writing or otherwise to take any of the actions
described in Sections 4.03(a) through (d) above, or any action that would make
any of the representations or warranties of Acquiror contained in this Agreement
untrue or incorrect or prevent Acquiror from performing or cause Acquiror not to
perform its covenants hereunder or cause any condition to Acquiror's obligations
to consummate the transactions contemplated hereby set forth in Article VI not
to be satisfied.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.01 Proxy Statement/Prospectus; Registration Statement.
(a) As promptly as reasonably practicable after the execution of this
Agreement, the Company shall, and Acquiror shall cause Guarantor to, prepare and
file with the SEC, preliminary proxy materials which shall constitute the Proxy
Statement/Prospectus and, if the parties so agree at the time, the Registration
Statement. As promptly as reasonably practicable after comments are received
from the SEC thereon and after the furnishing by the Company and Guarantor of
all information required to be contained therein, the Company shall, and
Acquiror shall, and shall cause Guarantor to, file with the SEC, the definitive
Proxy
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Statement/Prospectus and the Registration Statement (or, if the Registration
Statement has been previously filed, an amendment thereto) relating to the
adoption of this Agreement by the Company's stockholders as set forth in Section
2.04(c) and the other transactions contemplated hereby, and to the payment of
the Merger Consideration in the form of Guarantor Common Shares pursuant to this
Agreement, and shall use all reasonable efforts to cause the Registration
Statement to become effective, and the Company shall mail the Proxy
Statement/Prospectus to its stockholders as soon thereafter as reasonably
practicable. Acquiror shall also cause Guarantor to 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 the applicable state securities laws in connection with the issuance
of Guarantor Common Shares in connection with the Merger, and the Company shall
furnish to Guarantor all information concerning the Company and the holders of
capital stock of the Company as may be reasonably requested in connection with
any such action and the preparation, filing and distribution of the Proxy
Statement/Prospectus.
No filing of, or amendment or supplement to, or correspondence to the SEC
or its staff with respect to the Proxy Statement/Prospectus will be made by the
Company or Guarantor, without providing the other party a reasonable opportunity
to review and comment thereon. Acquiror will advise the Company, promptly after
Guarantor receives notice thereof, of the time when the Registration Statement
has become effective or any supplement or amendment has been filed, the issuance
of any stop order, the suspension of the qualification of the Guarantor Common
Shares issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Registration
Statement or comments thereon and responses thereto or requests by the SEC for
additional information. The Company will advise Acquiror, promptly after it
receives notice thereof, of any request by the SEC for the amendment of the
Proxy Statement/Prospectus 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 Acquiror, or any of their respective affiliates, officers or
directors, should be discovered by the Company or Acquiror which should be set
forth in an amendment or supplement to either of the Registration Statement or
the Proxy Statement/Prospectus so that any of such documents would not include
any misstatement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, the party which discovers such information shall
promptly notify the other parties hereto and an appropriate amendment or
supplement describing such information shall be promptly filed with the SEC and,
to the extent required by law, disseminated to the stockholders of the Company.
(b) Acquiror shall cause Guarantor to include as an exhibit to the
Registration Statement tax opinions of PricewaterhouseCoopers LLP and Wachtell,
Lipton ▇▇▇▇▇ & ▇▇▇▇, in form and substance reasonably satisfactory to Acquiror
and to the Company, on the basis of customary facts, representations,
warranties, covenants and assumptions set forth or referred to in such opinions,
that the Merger will be treated for United States federal income tax purposes as
a reorganization within the meaning of Section 368(a) of the Code that is not
subject to Section 367(a)(1) of the Code pursuant to Treasury Regulation Section
1.367(a)-(3)(c) (other than with respect to Company stockholders who are or will
be "five-percent transferee shareholders"
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within the meaning of Treasury Regulation Section 1.367(a)-3(c)(5)(ii) and do
not enter into five-year gain recognition agreements in the form provided in
Treasury Regulation Section 1.367(a)-8), and that each of Guarantor, Acquiror
and the Company will be a party to the reorganization within the meaning of
Section 368(b) of the Code.
(c) The Proxy Statement/Prospectus shall include the recommendation of the
Board of Directors of the Company in favor of adoption of this Agreement.
Section 5.02 Company Stockholders Meeting. The Company shall establish a
record date for, duly call, give notice of, convene and hold the Company
Stockholders Meeting as promptly as practicable for the purpose of voting upon
the adoption of this Agreement, and the Company shall use all reasonable efforts
to cause the Proxy Statement/Prospectus to be mailed to the Company's
stockholders and to hold the Company Stockholders Meeting as promptly as
practicable after the Registration Statement is declared effective under the
Securities Act. The Company shall solicit from its stockholders proxies in favor
of adoption of this Agreement and shall take all other reasonable action
necessary or advisable to secure the vote or consent of stockholders in favor of
such adoption. Acquiror shall cause Guarantor to vote any shares of Company
Common Stock with respect to which Guarantor or any Guarantor subsidiary has
beneficial ownership or other voting authority (including proxy authority) to be
voted in favor of adoption of this Agreement.
Section 5.03 Access to Information; Confidentiality.
(a) Upon reasonable notice, the Company shall (and shall cause its
subsidiaries and joint venture partners to), during the period after the
execution and delivery of this Agreement and prior to the Effective Time, (i)
afford to the officers, employees, accountants, counsel, investment bankers,
valuation consultants and other representatives of Acquiror full and complete
access to the properties, books, records and contracts and agreements of the
Company, its subsidiaries and joint ventures, (ii) furnish promptly to Acquiror
all information concerning the business, properties, prospects, assets (tangible
and intangible), liabilities, financial statements, ratings, regulatory
compliance, risk management, books, records, contracts, agreements, commitments
and personnel of the Company, its subsidiaries and joint ventures as Acquiror
may request, and (iii) make available to Acquiror the appropriate officers,
employees, consultants and other individuals of the Company, its subsidiaries
and joint ventures (including attorneys, accountants, actuaries, investment
bankers and other professionals) for discussion of the Company's business,
properties, prospects, assets (tangible and intangible), liabilities, financial
statements, ratings, regulatory compliance, risk management, books, records,
contracts, agreements, commitments and personnel as Acquiror may request. Such
information shall be kept confidential in accordance with the terms of the
confidentiality agreement, dated February 19, 2001 (the "Confidentiality
Agreement"), between an affiliate of Guarantor and the Company.
(b) Upon reasonable notice, the Acquiror shall, and shall cause Guarantor
to, during the period after the execution and delivery of this Agreement and
prior to the Effective Time, (i) afford to the officers, accountants, counsel,
investment bankers and other representatives of the Company reasonable access to
the properties of Guarantor and its subsidiaries, (ii) furnish promptly to
Acquiror all information concerning the business, properties and prospects of
Guarantor and its subsidiaries as the Company may reasonably request, and (iii)
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make available to the Company the appropriate individuals of Guarantor and its
subsidiaries (including attorneys, accountants and other professionals) for
discussion of Guarantors business, properties and prospects as the Company may
reasonably request. Such information shall be kept confidential in accordance
with the terms of the Confidentiality Agreement.
Section 5.04 Consents; Approvals.
(a) Subject to Section 5.08, the Company and Acquiror shall each use its
reasonable best efforts (and Acquiror shall cause Guarantor to use its
reasonable best efforts) to obtain and to cooperate with each other in order to
obtain all consents, waivers, approvals, authorizations or orders (including,
without limitation, all United States and non-United States governmental and
regulatory rulings and approvals), and the Company and Acquiror shall make (and
Acquiror shall cause Guarantor to make) as promptly as reasonably practicable
all filings (including, without limitation, all filings with United States and
non-United States governmental or regulatory agencies) required in connection
with the authorization, execution and delivery of this Agreement by the Company
and Acquiror and the consummation by them of the transactions contemplated
hereby. The Company and Acquiror shall furnish (and Acquiror shall cause
Guarantor to furnish) all information required to be included in the Proxy
Statement/Prospectus and the Registration Statement, or for any application or
other filing to be made pursuant to the rules and regulations of any United
States or non-United States governmental body in connection with the
transactions contemplated by this Agreement.
(b) The Company shall, and Acquiror shall and shall cause Guarantor to,
notify the other promptly upon the receipt of any comments from the SEC or its
staff or any other government officials in connection with any filing made
pursuant hereto and of any request by the SEC or its staff or any other
government officials for amendments or supplements to the Registration
Statement, the Proxy Statement/Prospectus or any other filings or for additional
information and will supply the other with copies of all correspondence between
such party or any of its representatives, on the one hand, and the SEC, or its
staff or any other government officials, on the other hand, with respect to the
Registration Statement, the Proxy Statement/Prospectus, the Merger or any other
filing. The Company shall, and Acquiror shall and shall cause Guarantor to,
cause all documents that it is responsible for filing with the SEC or other
regulatory authorities under Section 5.01 and this Section 5.04 to comply in all
material respects with all applicable requirements of law and the rules and
regulations promulgated thereunder. Whenever any event occurs which is required
to be set forth in an amendment or supplement to the Registration Statement, the
Proxy Statement/Prospectus or any other filing, the Company will, or Acquiror
will cause Guarantor to, as the case may be, promptly inform the other of such
occurrence and cooperate in filing with the SEC or its staff or any other
government officials and/or mailing to stockholders of the Company, such
amendment or supplement.
Section 5.05 Agreements with Respect to Affiliates. The Company shall
deliver to Acquiror, prior to the date the Registration Statement becomes
effective under the Securities Act, a letter (the "Company Affiliate Letter")
identifying all persons who are anticipated to be "affiliates" of the Company
for purposes of Rule 145 under the Securities Act at the time of the Company
Stockholders Meeting. The Company shall use its reasonable best efforts to cause
each person who is identified as an "affiliate" in the Company Affiliate Letter
to deliver to
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Acquiror prior to the date of the Company Stockholders Meeting a written
agreement (a "Company Affiliate Agreement") in connection with restrictions on
affiliates under Rule 145 in a form mutually agreeable to the Company and
Acquiror.
Section 5.06 Indemnification and Insurance.
(a) The Certificate of Incorporation and By-laws of the Surviving
Corporation shall contain the provisions with respect to indemnification set
forth in the Company Charter Documents, which provisions shall not be amended,
modified or otherwise repealed for a period of six years from the Effective Time
in any manner that would adversely affect the rights thereunder as of the
Effective Time of individuals who at the Effective Time were directors or
officers of the Company, unless such modification is required after the
Effective Time by law and then only to the minimum extent required by such law.
(b) The Surviving Corporation shall, to the fullest extent permitted under
applicable law indemnify and hold harmless, each present and former director or
officer of the Company or any of its subsidiaries (collectively, the
"Indemnified Parties") against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and amounts paid
in settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, (x)
arising out of or pertaining to the transactions contemplated by this Agreement
or (y) otherwise with respect to any acts or omissions occurring at or prior to
the Effective Time, to the same extent as provided in the Company Charter
Documents or any applicable contract or agreement as in effect on the date
hereof, in each case for a period of six years after the Effective Time. In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) any counsel retained by the
Indemnified Parties for any period after the Effective Time shall be reasonably
satisfactory to the Surviving Corporation, (ii) after the Effective Time, the
Surviving Corporation shall pay the reasonable fees and expenses of such
counsel, promptly after statements therefor are received, provided that the
Indemnified Parties shall be required to reimburse the Surviving Corporation for
such payments in the circumstances and to the extent required by the Company
Charter Documents, any applicable contract or agreement with such Indemnified
Party or applicable law, and (iii) the Surviving Corporation will cooperate in
the defense of any such matter; provided, however, that the Surviving
Corporation shall not be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld); and provided further
that, in the event that any claim or claims for indemnification are asserted or
made within such six-year period, all rights to indemnification in respect of
any such claim or claims shall continue until the final disposition of any and
all such claims. The Indemnified Parties as a group may retain only one law firm
to represent them in each applicable jurisdiction with respect to any single
action unless there is, under applicable standards of professional conduct, a
conflict on any significant issue between the positions of any two or more
Indemnified Parties, in which case each Indemnified Person with respect to whom
such a conflict exists (or group of such Indemnified Persons who among them have
no such conflict) may retain one separate law firm in each applicable
jurisdiction.
(c) The Surviving Corporation shall honor and fulfill in all respects the
obligations of the Company pursuant to indemnification agreements and employment
agreements (the parties under such agreements being referred to as the "Covered
Persons") with the
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Company's directors and officers existing at or before the Effective Time,
provided such agreements do not violate Section 4.01(f).
(d) In addition, Acquiror will provide, or cause the Guarantor to provide,
for a period of not less than six years after the Effective Time, the Company's
current directors and officers (as defined to mean those persons insured under
such policy) with an insurance and indemnification policy that provides coverage
for events occurring at or prior to the Effective Time (the "D&O Insurance")
that is no less favorable than the existing policy or, if substantially
equivalent insurance coverage is unavailable, the best available coverage;
provided, however, that Guarantor and the Surviving Corporation shall not be
required to pay an annual premium for the D&O Insurance in excess of 200% of the
annual premium currently paid by the Company for such insurance, but in such
case shall purchase as much such coverage as possible for such amount.
(e) This Section shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, the Surviving Corporation,
the Indemnified Parties and the Covered Persons, shall be binding on all
successors and assigns of the Surviving Corporation and shall be enforceable by
the Indemnified Parties and the Covered Persons.
Section 5.07 Notification of Certain Matters. The Company shall give
prompt notice to Acquiror, and Acquiror shall give prompt notice to the Company,
of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would reasonably be expected to cause any representation
or warranty contained in this Agreement to be materially untrue or inaccurate,
or (ii) any failure of the Company or Acquiror, as the case may be, materially
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice; and provided further
that failure to give such notice shall not be treated as a breach of covenant
for the purposes of Section 7.01(h) unless and except to the extent that the
failure to give such notice results in material prejudice to the other party.
Section 5.08 Further Action/Tax Treatment.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use all reasonable efforts to, and Acquiror shall cause
Guarantor to use all reasonable efforts to, take, or cause to be taken, all
actions and to do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, to obtain in a timely manner all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings, and otherwise to satisfy or cause to be satisfied all
conditions precedent to its obligations under this Agreement. The foregoing
covenant shall not include the obligation by Guarantor to agree to divest,
abandon, license, hold separate or take similar action with respect to any
assets (tangible or intangible) which are, or impose any liability which is,
material to Guarantor or the Company or material as compared against the
aggregate Merger Consideration.
(b) Each of Acquiror and the Company shall, and Acquiror shall cause
Guarantor to, use its reasonable best efforts to cause the Merger to qualify,
and will not (both
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before and after the Effective Time) take any actions, or fail to take any
action, which could reasonably be expected to prevent the Merger from
qualifying, as a reorganization under the provisions of Section 368(a) of the
Code that is not subject to Section 367(a)(1) of the Code pursuant to Treasury
Regulation Section 1.367(a)-(3)(c) (other than with respect to Company
stockholders who are or will be "five-percent transferee shareholders" within
the meaning of Treasury Regulation Section 1.367(a)-3(c)(5)(ii) and do not enter
into five-year gain recognition agreements in the form provided in Treasury
Regulation Section 1.367(a)-8). The parties hereto acknowledge that the actions
contemplated by the Stock Purchase Agreement are not prohibited by the preceding
sentence. Acquiror shall, and shall cause Guarantor to, comply with the
reporting requirements of Treasury Regulation Section 1.367(a)-3(c)(6) and
report, to the extent reporting is required by the Code or the regulations
thereunder, the Merger for income tax purposes as a reorganization within the
meaning of Section 368 of the Code. Each of Acquiror and the Company shall make,
and shall cause their affiliates to make, such representations, warranties and
covenants as shall be requested reasonably in the circumstances by
PricewaterhouseCoopers LLP and Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇ in order for such
firms to render their opinions referred to in Section 5.01(b).
Section 5.09 Public Announcements. Acquiror and the Company shall consult
with each other before issuing (and in the case of Acquiror, before Guarantor
issues) any press release or making any written public statement with respect to
the Merger or this Agreement and shall not issue any such press release or make
any such public statement without the prior consent of the other party, which
shall not be unreasonably withheld; provided, however, that either party may,
without the prior consent of the other, issue such press release or make such
public statement as may upon the advice of counsel be required by law or the
applicable rules and regulations of the SEC (including, without limitation,
Rules 165 and 425 under the Securities Act and Rule 14a-12 under the Exchange
Act), NYSE or the Toronto Stock Exchange if it has used all reasonable efforts
to consult with the other party.
Section 5.10 Guarantor Common Shares.
(a) Acquiror shall obtain from Guarantor, and shall cause Guarantor to
issue to Acquiror, the Guarantor Common Shares to be delivered by Acquiror to
the holders of Company Common Stock in the Merger.
(b) Acquiror shall cause Guarantor to use its best efforts to cause the
Guarantor Common Shares to be delivered by Acquiror to the holders of Company
Common Stock in the Merger to be listed, upon official notice of issuance, on
the NYSE prior to the Effective Time.
(c) Acquiror shall cause Guarantor on a timely basis to take any action
required to be taken under non-U.S. securities laws in connection with the
issuance of Guarantor Common Shares in the Merger.
Section 5.11 Stock Options and ESPP.
(a) At the Effective Time, and subject to the last sentence of this
Section 5.11(a), Acquiror shall take all necessary action to provide that each
outstanding Company Stock
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Option will continue to have, and be subject to, the same terms and conditions
set forth in the relevant Company stock option plan and applicable award
agreement (and separation agreement, if applicable), or other relevant
instrument or agreement, immediately prior to the Effective Time (except as
provided in the last sentence of this Section 5.11(a)), except that, (i) each
Company Stock Option will be exercisable for that number of whole Guarantor
Common Shares equal to the product of the number of shares of Company Common
Stock that were issuable upon exercise of such the Company Stock Option
immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounded to the nearest whole number of Guarantor Common Shares and (ii) the per
share exercise price for the Guarantor Common Shares issuable upon exercise of
such Company Stock Option will be equal to the quotient determined by dividing
the exercise price per share of the Company Common Stock at which such Company
Stock option was exercisable immediately prior to the Effective Time by the
Exchange Ratio, rounded to the nearest whole cent (each such Company Stock
Option, as modified, an "Adjusted Option"). With respect to any Company Stock
Option that is an "incentive stock option" as defined under Section 422(b) of
the Code, the adjustment procedures set forth in this Section 5.11 shall be
implemented in compliance with the provisions of Section 424(a) of the Code
(such that each applicable Adjusted Option shall continue to retain its
qualification as an "incentive stock option" under the Code). All Company Stock
Options, to the extent not vested and exercisable at the Effective Time, shall
become immediately vested and exercisable at the Effective Time.
(b) Acquiror will cause Guarantor to take all corporate action necessary
to reserve for issuance a sufficient number of Guarantor Common Shares for
delivery upon exercise of the Adjusted Options and, if and to the extent
necessary to deliver to holders of Adjusted Options upon the exercise of such
options, Guarantor Common Shares registered pursuant to the Securities Act and
listed on the NYSE. At the Effective Time, Acquiror will cause Guarantor to have
a sufficient number of Guarantor Common Shares issuable upon exercise of the
Adjusted Options registered pursuant to the Securities Act and listed on the
NYSE.
(c) Beginning on the date hereof, the Company shall not establish any new
employee stock purchase plan or extend the availability of the Company ESPP to
any groups or categories of employees not previously included in the Company
ESPP, or, in either case, implement any decisions to do the same, whether or not
such decisions have been communicated to employees. The Company shall take such
action as is necessary to end the then current offering period under the Company
ESPP prior to the Effective Time and to terminate such plan as of the Effective
Time. All shares of Company Common Stock under the Company ESPP shall be treated
as all other shares of Company Common Stock.
Section 5.12 Certain Employee Benefits.
(a) From the Effective Time through the first anniversary thereof (the
"Benefits Continuation Period"), the Surviving Corporation shall continue to
maintain the employee benefit plans, programs and arrangements set forth on
Section 5.12(a) of the Company Disclosure Schedule, for the benefit of each
employee of the Company or any subsidiary of the Company who is an employee at
the Effective Time or becomes an employee during the Benefits Continuation
Period (a "Company Employee"), and including for the applicable beneficiaries of
such Company Employees under such plans, programs or arrangements, without
termination, modification or amendment effective during the Benefits
Continuation Period (other than as may
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be required under applicable law). Notwithstanding anything in this Agreement
that may be to the contrary, the Company's Executive Retirement Plan (including
the Company's new Executive Retirement Plan) shall be maintained by the
Surviving Corporation indefinitely following the Effective Time, provided that
the Surviving Corporation shall not be required to permit new participants to be
added to the Executive Retirement Plan after the Effective Time. With respect to
any Company Employee Plan listed on Section 2.11(a) of the Company Disclosure
Schedule which is not set forth on Section 5.12(a) of the Company Disclosure
Schedule, the Surviving Corporation shall provide each Company Employee (and
applicable beneficiaries thereof) during the Benefits Continuation Period with
employee benefits that are no less favorable in the aggregate than the benefit
provided under such Company Employee Plans. In addition to the acceleration of
vesting and exercisability of all Company Stock Options provided in the last
sentence of Section 5.11(a), all restricted stock, SARs and other equity and
equity-based awards granted pursuant to the Company Employee Plans, to the
extent not vested (and exercisable, as the case may be) at the Effective Time,
shall become immediately fully vested (and exercisable, as the case may be) at
the Effective Time.
(b) After the Benefits Continuation Period the Surviving Corporation shall
provide the Company Employees with employee benefits that are no less favorable
in the aggregate to those provided to similarly situated employees of
subsidiaries of the Guarantor. For the avoidance of doubt, it is understood that
the Surviving Corporation shall have no obligation to provide Company Employees
with post-termination welfare or, to the extent not already accrued at the
Effective Time or, if applicable, the end of the Benefits Continuation Period,
pension benefits, except to the extent required by applicable law or contractual
agreement.
(c) With respect to the benefits provided pursuant to this Section 5.12,
(i) service accrued by Company Employees during employment with the Company and
its subsidiaries prior to the Effective Time shall be recognized for eligibility
and vesting and, except with respect to defined benefit plans, benefit accrual,
(ii) any and all pre-existing condition limitations (to the extent such
limitations did not apply to a pre-existing condition under the applicable
Company Employee Plan) and eligibility waiting periods under any group health
plan shall be waived with respect to such Company Employees and their eligible
dependents, and (iii) Company Employees shall be given credit for amounts paid
under a Company Employee Plan during the same period for purposes of applying
deductibles, co-payments and out-of-pocket maximums as though such amounts had
been paid in accordance with the terms and conditions of the employee plans
maintained by the Surviving Corporation or the applicable subsidiary of the
Guarantor.
(d) The Company shall amend its 401(k) savings plans and any other
employee benefits plan which permits participants to elect to invest in stock of
the Company, where necessary, to preclude any additional purchases of stock of
the Company, as of the date two (2) days prior to the Effective Time, and the
Company shall communicate this amendment to the participants in such plans.
(e) It is expressly agreed that (i) the provisions of Section 5.12 are not
intended to be for the benefit of or otherwise enforceable by any third party,
including, without limitation, any Company Employees and (ii) except as provided
in Section 5.12(a), nothing herein shall prevent the Surviving Corporation or
any other subsidiary of Guarantor from
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amending or modifying any employee benefit plan, program or arrangement in any
respect or terminating or modifying the terms and conditions of employment or
other service of any particular employee or any other person.
(f) Except as set forth in this Section 5.12 and in Section 5.12(f) of the
Company Disclosure Schedule, the Surviving Corporation shall not have any
obligations under this Agreement with respect to benefits to employees of the
Company from and after the Effective Time.
Section 5.13 Accountants Letters. Upon reasonable notice from the other,
the Company shall use its best efforts to cause KPMG LLP to deliver to Acquiror,
and Acquiror shall use its best efforts to cause PricewaterhouseCoopers to
deliver to the Company, a letter covering such matters as are reasonably
requested by Acquiror or the Company, as the case may be, and as are customarily
addressed in accountants' "comfort letters."
Section 5.14 Compliance with State Property Transfer Statutes. The Company
agrees that it shall use its reasonable commercial efforts to comply promptly
with all requirements of applicable state property transfer laws as may be
required by the relevant state agency and shall take all action necessary to
cause the transactions contemplated hereby to be effected in compliance with
applicable state property transfer laws, except where the failure to so comply
will not materially affect the right to use or enjoy any applicable property
after the Effective Time. The Company, after consultation with Acquiror, shall
determine which actions must be taken prior to or after the Effective Time to
comply with applicable state property transfer laws. The Company agrees to
provide Acquiror with any documents required to be submitted to the relevant
state agency prior to submission, and the Company shall not take any action to
comply with applicable state property transfer laws without Acquiror's prior
consent, which consent shall not be unreasonably withheld or delayed. Acquiror
shall provide, and shall cause Guarantor to provide, to the Company any
assistance reasonably requested by the Company with respect to such compliance.
Section 5.15 Conveyance Taxes. Acquiror and the Company shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications, or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated hereby that are
required or permitted to be filed on or before the Effective Time, and the
Company shall be responsible for the payment of all such taxes and fees.
Section 5.16 Exchangeco Shares.
(a) Each of Acquiror and the Company shall take, Acquiror shall cause
Guarantor to take, and the Company shall cause Exchangeco to take, all action
necessary or desirable to implement the provisions of Section 1.06(a)(ii) with
respect to the modification of the Exchangeco Documents following the Effective
Time.
(b) Acquiror will cause Guarantor to take all corporate action necessary
to reserve for issuance a sufficient number of Guarantor Common Shares for
delivery upon
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exchange of the Exchangeco Shares and to deliver to holders of Exchangeco Shares
upon the exchange thereof, Guarantor Common Shares registered pursuant to the
Securities Act and listed on the NYSE. At the Effective Time, Acquiror will
cause Guarantor to have a sufficient number of Guarantor Common Shares issuable
upon exchange of the Exchangeco Shares registered pursuant to the Securities Act
and listed on the NYSE.
(c) Acquiror will cause Guarantor to take and the Company will cause
Exchangeco to take all action necessary or desirable to obtain the approval of
the Toronto Stock Exchange and the variation of exemptive relief granted by the
securities commissions or similar regulatory authorities in all of the provinces
and territories in Canada in favor of Exchangeco which may be required in
connection with the implementation of the provisions of Section 1.06(a)(ii) with
respect to the issuance of the Guarantor Common Shares on the exchange of the
Exchangeable Shares and with respect to the modification of the Exchangeco
Documents as of the Effective Time.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.01 Conditions to Obligation of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose and no
similar proceeding in respect of the Proxy Statement/Prospectus shall have been
initiated or threatened by the SEC;
(b) Stockholder Adoption. This Agreement shall have been adopted by the
requisite vote of the stockholders of the Company;
(c) Antitrust. All waiting periods applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated, and all
clearances and approvals required to be obtained in respect of the Merger prior
to the Effective Time under any Non-U.S. Monopoly Laws shall have been obtained,
except where the failure to have obtained any such clearances or approvals with
respect to any Non-U.S. Monopoly Laws would not reasonably be expected to have a
Material Adverse Effect on the Company or Guarantor;
(d) Legal Actions. There shall not have been instituted, pending or
threatened any action or proceeding (or any investigation or other inquiry that
is reasonably likely to result in such an action or proceeding) by any
Governmental Authority or before any Governmental Authority or court of
competent jurisdiction, United States or non-United States, that is reasonably
likely to result in, nor shall there be in effect, any judgment, decree or order
of any Governmental Authority or court of competent jurisdiction or any other
legal restraint (i) preventing consummation of the Merger, (ii) prohibiting or
limiting Acquiror from exercising all material rights and privileges pertaining
to its ownership of the Surviving Corporation or the
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ownership or operation by Guarantor or any of its subsidiaries of all or a
material portion of the business or assets of the Surviving Corporation and its
subsidiaries, or (iii) compelling Guarantor or any of its subsidiaries
(including the Surviving Corporation and its subsidiaries) to dispose of or hold
separate assets which are, or impose any liability which is, material to
Guarantor or the Company, or material as compared against the aggregate Merger
Consideration, as a result of the Merger or the transactions contemplated by
this Agreement.
(e) Illegality. No statute, rule, regulation or order shall be enacted,
entered, enforced or deemed applicable to the Merger which makes the
consummation of the Merger illegal; and
(f) Tax Opinions. The Company shall have received a written opinion of
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, and Acquiror shall have received a written
opinion of PricewaterhouseCoopers LLP, in form and substance reasonably
satisfactory to each of them, on the basis of customary representations,
warranties, covenants and assumptions set forth or referred to in such opinions,
and delivered as of the date of the Effective Time, to the effect that the
Merger will constitute a reorganization within the meaning of Section 368(a) of
the Code that is not subject to Section 367(a)(1) of the Code pursuant to
Treasury Regulation Section 1.367(a)-(3)(c) (other than with respect to Company
stockholders who are or will be "five-percent transferee shareholders" within
the meaning of Treasury Regulation Section 1.367(a)-3(c)(5)(ii) and do not enter
into five-year gain recognition agreements in the form provided in Treasury
Regulation Section 1.367(a)-8), and that each of Guarantor, Acquiror and the
Company will be a party to the reorganization within the meaning of Section
368(b) of the Code.
Section 6.02 Additional Conditions to Obligations of Acquiror. The
obligations of Acquiror to effect the Merger are also subject to the following
conditions:
(a) Representations and Warranties. The representations and warranties of
the Company contained in this Agreement shall be true and correct in all
respects (without for this purpose giving effect to qualifications of
materiality contained in such representations and warranties) on and as of the
Effective Time, with the same force and effect as if made on and as of the
Effective Time, except for (i) changes contemplated by this Agreement, (ii)
those representations and warranties which address matters only as of a
particular date (which shall have been true and correct as of such date, subject
to clause (iii)), or (iii) where the failure to be true and correct would not
reasonably be expected, individually or in the aggregate with all other such
failures, to have a Material Adverse Effect (except the representations and
warranties set forth in Section 2.03 and Section 2.09, which shall be true and
correct in all material respects), and Acquiror shall have received a
certificate of the Company to such effect signed by the Chief Executive Officer
or Chief Financial Officer of the Company;
(b) Agreements and Covenants. The Company shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time, and Acquiror shall have received a certificate to such effect signed by
the Chief Executive Officer or Chief Financial Officer of the Company; provided,
however, that unless the Company knowingly breaches Sections 4.01(k) or 5.07,
the Company shall be deemed to have complied with such sections
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unless the failure to comply with such sections also results in or is with
respect to the failure of the condition set forth in Section 6.02(a); and
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by the Company for the authorization, execution and delivery of this
Agreement and the consummation by it of the transactions contemplated hereby
shall have been obtained and made by the Company, except where the failure to
receive such consents, waivers, approvals, authorizations or orders or to make
such filings would not reasonably be expected, individually or in the aggregate
with all other such failures, to have a Material Adverse Effect on the Company
or Guarantor.
Section 6.03 Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. The representations and warranties of
Acquiror contained in this Agreement shall be true and correct in all respects
(without for this purpose giving effect to qualifications of materiality
contained in such representations and warranties) on and as of the Effective
Time, with the same force and effect as if made on and as of the Effective Time,
except for (i) changes contemplated by this Agreement, (ii) those
representations and warranties which address matters only as of a particular
date (which shall have been true and correct as of such date, subject to clause
(iii)), or (iii) where the failure to be true and correct could not reasonably
be expected, individually or in the aggregate with all other such failures, to
have a Material Adverse Effect, and the Company shall have received a
certificate to such effect signed by the President or Chief Financial Officer of
Acquiror;
(b) Agreements and Covenants. Acquiror shall have performed or complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time, and the Company shall have received a certificate of Acquiror to such
effect signed by the President or Chief Financial Officer of Acquiror; provided,
however, that unless Acquiror knowingly breaches Sections 4.03(e) or 5.07, the
Acquiror shall be deemed to have complied with such sections unless the failure
to comply with such sections also results in or is with respect to the failure
of the condition set forth in Section 6.03(a);
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by Acquiror or Guarantor for the authorization, execution and delivery of
this Agreement and the Guarantee, as applicable, and the consummation by them of
the transactions contemplated hereby and thereby shall have been obtained and
made by Acquiror or Guarantor, except where the failure to receive such
consents, waivers, approvals, authorizations or orders or to make such filings
would not reasonably be expected, individually or in the aggregate with all
other such failures, to have a Material Adverse Effect on the Company, Acquiror
or Guarantor; and
(d) Listing. The Guarantor Common Shares to be delivered by Acquiror in
connection with the Merger shall have been authorized for listing on the NYSE
upon official notice of issuance.
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ARTICLE VII
TERMINATION
Section 7.01 Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding adoption thereof by the
stockholders of the Company:
(a) by mutual written consent duly authorized by the Boards of Directors
of Acquiror and the Company; or
(b) by either Acquiror or the Company, if the Merger shall not have been
consummated by September 30, 2001 (other than for the reasons set forth in
clause (c) below); provided, however, that the right to terminate this Agreement
under this Section 7.01(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Merger to be consummated on or prior to such date; or
(c) by either Acquiror or the Company, if the requisite vote of the
stockholders of the Company shall not have been obtained by September 30, 2001,
or if the stockholders of the Company shall not have adopted this Agreement at
the Company Stockholders Meeting; provided, however, that the Company may not
terminate pursuant to this clause if the Company has not complied with its
obligations under Section 5.02; or
(d) by either Acquiror or the Company, if a court of competent
jurisdiction or Governmental Authority shall have issued a nonappealable final
order, decree or ruling or taken any other nonappealable final action having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger; or
(e) by Acquiror, if, whether or not permitted to do so by this Agreement,
the Board of Directors of the Company or the Company shall (x) (i) withdraw,
modify or change its approval, adoption or recommendation of this Agreement or
the Merger in a manner adverse to Acquiror or shall have resolved to do so; (ii)
approve or recommend to the stockholders of the Company an Acquisition Proposal
or Alternative Transaction; (iii) approve or recommend that the stockholders of
the Company tender their shares in any tender or exchange offer that is an
Alternative Transaction; or (iv) fail to include the recommendation of the Board
of Directors of the Company in favor of approval of this Agreement pursuant to
Section 5.01(c) or fail to take the action required by the second sentence of
Section 5.02; or (y) take any public position or make any disclosures to the
Company's stockholders generally, whether or not permitted pursuant to Section
4.02, which has the effect of any of the foregoing (it being understood and
agreed that a communication by the Board of Directors of the Company to the
Company's stockholders pursuant to Rule 14d-9(f)(3) of the Exchange Act, or any
similar type of communication to the Company's stockholders in connection with
the making or amendment of a tender offer or exchange offer, shall not be deemed
to constitute a basis for termination under this Section 7.01(e)); or
(f) by Acquiror or the Company, if any representation or warranty of the
Company or Acquiror, respectively, set forth in this Agreement shall be untrue
when made, such
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that the conditions set forth in Sections 6.02(a) or 6.03(a), as the case may
be, would not be satisfied (a "Terminating Misrepresentation"); provided that if
such Terminating Misrepresentation is curable prior to September 30, 2001 (or,
in the case of the representation referred to in clause (ii) of Section 2.06(a),
thirty (30) days after notice thereof by Acquiror to the Company, if earlier) by
the Company or Acquiror, as the case may be, through the exercise of its
reasonable best efforts and for so long as the Company or Acquiror, as the case
may be, continues to exercise such reasonable best efforts, neither Acquiror nor
the Company, respectively, may terminate this Agreement under this Section
7.01(f); or
(g) by Acquiror, if any representation or warranty of the Company shall
have become untrue such that the condition set forth in Section 6.02(a) would
not be satisfied, or by the Company, if any representation or warranty of
Acquiror shall have become untrue such that the condition set forth in Section
6.03(a) would not be satisfied (in either case, a "Terminating Change"), in
either case other than by reason of a Terminating Breach (as hereinafter
defined); provided that if any such Terminating Change is curable prior to
September 30, 2001 (or, in the case of the representation referred to in clause
(ii) of Section 2.06(a), thirty (30) days after notice thereof by Acquiror to
the Company, if earlier) by the Company or Acquiror, as the case may be, through
the exercise of its reasonable best efforts, and for so long as the Company or
Acquiror, as the case may be, continues to exercise such reasonable best
efforts, neither Acquiror nor the Company, respectively, may terminate this
Agreement under this Section 7.01(g); or
(h) by Acquiror or the Company, upon a breach of any covenant or agreement
on the part of the Company or Acquiror, respectively, set forth in this
Agreement such that the conditions set forth in Sections 6.02(b) or 6.03(b), as
the case may be, would not be satisfied (a "Terminating Breach"); provided that,
except for any breach of the Company's obligations under Section 4.02, if such
Terminating Breach is curable prior to September 30, 2001 by the Company or
Acquiror, as the case may be, through the exercise of its reasonable best
efforts and for so long as the Company or Acquiror, as the case may be,
continues to exercise such reasonable best efforts, neither Acquiror nor the
Company, respectively, may terminate this Agreement under this Section 7.01(h).
Section 7.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.01, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or stockholders except that the Company or
Acquiror may have liability or obligations as set forth in Section 7.03 and as
set forth in or contemplated by Section 8.01 hereof. Notwithstanding the
foregoing, nothing herein shall relieve the Company or Acquiror from liability
for any willful breach hereof or willful misrepresentation herein (it being
understood that (x) the provisions of Section 7.03 do not constitute a sole or
exclusive remedy for such willful breach or misrepresentation and (y) the mere
existence of a Material Adverse Effect, by itself, shall not constitute such a
willful breach).
Section 7.03 Fees and Expenses. (a) Except as set forth in this Section
7.03, all fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, whether or not the Merger is consummated; provided, however, that if
the Merger is not consummated Acquiror and the Company shall share equally (i)
all SEC filing fees and printing expenses incurred in connection
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with the printing and filing of the Proxy Statement/Prospectus (including any
preliminary materials related thereto) and the Registration Statement (including
financial statements and exhibits) and any amendments or supplements thereto and
(ii) conveyance and similar taxes required to be paid or which Acquiror has
agreed should be paid prior to the Effective Time pursuant to Section 5.15.
(b) The Company shall pay Guarantor a fee of $325 million (the "Fee") and
shall also pay Acquiror's and Guarantor's respective actual, documented and
reasonable out-of-pocket expenses relating to the transactions contemplated by
this Agreement (including, but not limited to, fees and expenses of counsel and
accountants and out-of-pocket expenses (but not fees) of financial advisors)
("Expenses," as applicable to Acquiror, Guarantor or the Company) in a combined
amount not to exceed $20 million, upon the first to occur of any of the
following events:
(i) the termination of this Agreement by Acquiror or the Company pursuant
to Section 7.01(c) following the Company Stockholders Meeting at which the
stockholders of the Company failed to adopt this Agreement, provided that the
Alternative Transaction Condition is satisfied; and
(ii) the termination of this Agreement by Acquiror pursuant to Section
7.01(e).
The "Alternative Transaction Condition" shall be satisfied in respect of a
termination of this Agreement if an Alternative Transaction shall be publicly
announced by the Company or any third party during the period beginning on the
date of this Agreement and ending twelve (12) months following the date of
termination of this Agreement and such transaction shall at any time thereafter
be consummated on terms substantially equivalent to or more favorable to the
Company or its stockholders than the terms theretofore announced.
(c) Upon a termination of this Agreement by Acquiror pursuant to Section
7.01(h), (x) the Company shall pay to Guarantor and Acquiror their respective
Expenses relating to the transactions contemplated by this Agreement in a
combined amount not to exceed $20 million, and (y) the Company shall pay
Guarantor the Fee provided that (I) such Terminating Breach is willful and (II)
either (1) the termination is on account of a breach of Section 4.02 or the
first sentence of Section 5.02 (and, in the case of a breach of the first
sentence of Section 5.02, such breach occurred in response to, or to facilitate,
an Acquisition Proposal) or (2) the Alternative Transaction Condition is
satisfied.
(d) Upon a termination of this Agreement by Acquiror pursuant to Section
7.01(f), the Company shall pay to Guarantor and Acquiror their respective
Expenses in a combined amount not to exceed $20 million.
(e) Upon a termination of this Agreement by the Company pursuant to
Section 7.01(f) or Section 7.01(h), Acquiror shall pay to the Company its
Expenses in an amount not to exceed $20 million.
(f) The Fee and Expenses payable pursuant to Section 7.03(b) or Section
7.03(c), or the Expenses payable pursuant to Section 7.03(d) or Section 7.03(e),
shall be paid within one business day after a demand for payment following the
occurrence of the relevant
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event and, as applicable, the satisfaction of the relevant condition, in each
case as described in the aforesaid Sections, as applicable; provided that, in no
event shall the Company be required to pay the Fee or any Expenses to Acquiror,
nor shall Acquiror be required to pay any Expenses to the Company if,
immediately prior to the termination of this Agreement, the entity otherwise
entitled to receive such fee and/or expenses was in material breach of its
obligations under this Agreement or, in the case of Acquiror, Guarantor was in
material breach of the Guarantee.
(g) Each of the Company and Acquiror agrees that the payments provided for
in this Section 7.03 shall be the sole and exclusive remedy of Acquiror upon a
termination of this Agreement by Acquiror pursuant to Section 7.01(c), (e), (f)
or (h), and the payments provided for in this Section 7.03 shall be the sole and
exclusive remedy of the Company upon a termination of this Agreement by the
Company pursuant to Section 7.01(f) or (h), regardless of the circumstances
giving rise to such termination; provided, however, that the foregoing shall not
apply to any willful breach of this Agreement or any willful misrepresentation
hereunder giving rise to such termination.
(h) Subject to Section 7.03(g), if a party is entitled to terminate this
Agreement pursuant to more than one clause of Section 7.01, such party shall be
entitled to receive the Fee and Expenses to which it is entitled as a result of
any such termination, provided that in no event shall there be any duplication
of payment.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01 Effectiveness of Representations, Warranties and Agreements.
(a)Except as otherwise provided in this Section 8.01, the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 7.01, as the case may be, except that the agreements set
forth in Article I and Sections 5.06 and 5.08 and any other agreement in this
Agreement which contemplates performance after the Effective Time shall survive
the Effective Time indefinitely and those set forth in Sections 7.02 and 7.03
and this Article VIII shall survive termination indefinitely. The
Confidentiality Agreement shall survive termination of this Agreement in
accordance with its terms.
(b) Any disclosure made with reference to one or more Sections of the
Company Disclosure Schedule shall be deemed disclosed with respect to each other
section therein as to which such disclosure is relevant provided that such
relevance is reasonably apparent. Disclosure of any matter in the Company
Disclosure Schedule shall not be deemed an admission that such matter is
material.
Section 8.02 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the following addresses or
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sent by electronic transmission, with confirmation received, to the telecopy
numbers specified below (or at such other address or telecopy number for a party
as shall be specified by like notice):
If to Acquiror:
Tyco Acquisition Corp. XIX (NV)
c/o Tyco International (US) Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall not constitute notice) to:
Tyco International (US) Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
The CIT Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
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and
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.03 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliates", with respect to any person, means a person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first mentioned person;
(b) "business day" means any day other than a day on which banks in New
York City are required or authorized to be closed;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(d) "dollars" or "$" means United States dollars;
(e) "knowledge" means, with respect to any matter in question, that the
executive officers or any employee having primary or substantial oversight
responsibility for the matter of the Company, Acquiror or Guarantor, as the case
may be, have or at any time had actual knowledge of such matter;
(f) "Material Adverse Effect," when used in connection with the Company or
any of its subsidiaries or Guarantor or any of its subsidiaries, as the case may
be, means any change, effect or circumstance that (i) is materially adverse to
the business, assets (including intangible assets), financial condition or
results of operations of the Company and its subsidiaries or Guarantor and its
subsidiaries, as the case may be, in each case taken as a whole, excluding the
effects of changes to the extent related to (A) the United States or global
economy or capital markets generally, (B) general changes in conditions in the
industries in which the Company or the Guarantor, as the case may be, conduct
business or (C) this Agreement, the announcement thereof and the transactions
contemplated thereby or (ii) materially adversely affects the ability of the
Company or Acquiror and Guarantor, as the case may be, timely to perform the
obligations or consummate the transactions contemplated by this Agreement and,
in the case of Guarantor, the Guarantee.
For purposes of clause (i) of the preceding paragraph, the failure of a
representation or warranty to be true and correct, either individually or
together with the failure of other representations or warranties to be true and
correct, or the failure to perform an obligation, agreement or covenant shall be
deemed to have a Material Adverse Effect if (x) the circumstance of the failure
of such representation or warranty to be true and correct or the failure
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to perform such obligation, agreement or covenant, taken together with all such
other failures, is materially adverse to the business, assets (including
intangible assets), financial condition or results of operations of the Company
and its subsidiaries, or of Guarantor and its subsidiaries, as the case may be,
in each case taken as a whole, under the standard set forth in the preceding
paragraph and as measured against the representations and warranties of such
party having been true and correct (in the case of the Company, giving effect to
the disclosures in the Company Disclosure Schedule) or the obligations,
agreements or covenants of such party having been performed;
(g) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, other entity
or group (as defined in Section 13(d)(3) of the Exchange Act);
(h) "significant subsidiary" has the meaning assigned to such term in Rule
1-02 under SEC Regulation S-X; and
(i) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Acquiror, Guarantor or any other person means any corporation,
partnership, joint venture or other legal entity of which the Company, the
Surviving Corporation, Acquiror, Guarantor or such other person, as the case may
be (either alone or through or together with any other subsidiary), owns,
directly or indirectly, more than 50% of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
When reference is made in this Agreement to the Company, Acquiror or
Guarantor, such reference shall include their respective subsidiaries, as and to
the extent the context so requires, whether or not explicitly stated in this
Agreement.
Section 8.04 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after adoption
of this Agreement by the stockholders of the Company, no amendment may be made
which by law requires approval by such stockholders without such approval. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
Section 8.05 Waiver. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party or parties to be bound
thereby.
Section 8.06 Headings; Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Notwithstanding any provision in
this Agreement that may be to the contrary, nothing contained herein shall be
deemed to require any party hereto or its
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affiliates to take any action to the extent that such action is prohibited by
applicable law or to refrain from taking any action to the extent that such
action is required by applicable law.
Section 8.07 Severability. (a) 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 so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
material manner adverse to any party. Upon a 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 in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the
extent possible.
(b) The Company and Acquiror agree that the Fee provided in Section
7.03(b) is fair and reasonable in the circumstances. If a court of competent
jurisdiction shall nonetheless, by a final, nonappealable judgment, determine
that the amount of the Fee exceeds the maximum amount permitted by law, then the
amount of the Fee shall be reduced to the maximum amount permitted by law in the
circumstances, as determined by such court of competent jurisdiction.
Section 8.08 Entire Agreement. This Agreement and the Guarantor's
guarantee hereof constitute the entire agreement and supersede all prior
agreements and undertakings (other than the Confidentiality Agreement, except
for Section 10 thereof), both written and oral, among the parties, or any of
them, with respect to the subject matters hereof and thereof, except as
otherwise expressly provided herein or therein.
Section 8.09 Assignment. This Agreement shall not be assigned by operation
of law or otherwise, except that all or any of the rights of Acquiror hereunder
may be assigned to Guarantor or any direct or indirect wholly-owned subsidiary
of Guarantor, provided that no such assignment shall relieve the assigning party
of its obligations hereunder.
Section 8.10 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, including, without limitation, by way of subrogation, other than
Section 5.06 (which is intended to be for the benefit of the Indemnified Parties
and Covered Persons and may be enforced by such Indemnified Parties and Covered
Persons) and Section 7.03 (which contains provisions intended to be for the
benefit of Guarantor and may be enforced by Guarantor).
Section 8.11 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
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Section 8.12 Governing Law; Jurisdiction. (a) This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
Delaware applicable to contracts executed and fully performed within the State
of Delaware.
(b) Each of the parties hereto submits to the exclusive jurisdiction of
the federal courts of the United States located in the City of New York, Borough
of Manhattan, State of New York, with respect to any claim or cause of action
arising out of this Agreement or the transactions contemplated hereby.
Section 8.13 Counterparts. This Agreement may be executed in two or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
Section 8.14 Waiver of Jury Trial. EACH OF ACQUIROR AND THE COMPANY HEREBY
IRREVOCABLY WAIVES (AND IN RESPECT OF ANY DISPUTE IN RESPECT OF THE GUARANTEE,
ACQUIROR SHALL CAUSE GUARANTOR TO WAIVE), TO THE FULLEST EXTENT PERMITTED BY
LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 8.15 Performance of Guarantee. Unless otherwise previously
performed, Acquiror shall cause Guarantor to perform all of its obligations
under the Guarantee.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Acquiror and the Company have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
THE CIT GROUP, INC.
By:____________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Chairman of the Board of Directors,
President and Chief Executive Officer
TYCO ACQUISITION CORP. XIX (NV)
By:____________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
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GUARANTEE
Tyco International Ltd. ("Guarantor") irrevocably guarantees each and
every representation, warranty, covenant, agreement and other obligation of
Acquiror, and/or any of its permitted assigns (and where any such representation
or warranty is made to the knowledge of Acquiror, such representation or
warranty shall be deemed made to the knowledge of Guarantor), and the full and
timely performance of their respective obligations under the provisions of the
foregoing Agreement. This is a guarantee of payment and performance, and not of
collection, and Guarantor acknowledges and agrees that this guarantee is full
and unconditional, and no release or extinguishment of Acquiror's obligations or
liabilities (other than in accordance with the terms of the Agreement), whether
by decree in any bankruptcy proceeding or otherwise, shall affect the continuing
validity and enforceability of this guarantee, as well as any provision
requiring or contemplating performance by Guarantor.
Guarantor hereby waives, for the benefit of the Company, (i) any right to
require the Company as a condition of payment or performance by Guarantor, to
proceed against Acquiror or pursue any other remedy whatsoever and (ii) to the
fullest extent permitted by law, any defenses or benefits that may be derived
from or afforded by law which limit the liability of or exonerate guarantors or
sureties, except to the extent that any such defense is available to Acquiror.
Without limiting in any way the foregoing guarantee, Guarantor covenants
and agrees to take all actions to enable Acquiror to adhere to each provision of
the Agreement which requires an act or omission on the part of Guarantor or any
of its subsidiaries to enable Acquiror to comply with its obligations under the
Agreement.
The provisions of Article VIII of the Agreement are incorporated herein,
mutatis mutandis, except that notices and other communications hereunder to
Guarantor shall be delivered to Tyco International Ltd., The Zurich Centre,
Second Floor, 90 ▇▇▇▇▇ Bay Road, Pembroke HM 08, Bermuda, Attn: Chief Corporate
Counsel, Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇, Confirm No. (▇▇▇) ▇▇▇-▇▇▇▇ (with a copy as
provided therefor in Section 8.02).
Guarantor understands that the Company is relying on this guarantee in
entering into the Agreement and may enforce this guarantee as if Guarantor were
a party thereto.
TYCO INTERNATIONAL LTD.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer