Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 20, 2000
(this "Agreement"), among HAVAS ADVERTISING, a societe anonyme organized under
the laws of the French Republic ("Parent"), HAS Acquisition Corp., a Delaware
corporation and a direct, wholly owned subsidiary of Parent ("Merger
Subsidiary"), and ▇▇▇▇▇▇ COMMUNICATIONS, INC., a Delaware corporation (the
"Company").
WHEREAS, the respective Boards of Directors of Parent and
the Company have approved, and deem it advisable and in the best interests of
their respective shareholders to consummate, the business combination of the
Company and Parent on the terms and conditions set forth herein;
WHEREAS, the combination of the Company and Parent shall be
effected by the terms of this Agreement through the Merger (as defined in
Section 1.01(a));
WHEREAS, in furtherance thereof, the Board of Directors of
each of the Company and Parent have approved the Merger, upon the terms and
subject to the conditions set forth in this Agreement, pursuant to which each
share of SNC Common Stock (as defined in Section 2.01(a)) of the Company will be
converted into the right to receive Parent ADSs (as defined in Section 2.01(a));
WHEREAS, as a condition and inducement to Parent's
willingness to enter into this Agreement, Parent and certain shareholders of the
Company (the "Designated Company Stockholders") are entering into an agreement
dated as of the date hereof in the form of Exhibit A to this Agreement (the
"Company Stockholder Voting Agreement") pursuant to which the Designated Company
Stockholders have agreed, among other things, to vote their shares of the
Company in favor of the approval and adoption of this Agreement and the
transactions contemplated hereby;
WHEREAS, as a condition and inducement to the Company's
willingness to enter into this Agreement, the Company and a shareholder of
Parent (the "Designated Parent Stockholder") are entering into an agreement
dated as of the date hereof in the form of Exhibit B to this Agreement (the
"Parent Stockholder Voting Agreement") pursuant to which the Designated Parent
Stockholder has agreed, among other things, to vote its shares in favor of the
Capital Increase (as defined in Section 4.02(a)); and
WHEREAS, for United States federal income tax purposes, it
is intended that the Merger contemplated by this Agreement qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the rules and regulations promulgated
thereunder.
NOW, THEREFORE, in consideration of the premises and the
respective representations, warranties, covenants, and agreements set forth
herein, the parties hereto agree as follows:
Article 1
The Merger
SECTION 1.01. The Merger.
(a) Upon the terms and subject to the conditions set forth
in this Agreement, at the Effective Time, Merger Subsidiary shall be merged (the
"Merger") with and into the Company in accordance with the Delaware General
Corporation Law (the "DGCL"), whereupon the separate existence of Merger
Subsidiary shall cease, and the Company shall continue as the surviving
corporation (the "Surviving Corporation").
(b) Upon the terms and subject to the conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place at 10:00
a.m. on a date (the "Closing Date") which shall be the second business day after
satisfaction or waiver of the conditions set forth in Article 6, other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the fulfillment or waiver of those conditions, at the offices of
Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at
such other time, date or place as agreed to in writing by the parties hereto.
(c) Subject to the conditions of this Agreement, Parent and
the Company shall cause the Merger to be consummated by filing a certificate of
merger complying with the DGCL with the Secretary of State of the State of
Delaware (the "Certificate of Merger"), as soon as practicable on or after the
Closing Date. The Merger shall become effective upon filing of the Certificate
of Merger with the Secretary of State of the State of Delaware or at such later
time as is agreed by Parent and the Company and specified in the Certificate of
Merger (the "Effective Time").
(d) The Merger shall have the effects set forth in the
DGCL. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, all the properties, rights, privileges, immunities, powers
and franchises of the Company and Merger Subsidiary shall vest in the Surviving
Corporation, and all debts, liabilities, obligations and duties of the Company
and Merger Subsidiary shall become the debts, liabilities, obligations and
duties of the Surviving Corporation.
SECTION 1.02. Certificate of Incorporation.
The certificate of incorporation of the Company shall be
the certificate of incorporation of the Surviving Corporation.
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SECTION 1.03. Bylaws.
The bylaws of Merger Subsidiary in effect at the Effective
Time shall be the bylaws of the Surviving Corporation until amended in
accordance with such bylaws, the certificate of incorporation of the Surviving
Corporation and the DGCL.
SECTION 1.04. Directors and Officers.
From and after the Effective Time, until successors are
duly elected or appointed and qualified in accordance with the DGCL, the
certificate of incorporation and bylaws of the Surviving Corporation, (a) the
directors of Merger Subsidiary at the Effective Time shall be the directors of
the Surviving Corporation, and (b) the officers of Merger Subsidiary at the
Effective Time shall be the officers of the Surviving Corporation.
Article 2
Conversion of Securities
SECTION 2.01. Conversion of Securities.
As of the Effective Time, by virtue of the Merger and
without any action on the part of any holder of any capital stock of Parent,
Merger Subsidiary or the Company:
(a) SNC Common Stock. Each share of common stock, par value
$0.001 per share, of the Company designated as "▇▇▇▇▇▇ Communications, Inc.
Common Stock" in the certificate of incorporation of the Company (the "SNC
Common Stock") issued and outstanding immediately prior to the Effective Time
(other than any shares of SNC Common Stock to be cancelled pursuant to Section
2.01(c)) automatically will be converted into the right to receive at the
Effective Time a number of fully paid and non-assessable American Depositary
Shares of Parent (each a "Parent ADS", and collectively the "Parent ADSs", with
each Parent ADS representing a fraction of a Parent Share (as defined in Section
4.05(a)) to be determined by Parent as soon as practicable following the date
hereof (such fraction of a Parent Share represented by each Parent ADS, the "ADS
Ratio")) evidenced by American Depositary Receipts of Parent ("Parent ADRs")
equal to the Exchange Ratio (as defined below).
(i) For purposes of this Agreement, the "Exchange Ratio"
shall be calculated as follows:
(A) If the Average Parent Trading Price (as defined below)
in Euros is at least equal to 493 (the "Lower Collar Amount") but not greater
than 667 (the "Upper Collar Amount"), the Exchange Ratio shall equal the
quotient (rounded to the nearest ten thousandth) of (1) $29.50 divided by (2)
the product of (x) the Average Parent Trading Price in U.S. Dollars multiplied
by (y) the ADS Ratio.
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(B) If the Average Parent Trading Price in Euros is greater
than the Upper Collar Amount, then the Exchange Ratio shall equal the quotient
(rounded to the nearest ten thousandth) of (1) $29.50 divided by (2) the product
of (x) 667 multiplied by (y) the Average Exchange Rate (as defined below)
multiplied by (z) the ADS Ratio.
(C) If the Average Parent Trading Price in Euros is less
than the Lower Collar Amount, then the Exchange Ratio shall equal the quotient
(rounded to the nearest ten thousandth) of (1) $29.50 divided by (2) the product
of (x) 493 multiplied by (y) the Average Exchange Rate multiplied by (z) the ADS
Ratio.
(ii) For purposes of this Agreement, (A) the term "Average
Parent Trading Price" in Euros shall mean the average of the Closing Sale Prices
for the twenty (20) days of trading ending on the day immediately prior to the
Closing Date, (B) the term "Closing Sale Price" shall mean the closing sale
price of the Parent Shares reported on the Premier Marche of the Bourse de Paris
on the applicable trading date and (C) the term "Average Exchange Rate" shall
mean the average of the Exchange Rates for the twenty (20) days of trading
ending on the date immediately prior to the Closing Date. For purposes of
determining the Average Parent Trading Price in U.S. Dollars, the Closing Sale
Price for each applicable trading date shall be multiplied by the exchange rate
for such trading date for converting Euros to U.S. Dollars, as published in The
Wall Street Journal (such rate, for any given day, the "Exchange Rate").
(b) ▇▇▇▇▇▇.▇▇▇ Common Stock. Each share of common stock,
par value $0.001 per share, of the Company designated as "▇▇▇▇▇▇ Communications,
Inc. - ▇▇▇▇▇▇.▇▇▇ Common Stock" in the certificate of incorporation of the
Company (the "▇▇▇▇▇▇.▇▇▇ Common Stock", and together with the SNC Common Stock,
the "Company Common Stock") issued and outstanding immediately prior to the
Effective Time shall remain outstanding in the Merger as one share of ▇▇▇▇▇▇.▇▇▇
Common Stock of the Surviving Corporation.
(c) Cancellation of Certain Shares. Each share of SNC
Common Stock held in the treasury of the Company or owned by Parent, Merger
Subsidiary or any other Subsidiary (as defined in Section 8.01) of the Parent
immediately prior to the Effective Time shall be cancelled and extinguished
without any conversion thereof.
(d) Capital Stock of Merger Subsidiary. The shares of
common stock, $0.01 par value, of Merger Subsidiary issued and outstanding
immediately prior to the Effective Time automatically will be converted into the
number of fully-paid and non-assessable shares of common stock designated as
"SNC Common Stock", $0.001 par value per share, of the Surviving Corporation
equal to the number of shares of SNC Common Stock of the Company outstanding
immediately prior to the Effective Time (other than any shares of SNC Common
Stock to be cancelled pursuant to Section 2.01(c)).
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(e) Adjustment. The Exchange Ratio shall be adjusted to
reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into Parent
Shares or Parent ADSs), reorganization, recapitalization or other like change
with respect to Parent Shares or Parent ADSs occurring after the date hereof and
having a record or effective date prior to the Effective Time.
(f) Fractional Shares. No certificates, scrip or receipt
representing any fraction of a Parent ADS will be issued by virtue of the
Merger, but in lieu thereof each holder of shares of SNC Common Stock who would
otherwise be entitled to a fraction of a Parent ADS (after aggregating all
fractional Parent ADSs to be received by such holder) shall receive from Parent
an amount of cash (rounded down to the nearest whole cent), without interest
thereon, equal to the product of (i) such fraction multiplied by (ii) the
Average Parent Trading Price in U.S. Dollars multiplied by (iii) the ADS Ratio.
SECTION 2.02. Surrender of Certificates.
(a) Exchange Agent. Parent shall select a bank or trust
company reasonably acceptable to the Company, which may be Parent's transfer
agent, to act as the exchange agent (the "Exchange Agent") in the Merger.
(b) Parent to Provide Merger Consideration. Promptly after
the Effective Time, Parent shall make available to the Exchange Agent for
exchange in accordance with this Article 2 certificates for the Parent ADRs
representing the Parent ADSs issuable pursuant to Section 2.01(a) in exchange
for outstanding shares of SNC Common Stock and cash in an amount sufficient for
payment in lieu of fractional shares pursuant to Section 2.01(f) and any
dividends or distributions to which holders of shares of SNC Common Stock may be
entitled pursuant to Section 2.02(e). The Parent ADSs issuable pursuant to
Section 2.01(a) and the cash payable pursuant to Section 2.01(f) are referred to
collectively as the "Merger Consideration."
(c) Exchange Procedures for SNC Common Stock. Promptly
after the Effective Time, Parent shall cause the Exchange Agent to mail to each
holder of record of a certificate or certificates (the "SNC Certificates") that
immediately prior to the Effective Time represented outstanding shares of SNC
Common Stock whose shares were converted into the right to receive a pro rata
portion of the Merger Consideration (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the SNC
Certificates shall pass, only upon delivery of the SNC Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Parent shall reasonably specify) and (ii) instructions for effecting the
exchange of the SNC Certificates for a pro rata portion of the Merger
Consideration. Upon surrender of an SNC Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal duly completed and validly executed in
accordance with the instructions thereto, the holder of such SNC Certificate
shall be entitled to receive in exchange therefor the Merger Consideration to
which such holder is entitled pursuant to Section 2.01, and the SNC Certificate
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so surrendered shall forthwith be cancelled. Until so surrendered, each
outstanding SNC Certificate will be deemed from and after the Effective Time,
for all corporate purposes to evidence only the ownership of the Parent ADRs
representing the number of full Parent ADSs into which the shares of SNC Common
Stock evidenced by such SNC Certificate shall have been so converted and the
right to receive an amount in cash in lieu of the issuance of any fractional
Parent ADSs in accordance with Section 2.01(f) and any dividends or
distributions payable pursuant to Section 2.02(e).
(d) Certificates for ▇▇▇▇▇▇.▇▇▇ Common Stock. Certificates
representing shares held of record by holders of ▇▇▇▇▇▇.▇▇▇ Common Stock (the
"▇▇▇▇▇▇.▇▇▇ Certificates") shall remain outstanding and shall not be exchanged,
but shall represent the equivalent number of shares of ▇▇▇▇▇▇.▇▇▇ Common Stock
of the Surviving Corporation.
(e) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the date of this
Agreement with respect to Parent ADSs with a record date after the Effective
Time will be paid to the holder of any unsurrendered SNC Certificate with
respect to the Parent ADSs represented thereby until the holder of record of
such SNC Certificate shall surrender such SNC Certificate. Subject to the effect
of applicable abandoned property, escheat or similar laws, following surrender
of any such SNC Certificate, there shall be delivered to the record holder of
Parent ADRs representing such Parent ADSs (i) a certificate representing whole
Parent ADSs issuable and payable in exchange for such SNC Certificate, without
interest, (ii) payments of the amount of dividends or other distributions with a
record date after the Effective Time then payable with respect to such whole
Parent ADSs and (iii) cash in lieu of any fractional shares in accordance with
Section 2.01(f).
(f) Transfers of Ownership. If any certificate for Parent
ADRs representing Parent ADSs is to be issued in a name other than that in which
the SNC Certificate surrendered in exchange therefor is registered or if any
other portion of the Merger Consideration is to be payable to a person other
than the person to whom such SNC Certificate is registered, it will be a
condition of the issuance and payment thereof that the SNC Certificate so
surrendered will be properly endorsed, accompanied by any documents required to
evidence and effect such transfer and otherwise be in proper form for transfer
and that the person requesting such exchange will have paid to Parent or any
agent designated by it any applicable transfer taxes required by reason of the
issuance of a certificate for Parent ADRs representing Parent ADSs in any name,
or the payment of any other portion of the Merger Consideration to any person,
other than that of the registered holder of the SNC Certificate surrendered, or
shall provide evidence that any applicable transfer taxes have been paid.
(g) No Liability. Notwithstanding anything to the contrary
in this Section 2.02, none of the Exchange Agent, Parent, the Surviving
Corporation nor any other party hereto shall be liable to any person in respect
of any Merger Consideration for any amount properly delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
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(h) Termination of Exchange Agent. Any Merger Consideration
made available to the Exchange Agent pursuant to Section 2.02(b) and not
exchanged within twelve (12) months after the Effective Time pursuant to this
Section 2.02 shall be returned by the Exchange Agent to Parent, which shall
thereafter act as Exchange Agent, and thereafter any holder of unsurrendered SNC
Certificates shall look as a general creditor only to Parent for payment of any
funds to which such holder may be due, subject to applicable law.
SECTION 2.03. No Further Ownership Rights in SNC Common
Stock.
The Merger Consideration issued and paid in exchange of
shares of SNC Common Stock in accordance with the terms hereof shall be deemed
to have been issued and paid in full satisfaction of all rights pertaining to
such shares of SNC Common Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of SNC Common
Stock that were outstanding immediately prior to the Effective Time. If after
the Effective Time, SNC Certificates are presented to the Surviving Corporation
for any reason, they shall be cancelled and exchanged as provided in this
Article 2.
SECTION 2.04. Lost, Stolen or Destroyed Certificates.
In the event any SNC Certificates shall have been lost,
stolen or destroyed, the Exchange Agent shall deliver in exchange for such lost,
stolen or destroyed SNC Certificates, upon the making of an affidavit of that
fact by the holder thereof, the Merger Consideration; provided, however, that
Parent may, in its discretion and as a condition precedent to such delivery,
require the owner of such lost, stolen or destroyed SNC Certificates to deliver
a bond in such sum as it may reasonably direct as indemnity against any claim
that may be made against Parent or the Exchange Agent with respect to the SNC
Certificates alleged to have been lost, stolen or destroyed.
SECTION 2.05. Withholding Rights.
Each of the Surviving Corporation and Parent shall be
entitled, or shall be entitled to cause the Exchange Agent, to deduct and
withhold from the Merger Consideration otherwise payable pursuant to this
Agreement to any holder of shares of SNC Common Stock such amounts as it is
required to deduct and withhold with respect to the making of such payment under
the Code and the rules and regulations promulgated thereunder, or any provision
of a Tax (as defined in Section 3.14(h)) law. To the extent that amounts are so
withheld by the Surviving Corporation, Parent or the Exchange Agent, as the case
may be, such amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of SNC Common Stock in respect to
which such deduction and withholding was made by the Surviving Corporation or
Parent, as the case may be.
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SECTION 2.06. Stock Option and Other Stock Plans.
(a) As soon as practicable following the date of this
Agreement, Parent and the Company shall take such action with respect to ▇▇▇▇▇▇
Communications Inc. Second Amended and Restated 1996 Stock Incentive Plan and
other assumed stock option plans of the Company (the "Company Option Plans") and
any other actions as may be required to effect the following provisions of this
Section 2.06(a). At the Effective Time, Parent shall assume each option to
purchase shares of SNC Common Stock pursuant to the Company Option Plans that is
then outstanding, whether vested or unvested (each a "SNC Stock Option"), and
each such SNC Stock Option shall be converted into an option (or a new
substitute option shall be granted) (each an "Adjusted Option") to purchase the
number of Parent ADSs (rounded up to the nearest whole share) equal to (x) the
number of shares of SNC Common Stock subject to such option multiplied by (y)
the Exchange Ratio, at an exercise price per Parent ADS (rounded down to the
nearest whole cent) equal to the aggregate exercise price for the shares of SNC
Common Stock subject to such SNC Stock Option divided by the number of Parent
ADSs purchasable pursuant to the corresponding Adjusted Option; provided,
however, that in the case of any SNC Stock Option to which Section 421 of the
Code applies by reason of its qualification under Section 422 of the Code, the
conversion formula shall be adjusted, if necessary, to comply with Section
424(a) of the Code. Except as provided above, the Adjusted Options shall be
subject to the same terms and conditions (including, subject to any contractual
acceleration of vesting as a consequence of the Merger pursuant to the terms of
the applicable option agreement, with respect to vesting) as were applicable to
the converted option immediately prior to the Effective Time.
(b) At the Effective Time, each option to purchase shares
of ▇▇▇▇▇▇.▇▇▇ Common Stock pursuant to the Company Option Plans that is then
outstanding, whether vested or unvested (each a "▇▇▇▇▇▇.▇▇▇ Stock Option", and
together with the SNC Stock Options, the "Company Stock Options"), shall by
virtue of the Merger, and without any further action on the part of any holder
thereof, be subject to the same terms and conditions as were applicable to the
original option to purchase ▇▇▇▇▇▇.▇▇▇ Common Stock immediately prior to the
Effective Time and be assumed by the Surviving Corporation and converted into an
option to purchase the number of shares of ▇▇▇▇▇▇.▇▇▇ Common Stock in the
Surviving Corporation equal to the number of shares of ▇▇▇▇▇▇.▇▇▇ Common Stock
of the Company subject to such option, at an exercise price per share of
▇▇▇▇▇▇.▇▇▇ Common Stock in the Surviving Corporation equal to the former
exercise price per share of ▇▇▇▇▇▇.▇▇▇ Common Stock of the Company under such
option immediately prior to the Effective Time.
(c) Notwithstanding the foregoing provisions of Sections
2.06(a) and 2.06(b), at the Effective Time each of the Holding Company Persons
(as defined below) who hold SNC Stock Options identified in Section 2.06(c) of
the Company Disclosure Schedule (as defined in Section 3.01(a)) the terms of
which provide for the acceleration of vesting as a consequence of the Merger
(the "Accelerated Options") shall have the right, exercisable by written notice
to Parent (the "Purchase Notice") on or prior to the Closing Date, to cause
Parent to purchase the Accelerated Options held by such Holding Company Person
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for cash in an amount (the "Purchase Amount") equal to the difference of (i) the
product of (A) the Average Parent Trading Price in U.S. Dollars multiplied by
(B) the ADS Ratio multiplied by (C) the number of Parent ADSs issuable upon
exercise of such option, giving effect to the adjustment provisions in Section
2.06(a), less (ii) the aggregate exercise price for the Parent ADSs subject to
such Accelerated Options. The Purchase Amount for all Accelerated Options with
respect to which a Purchase Notice is furnished in accordance with this Section
2.06(c) shall be payable on or prior to the third business day following the
Closing Date. For purposes hereof, the "Holding Company Persons" shall mean
those employees and directors of the Company set forth in Section 2.06(c) of the
Company Disclosure Schedule.
(d) As soon as practicable after the Effective Time (but in
no event more than thirty (30) days thereafter), Parent shall deliver to the
holders of SNC Stock Options other than for the Holding Company Persons
appropriate notices setting forth such holders' rights pursuant to the Company
Option Plans and the agreements evidencing the grants of such SNC Stock Options
and that such SNC Stock Options and agreements shall be assumed by Parent and
shall continue in effect on the same terms and conditions (subject to the
adjustments required by this Section 2.06 after giving effect to the Merger).
Parent and the Surviving Corporation shall comply with the terms of the Company
Option Plans and ensure, to the extent required by, and subject to the
provisions of, the Company Option Plans, that the Company Stock Options that
qualified as incentive stock options under Section 422 of the Code prior to the
Effective Time continue to so qualify as incentive stock options after the
Effective Time.
(e) Parent and the Surviving Corporation shall take such
actions as are reasonably necessary for the assumption (or substitution) of the
Company Stock Options by Parent pursuant to this Section 2.06, including the
reservation, issuance and listing of Parent ADSs and ▇▇▇▇▇▇.▇▇▇ Common Stock of
the Surviving Corporation, as applicable, as is necessary to effectuate the
transactions contemplated by this Section 2.06. Parent shall, and shall cause
the Surviving Corporation to, prepare and file with the SEC (as hereinafter
defined) a registration statement on Form S-8 or other appropriate form with
respect to (i) Parent ADSs subject to Adjusted Options issued under the Company
Option Plan and (ii) shares of ▇▇▇▇▇▇.▇▇▇ Common Stock of the Surviving
Corporation subject to Company Stock Options, and shall use its reasonable best
efforts to have such registration statement(s) declared effective immediately
following the Effective Time and to maintain the effectiveness of such
registration statement covering such Adjusted Options (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
Adjusted Options remain outstanding.
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Article 3
Representations and Warranties of the Company
The Company represents and warrants to Parent that:
SECTION 3.01. Organization and Power.
(a) Each of the Company and its Significant Subsidiaries
(as defined below) is a corporation, partnership or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, and has the requisite corporate or other power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of the Company and its Significant
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so duly qualified or
licensed and in good standing would not, individually or in the aggregate, have
a Material Adverse Effect on the Company.
For purposes of this Agreement, a "Material Adverse Effect"
with respect to the Company or Parent, as the case may be, means any change,
circumstance or effect that, individually or in the aggregate with all other
changes, circumstances or effects, is or is reasonably likely to be materially
adverse to (i) the assets, properties, condition (financial or otherwise), or
results of operations of such person and its Subsidiaries, taken as a whole, or
(ii) the ability of such person to perform its obligations under or to
consummate the transactions contemplated by this Agreement, provided that none
of the following shall constitute a Material Adverse Effect: (i) occurrences
affecting the Company's or Parent's or any of their respective Subsidiaries'
businesses as a result of the announcement of the execution of this Agreement;
(ii) general economic conditions; (iii) any changes generally affecting the
industries in which the Company and its Subsidiaries or Parent and its
Subsidiaries operate; or (iv) changes in the Company's business after the date
hereof attributable solely to actions taken by Parent.
(b) Section 3.01 of the disclosure schedule delivered by
the Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule") sets forth a complete list of the Company's Subsidiaries.
The Company has heretofore delivered to Parent true and complete copies of the
certificate of incorporation and bylaws of the Company and the organizational
documents of the subsidiaries of the Company that are "significant
subsidiaries", as such term is defined in Section 1-02 of Regulation S-X under
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "1934 Act") but excluding therefrom holding
companies that have no significant subsidiaries (each, a "Significant
Subsidiary"), as currently in effect.
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SECTION 3.02. Corporate Authorization.
(a) The execution, delivery and performance by the Company
of this Agreement, and the consummation by the Company of the transactions
contemplated hereby are within the Company's corporate powers and, except as set
forth in the next succeeding sentence of this Section 3.02, have been duly
authorized by all necessary corporate action. The affirmative vote of the
holders of a majority of the outstanding shares of Company Common Stock entitled
to vote on this Agreement, voting together as one class (the "Company Requisite
Vote"), is the only vote of any class or series of the Company's capital stock
necessary to approve and adopt this Agreement and the transactions contemplated
by this Agreement. This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms (subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally from time
to time in effect and to general principles of equity, including concepts of
materiality, reasonableness, good faith and fair dealing, regardless of whether
in a proceeding at equity or at law).
(b) The Board of Directors of the Company (the "Company
Board") has by unanimous vote of those present (who constituted 100% of the
directors then in office), duly and validly authorized the execution and
delivery of this Agreement and approved the consummation of the transactions
contemplated hereby, and taken all corporate actions required to be taken by the
Company Board for the consummation of the transactions, including the Merger,
contemplated hereby and thereby, and has resolved to (i) deem this Agreement and
the transactions contemplated hereby, including the Merger, taken together,
advisable and fair to, and in the best interests of, the Company and its
shareholders and (ii) recommend that the shareholders of the Company approve and
adopt this Agreement. The Company Board has directed that this Agreement be
submitted to the shareholders of the Company for their approval.
SECTION 3.03. Governmental Authorization.
The execution, delivery and performance by the Company of
this Agreement, and the consummation by the Company of the transactions
contemplated hereby, require no action by or in respect of, or filing with, any
federal, state, local, foreign or multinational (including the European Union)
government or any court, administrative agency or commission or other
governmental agency or authority (a "Governmental Authority") other than: (a)
the filing of Certificate of Merger with respect to the Merger with the
Secretary of State of the State of Delaware; (b) compliance with any applicable
requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act") and the Council Regulation (EEC) No. 4064/89 of December
21, 1989 on the Control of Concentrations Between Undertaking, OJ (1989) L/395/1
(as amended) and the regulations and decisions of the Commission of the European
Community or other organs of the European Union or European Community
implementing such regulations (the "EU Merger Regulations") or any foreign laws
governing competition, antitrust, investment or exchange control; (c) compliance
with any applicable requirements of the Securities Act of 1933, as amended, and
11
the rules and regulations promulgated thereunder (the "1933 Act"); (d)
compliance with any applicable requirements of the 1934 Act; (e) compliance with
any other applicable securities or takeover laws; (f) those that may be required
solely by reason of Parent's or Merger Subsidiary's (as opposed to any other
third party's) participation in the transactions contemplated by this Agreement;
(g) actions or filings which, if not taken or made, and consents, authorizations
or orders which, if not obtained, would not, individually or in the aggregate,
have a Material Adverse Effect on the Company; and (h) filings and notices not
required to be made or given until after the Effective Time.
SECTION 3.04. Non-Contravention.
Except as set forth on Section 3.04 of the Company
Disclosure Schedule, the execution, delivery and performance by the Company of
this Agreement do not, and the consummation by the Company of the transactions
contemplated hereby will not: (a) assuming receipt of the approval of
shareholders referred to in Section 3.02 with respect to this Agreement,
contravene or conflict with the certificate of incorporation, bylaws or similar
organizational documents of the Company or any of its Significant Subsidiaries;
(b) assuming compliance with the matters referred to in Section 3.03 with
respect to this Agreement, contravene or conflict with or constitute a violation
of any provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to the Company or its Subsidiaries; (c) constitute a
default (or an event which with notice, the lapse of time or both would become a
default) under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Company or any of its
Subsidiaries or to a loss of any benefit to which the Company or any of its
Subsidiaries is entitled under any provision of any agreement, contract or other
instrument binding upon the Company or any of its Subsidiaries and which (i) has
a term of more than one year, (ii) involves the payment or receipt of money in
excess of $1,000,000, or (iii) involves the issuance of capital stock of the
Company or any of its Subsidiaries (a "Company Agreement") or any license,
franchise, permit or other similar authorization held by the Company or any of
its Subsidiaries; or (d) result in the creation or imposition of any Lien on any
asset of the Company or any of its Subsidiaries, except for such contraventions,
conflicts or violations referred to in clause (b) or defaults, rights of
termination, cancellation or acceleration, losses or Liens referred to in clause
(c) or (d) that would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. For purposes of this Agreement, "Lien" means,
with respect to any asset, any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset.
SECTION 3.05. Capitalization of the Company.
(a) The authorized capital stock of the Company consists of
405,000,000 shares, comprised of 320,000,000 shares of SNC Common Stock,
80,000,000 shares of ▇▇▇▇▇▇.▇▇▇ Common Stock and 5,000,000 shares of preferred
stock, $0.001 par value per share (the "Preferred Stock"). As of the close of
business on February 15, 2000, 71,233,429 shares of SNC Common Stock were issued
and outstanding, 22,422,885 shares of ▇▇▇▇▇▇.▇▇▇ Common Stock were issued and
12
outstanding, and no shares of Preferred Stock were issued and outstanding. The
strike prices, vesting information, grantees and number of shares with respect
to options previously granted pursuant to the Company Option Plans and the
number of shares purchased and rights to acquire shares under the Company's
Amended and Restated Employee Stock Purchase Plan set forth in Section 3.05 of
the Company Disclosure Schedule are accurate in all material respects. All the
outstanding shares of the Company's capital stock are, and all shares which may
be issued pursuant to the Company Option Plans will be, when issued in
accordance with the respective terms thereof, duly authorized, validly issued,
fully paid and non-assessable. Except (i) as set forth in this Section 3.05 or
in Section 5.01 of the Company Disclosure Schedule, (ii) for the transactions
contemplated by this Agreement, including those permitted in accordance with
Section 5.01(f) and (iii) for changes since February 15, 2000 resulting from the
exercise of employee and director stock options outstanding on such date, there
are outstanding (x) no shares of capital stock or other voting securities of the
Company, (y) no securities of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company, and (z) no options,
warrants or other rights to acquire from the Company, and no preemptive or
similar rights, subscriptions or other rights, convertible securities,
agreements, arrangements or commitments of any character, relating to the
capital stock of the Company, obligating the Company to issue, transfer or sell,
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company or obligating
the Company to grant, extend or enter into any such option, warrant,
subscription or other right, convertible security, agreement, arrangement or
commitment (including equity equivalents or stock appreciation rights) (the
items in clauses (x), (y) and (z) being referred to collectively as the "Company
Securities"). None of the Company or its Subsidiaries has any contractual
obligation to redeem, repurchase or otherwise acquire any Company Securities or
any Company Subsidiary Securities (as hereinafter defined), including as a
result of the transactions contemplated by this Agreement.
(b) There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of its
Subsidiaries.
SECTION 3.06. Capitalization of Subsidiaries.
Except as set forth in Section 3.06 of the Company
Disclosure Schedule, all of the outstanding shares of capital stock of, or other
ownership interests in, each Subsidiary of the Company, is owned by the Company,
directly or indirectly, free and clear of any consensual Lien (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). There are no outstanding (i) securities of
the Company or any of its Subsidiaries convertible into or exchangeable for
shares of capital stock or other voting securities or ownership interests in any
Subsidiary of the Company, or (ii) options or other rights to acquire from the
Company or any of its Subsidiaries, and no other obligation of the Company or
any of its Subsidiaries to issue, any capital stock, voting securities or other
ownership interests in, or any securities convertible into or exchangeable for,
13
any capital stock, voting securities or ownership interests in, any Subsidiary
of the Company (the items in clauses (i) and (ii) being referred to collectively
as the "Company Subsidiary Securities").
SECTION 3.07. SEC Filings.
(a) The Company has filed all required reports, schedules,
forms, statements and other documents with the Securities and Exchange
Commission (the "SEC") since September 30, 1998 (the "Company SEC Documents").
(b) As of its filing date, each Company SEC Document filed
pursuant to the 1934 Act (i) did not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except to the extent that such statements have been
modified or superseded by a later filed Company SEC Document and (ii) complied
in all material respects with the 1934 Act.
(c) Each Company SEC Document that is a registration
statement, as amended or supplemented, if applicable, filed pursuant to the 1933
Act as of the date such registration statement or amendment became effective (i)
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, except to the extent that such statements have been
modified or superseded by a later filed Company SEC Document and (ii) complied
in all material respects with the 1933 Act.
SECTION 3.08. Financial Statements.
The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company included in the
Company's Proxy Statement and Prospectus dated October 7, 1999 (the
"Recapitalization Proxy Statement") and its Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 1999 (the "Company 10-Q") have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject to normal year-end
adjustments in the case of the unaudited interim financial statements). For
purposes of this Agreement, "Company Balance Sheet" means the consolidated
balance sheet of the Company as of September 30, 1999 set forth in the Company
10-Q and "Company Balance Sheet Date" means September 30, 1999.
SECTION 3.09. Disclosure Documents.
Neither the Company Proxy Statement (as defined in Section
5.03(c)), nor any amendment or supplement thereto, will, at the date the Company
Proxy Statement or any such amendment or supplement is first mailed to
14
shareholders of the Company, or at the time such shareholders vote on the
adoption and approval of this Agreement, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Company Proxy Statement will, when the Form F-4 (as defined
in Section 4.08(a)) is first filed with the SEC and when the Form F-4 becomes
effective, comply as to form in all material respects with the requirements of
the 1933 Act and the 1934 Act. No representation or warranty is made by the
Company in this Section 3.09 with respect to statements made or incorporated by
reference therein based on information supplied by Parent or Merger Subsidiary
for inclusion or incorporation by reference in the Company Proxy Statement.
SECTION 3.10. Information Supplied.
None of the information supplied or to be supplied by the
Company for inclusion or incorporation by reference in the Form F-4 or any
amendment or supplement thereto will, at the time the Form F-4 or any such
amendment or supplement becomes effective under the 1933 Act or at the Effective
Time, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
SECTION 3.11. Absence of Certain Changes.
Except as disclosed in the Company SEC Documents filed
prior to the date of this Agreement, as disclosed in Section 3.11 of the Company
Disclosure Schedule or with respect to the period from and after the date of
this Agreement as permitted pursuant to Section 5.01, since September 30, 1999,
the Company and its Subsidiaries have conducted their business in the ordinary
course consistent with past practice and there has not been:
(a) any event, occurrence, development change or
circumstance which has had, or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock of
the Company, or any repurchase, redemption or other acquisition by the Company
or any of its Subsidiaries of any amount of outstanding shares of capital stock
or other equity securities of, or other ownership interests in, the Company or
any of its Subsidiaries;
(c) any amendment of any term of any outstanding security
of the Company or any of its Subsidiaries that would materially increase the
obligations of the Company or such Subsidiary under such security;
(d) (x) any incurrence or assumption by the Company or any
of its Subsidiaries of any indebtedness for borrowed money other than under
existing credit facilities (or any renewals, replacements or extensions that do
15
not increase the aggregate commitments thereunder) (A) in the ordinary course of
business consistent with past practice (it being understood that any
indebtedness incurred prior to the date hereof in respect of capital
expenditures shall be considered to have been in the ordinary course of business
consistent with past practice) or (B) in connection with any acquisition or
capital expenditure permitted by Section 5.01 or (y) any guarantee, endorsement
or other incurrence or assumption of liability (whether directly, contingently
or otherwise) by the Company or any of its Subsidiaries for the obligations of
any other person (other than any wholly owned Subsidiary of the Company), other
than in the ordinary course of business consistent with past practice;
(e) any creation or assumption by the Company or any of its
Subsidiaries of any consensual Lien on any material asset of the Company or any
of its Subsidiaries other than in the ordinary course of business consistent
with past practice;
(f) any making of any loan, advance or capital contribution
to or investment in any person by the Company or any of its Subsidiaries other
than (i) loans, advances or capital contributions to or investments in
wholly-owned Subsidiaries of the Company or (ii) loans or advances to employees
of the Company or any of its Subsidiaries made in the ordinary course of
business consistent with past practice;
(g) (i) any contract or agreement entered into by the
Company or any of its Subsidiaries on or prior to the date hereof relating to
any material acquisition or disposition of any assets or business or (ii) any
modification, amendment, assignment, termination or relinquishment by the
Company or any of its Subsidiaries of any contract, license or other right
(including any insurance policy naming it as a beneficiary or a loss payable
payee) that, individually or in the aggregate, would have a Material Adverse
Effect on the Company, other than, in the case of (i) and (ii), transactions,
commitments, contracts or agreements in the ordinary course of business
consistent with past practice and those contemplated by this Agreement;
(h) any material change in any method of accounting or
accounting principles or practice by the Company or any of its Subsidiaries,
except for any such change required by reason of a change in GAAP; or
(i) any (i) grant of any severance or termination pay to
any director, officer or employee of the Company or any of its Subsidiaries,
(ii) entering into of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or employee of the Company or any of its Subsidiaries, (iii) increase in
benefits payable under any existing severance or termination pay policies or
employment agreements or (iv) increase in compensation, bonus or other benefits
payable to directors, officers or employees of the Company or any of its
Subsidiaries other than, in the case of clause (iv) only, increases prior to the
date hereof in compensation, bonus or other benefits payable to employees of the
Company or any of its Subsidiaries in the ordinary course of business consistent
with past practice or merit increases in salaries of employees at regularly
16
scheduled times in customary amounts consistent with past practices.
SECTION 3.12. No Undisclosed Material Liabilities.
There have been no liabilities or obligations (whether
pursuant to contracts or otherwise) of any kind whatsoever incurred by the
Company or any of its Subsidiaries since September 30, 1999, whether accrued,
contingent, absolute, determined, determinable or otherwise, other than:
(a) liabilities or obligations disclosed or provided for in
the Company Balance Sheet or in the notes thereto or in the Company SEC
Documents filed prior to the date hereof;
(b) liabilities or obligations which, individually and in
the aggregate, have not had and would not have a Material Adverse Effect on the
Company; or
(c) liabilities or obligations under this Agreement.
SECTION 3.13. Litigation.
Except as disclosed in the Company SEC Documents filed
prior to the date hereof or in Section 3.13 of the Company Disclosure Schedule,
there is no action, suit, investigation or proceeding pending against, or to the
knowledge of the Company, threatened against or affecting, the Company or any of
its Subsidiaries or any of their respective properties which, individually or in
the aggregate, would have a Material Adverse Effect on the Company.
SECTION 3.14. Taxes.
Except as set forth on Section 3.14 of the Company
Disclosure Schedule:
(a) The Company and each of its Subsidiaries, and each
affiliated group (within the meaning of Section 1504 of the Code) of which the
Company or any of its Subsidiaries is or has been a member, has timely filed (or
has had timely filed on its behalf) all material Tax Returns required by
applicable law to be filed by it prior to the date hereof, and all such material
Tax Returns were true, correct and complete in all material respects;
(b) The Company and each of its material Subsidiaries has
paid (or has had paid on its behalf) all Taxes shown due with respect to Tax
Returns filed prior to the date hereof;
(c) The federal income Tax Returns of the Company have been
examined and settled with the Internal Revenue Service (the "Service") (or the
applicable statutes of limitation for the assessment of federal income Taxes for
such periods have expired) for all years through 1997;
17
(d) There are no material Liens or encumbrances for Taxes
on any of the assets of the Company or its Subsidiaries (other than for current
Taxes not yet due and payable);
(e) The Company and its Subsidiaries have complied in all
material respects with all applicable laws, rules and regulations relating to
the payment and withholding of Taxes;
(f) None of the Company or its Subsidiaries is a party to
any tax allocation, tax sharing, tax indemnity or similar agreement (whether or
not in writing), arrangement or practice with respect to Taxes (including any
adverse pricing agreement, closing agreement or other agreement relating to
Taxes with any Taxing Authority), except among themselves;
(g) No federal, state, local or foreign audits or
administrative proceedings are presently pending with regard to any material
Taxes or Tax Return of the Company or its Subsidiaries and none of them has
received a written notice of any proposed audit or proceeding regarding any
pending audit or proceeding; and
(h) "Taxes" (including the term "Tax") shall mean any and
all taxes, charges, fees, levies or other similar assessments imposed by the
Service or any other taxing authority (whether domestic or foreign) (a "Taxing
Authority"), and such term shall include any interest, penalties or additional
amounts with respect to any such taxes, charges, fees, levies or other
assessments. "Tax Return" shall mean any report, return, document, declaration
or other information or filing required to be supplied to any Taxing Authority
(foreign or domestic) with respect to Taxes.
SECTION 3.15. Employee Benefit Plans; ERISA.
(a) Except as set forth in Section 3.15(a) of the Company
Disclosure Schedule, there are no material employee benefit plans (including any
plans for the benefit of directors or former directors), arrangements,
practices, contracts or agreements (including employment agreements and
severance agreements, incentive compensation, bonus, stock option, stock
appreciation rights and stock purchase plans) of any type (including plans
described in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), maintained by the Company, any of its Subsidiaries
or any trade or business, whether or not incorporated (an "ERISA Affiliate"),
that together with the Company would be deemed a "controlled group" within the
meaning of Section 4001(a)(14) of ERISA, or with respect to which the Company or
any of its Subsidiaries has or may have a liability (the "Company Benefit
Plans"). Except as disclosed in Section 3.15(a) of the Company Disclosure
Schedule (or as otherwise permitted by this Agreement): (1) neither the Company
nor any ERISA Affiliate has any formal plan or commitment, whether legally
binding or not, to create any additional Company Benefit Plan or modify or
change any existing Company Benefit Plan that would affect any employee or
terminated employee of the Company or any ERISA Affiliate; and (2) since
September 30, 1999, there has been no change, amendment, modification to, or
18
adoption of, any Company Benefit Plan, in each case, that has had, or would
have, a Material Adverse Effect on the Company.
(b) With respect to each Company Benefit Plan, except as
disclosed in Section 3.15(b) of the Company Disclosure Schedule or as would not,
individually or in the aggregate, have a Material Adverse Effect on the Company:
(i) if intended to qualify under Section 401(a), 401(k) or 403(a) of the Code,
such plan so qualifies, and its trust is exempt from taxation under Section
501(a) of the Code; (ii) such plan has been administered in accordance with its
terms and applicable law; (iii) no breaches of fiduciary duty have occurred;
(iv) no prohibited transaction within the meaning of Section 406 of ERISA has
occurred; (v) as of the date of this Agreement, no lien imposed under the Code
or ERISA exists; and (vi) all contributions and premiums due (including any
extensions for such contributions and premiums) have been made in full.
(c) None of the Company Benefit Plans has incurred any
"accumulated funding deficiency", as such term is defined in Section 412 of the
Code, whether or not waived.
(d) Except as disclosed in Section 3.15(d) of the Company
Disclosure Schedule, neither the Company nor any ERISA Affiliate has incurred
any liability under Title IV of ERISA (including Sections 4063-4064 and 4069 of
ERISA) that has not been satisfied in full except as, individually or in the
aggregate, would not have a Material Adverse Effect on the Company or that has
not been reflected on the Company's consolidated financial statements.
(e) With respect to each Company Benefit Plan that is a
"welfare plan" (as defined in Section 3(1) of ERISA), except as specifically
disclosed in Section 3.15(e) of the Company Disclosure Schedule, no such plan
provides medical or death benefits with respect to current or former employees
of the Company or any of its Subsidiaries beyond their termination of
employment, other than as may be required under Part 6 of Title I of ERISA and
at the expense of the participant or the participant's beneficiary and except as
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
(f) Except with respect to payments under the agreements
and programs specified in Section 3.15(f) of the Company Disclosure Schedule,
the consummation of the transactions contemplated by this Agreement will not
entitle any individual to severance pay or any tax "gross-up" payments with
respect to the imposition of any tax pursuant to Section 4999 of the Code or
accelerate the time of payment or vesting, or increase the amount, of
compensation or benefits due to any individual with respect to any Company
Benefit Plan.
(g) Except as disclosed in Section 3.15(a) of the Company
Disclosure Schedule, there is no Company Benefit Plan that is a "multiemployer
plan", as such term is defined in Section 3(37) of ERISA, or which is covered by
Section 4063 or 4064 of ERISA.
19
SECTION 3.16. Compliance with Laws; No Default.
Neither the Company nor any of its Subsidiaries is in
violation of any statute, law, ordinance, regulation, rule, judgment, decree,
order, writ, injunction, permit or license or other authorization or approval of
any Governmental Authority applicable to its business or operations, except for
violations and failures to comply that have not had and would not, individually
or in the aggregate, result in a Material Adverse Effect on the Company.
SECTION 3.17. No Default.
Each Company Agreement is a valid, binding and enforceable
obligation of the Company and in full force and effect, except where the failure
to be valid, binding and enforceable and in full force and effect would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
None of the Company or any of its Subsidiaries is in default or violation of any
term, condition or provision of (i) its respective certificate of incorporation
or by-laws or similar organizational documents or (ii) except as disclosed in
Section 3.17 of the Company Disclosure Schedule, any Company Agreement, except,
in the case of clause (i) (with respect to organizational documents that are
partnership, joint venture or similar documents) and (ii), for defaults or
violations that, individually or in the aggregate, have not had and would not
have a Material Adverse Effect on the Company. The Company has all permits and
licenses necessary to carry on the business conducted by it as of the date
hereof, except where the failure to have such permit or license would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
SECTION 3.18. Finders' Fees.
Except for Deutsche Banc Alex. ▇▇▇▇▇, a copy of whose
engagement agreement has been provided to Parent, no investment banker, broker,
finder, other intermediary or similar person is entitled to any fee or
commission from the Company or any of its Subsidiaries in connection with the
transactions contemplated by this Agreement.
SECTION 3.19. Environmental Matters.
(a) Except as disclosed in the Company SEC Documents filed
prior to the date hereof, to the knowledge of the Company:
(i) no notice, notification, demand, request for
information, citation, summons or order has been received by, no complaint has
been filed against, no penalty has been assessed against, and no investigation,
action, claim, suit, proceeding or review is pending or threatened by any person
against, the Company or any of its Subsidiaries with respect to any matters
relating to or arising out of any Environmental Law which, individually or in
the aggregate, would have a Material Adverse Effect on the Company;
20
(ii) no Hazardous Substance has been discharged, disposed
of, dumped, injected, pumped, deposited, spilled, leaked, emitted or released
at, on or under any property now or, to the knowledge of the Company, previously
owned, leased or operated by the Company or any of its Subsidiaries, which
circumstance, individually or in the aggregate, would have a Material Adverse
Effect on the Company; and
(iii) there are no Environmental Liabilities that,
individually or in the aggregate, have had or would have a Material Adverse
Effect on the Company.
(b) For purposes of this Section, the following terms shall
have the meanings set forth below:
(i) "Company" and its "Subsidiaries" shall include any
entity which is, in whole or in part, a predecessor of the Company or any of its
Subsidiaries;
(ii) "Environmental Laws" means any and all federal, state,
local and foreign law (including common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit, or governmental
restrictions or any agreement with any governmental authority or other third
party, relating to human health and safety, the environment or to pollutants,
contaminants, wastes or chemicals or toxic, radioactive, ignitable, corrosive,
reactive or otherwise hazardous substances, wastes or materials;
(iii) "Environmental Liabilities" means any and all
liabilities of or relating to the Company or any of its Subsidiaries of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, which (A) arise under or relate to matters covered by Environmental
Laws and (B) arise from actions occurring or conditions existing on or prior to
the Effective Time; and
(iv) "Hazardous Substances" means any pollutant,
contaminant, waste or chemical or any toxic, radioactive, corrosive, reactive or
otherwise hazardous substance, waste or material, or any substance having any
constituent elements displaying any of the foregoing characteristics, including,
without limitation, petroleum, its derivatives, by-products and other
hydrocarbons, or any substance, waste or material regulated under any
Environmental Laws.
SECTION 3.20. Labor Matters.
Except as set forth in Section 3.20 of the Company
Disclosure Schedule, (i) there is no labor strike, dispute, slowdown, stoppage
or lockout pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries; (ii) to the knowledge of the Company, no
union organizing campaign with respect to the Company's or any of its
Subsidiaries' employees is underway; (iii) there is no unfair labor practice
charge or complaint against the Company or any of its Subsidiaries pending or,
to the knowledge of the Company, threatened before the National Labor Relations
Board or any similar state or foreign agency; (iv) there is no written grievance
21
pending relating to any collective bargaining agreement or other grievance
procedure; (v) to the knowledge of the Company, no charges with respect to or
relating to the Company or any of its Subsidiaries are pending before the Equal
Employment Opportunity Commission or any other agency responsible for the
prevention of unlawful employment practices; and (vi) the are no collective
bargaining agreements with any union covering employees of the Company or any of
its Subsidiaries, except for such exceptions to the foregoing clauses (i)
through (vi) which, individually or in the aggregate, would not have a Material
Adverse Effect on the Company.
SECTION 3.21. Intellectual Property.
(a) The Company and its Subsidiaries own or have the right
to use all material Intellectual Property (as defined hereafter) reasonably
necessary for the Company and its Subsidiaries to conduct their business as it
is currently conducted, except for such exceptions which, individually or in the
aggregate, would not have a Material Adverse Effect on the Company.
(b) Except as set forth in Schedule 3.21 of the Company
Disclosure Schedule, to the knowledge of the Company: (i) all of the
registrations relating to material Intellectual Property owned by the Company
and its Subsidiaries are subsisting and unexpired, free of all Liens and have
not been abandoned, except for such exceptions which, individually or in the
aggregate, would not have a Material Adverse Effect on the Company; (ii) the
Company does not infringe the intellectual property rights of any third party in
any respect that would have, individually or in the aggregate, a Material
Adverse Effect on the Company; (iii) no judgment, decree, injunction, rule or
order has been rendered by any Governmental Authority which would limit, cancel
or question the validity of, or the Company's or its Subsidiaries' rights in and
to, any Intellectual Property owned by the Company or any such Subsidiary in any
respect that would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company; and (iv) neither the
Company nor any of its Subsidiaries has received notice of any pending or
threatened suit, action or adversarial proceeding that seeks to limit, cancel or
question the validity of, or the Company's or any such Subsidiary's rights in
and to, any Intellectual Property, which would have, individually or in the
aggregate, a Material Adverse Effect on the Company.
(c) For purposes of this Agreement "Intellectual Property"
shall mean all rights, privileges and priorities provided under federal, state
and foreign law relating to intellectual property, including without limitation
all (x) (1) proprietary inventions, discoveries, processes, formulae, designs,
methods, techniques, procedures, concepts, developments, technology, new and
useful improvements thereof and proprietary know-how relating thereto, whether
or not patented or eligible for patent protection; (2) copyrights and
copyrightable works, including computer applications, programs, software,
databases and related items; (3) trademarks, service marks, trade names, and
trade dress, the goodwill of any business symbolized thereby, and all common-law
rights relating thereto; (4) trade secrets and other confidential information;
(y) registrations, applications and recordings for any of the foregoing and (z)
22
licenses or other similar agreements granting the rights to use any of the
foregoing.
SECTION 3.22. Opinion of Financial Advisor.
The Company has received the opinion of Deutsche Banc Alex.
▇▇▇▇▇ to the effect that, as of the date of such opinion, the Merger
Consideration to be received by the holders of shares of the Company Common
Stock in connection with the Merger is fair to such holders from a financial
point of view.
SECTION 3.23. Takeover Statutes.
The Company Board has approved, for purposes of Section 203
of the DGCL, the Merger and this Agreement. No other "fair price", "moratorium",
"control share acquisition" or other similar antitakeover statute or regulation
enacted under state or federal laws in the United States (each, a "Takeover
Statute") applicable to the Company or any of its Subsidiaries is applicable to
the Merger or the other transactions contemplated hereby.
SECTION 3.24. Affiliates.
Section 3.24 of the Company Disclosure Schedule sets forth
each person who, as of the date hereof, is, to the best of the Company's
knowledge, deemed to be an Affiliate (as defined in Section 5.11) of the
Company.
SECTION 3.25. The Company's Certificate of Incorporation.
The provisions of the Company's certificate of
incorporation regarding transactions with controlling persons do not and will
not apply to this Agreement, the Merger or to the transactions contemplated
hereby.
Article 4
Representations and Warranties of Parent
Parent represents and warrants to the Company that:
SECTION 4.01. Organization and Power.
(a) Each of Parent and its Significant Subsidiaries is a
corporation, partnership or other entity duly organized, validly existing and is
in good standing under the laws of the jurisdiction of its incorporation or
organization, and has the requisite corporate or other power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted. Each of Parent and its Significant Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
23
the failure to be so duly qualified or licensed and in good standing would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
(b) Section 4.01 of the disclosure schedule delivered by
Parent to the Company prior to the execution of this Agreement (the "Parent
Disclosure Schedule") sets forth a complete list of Parent's Significant
Subsidiaries. Parent has delivered to the Company true and complete copies of
Parent's statuts and Merger Subsidiary's certificate of incorporation and bylaws
as currently in effect.
SECTION 4.02. Corporate Authorization.
(a) The execution, delivery and performance by Parent of
this Agreement and the consummation by Parent and Merger Subsidiary of the
transactions contemplated hereby are within the corporate powers of Parent and,
except as set forth in the next succeeding sentence of this Section 4.02, have
been duly authorized by all necessary corporate action, including by resolution
of the Board of Directors of Parent (the "Parent Board"). The affirmative vote
of at least 66 2/3% of the outstanding voting rights of shareholders present in
person or represented by proxy at the Parent Shareholder Meeting (as hereinafter
defined) (the "Parent Requisite Vote") is the only vote of any class or series
of Parent's capital stock necessary to authorize the capital increase, or
authorize the Parent Board to effect the capital increase and related issuance
of shares in connection with the consummation of the Merger (the "Capital
Increase"); provided that a quorum of at least 33 1/3% (on the first call) or at
least 25% (on the second call) of the outstanding Parent Shares having voting
power is required at the Parent Shareholder Meeting. This Agreement has been
duly executed and delivered by Parent and constitutes a valid and binding
agreement of Parent, enforceable against Parent, in accordance with its terms
(subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
from time to time in effect and to general principles of equity, including
concepts of materiality, reasonableness, good faith and fair dealing, regardless
of whether in a proceeding at equity or at law). The Parent Shares to be
represented by the Parent ADSs to be issued pursuant to the Merger, when issued
in accordance with the terms hereof, will be duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights.
(b) The Parent Board has, by unanimous vote of those
present, duly and validly authorized the execution and delivery of this
Agreement and approved the consummation of the transactions contemplated hereby,
and taken all corporate actions required to be taken by the Parent Board for the
consummation of the transactions, including the Merger, contemplated hereby and
has resolved to (i) deem this Agreement and the transactions contemplated
hereby, including the Merger, taken together, advisable and fair to, and in the
best interests of, the Parent and its shareholders and (ii) recommend that the
shareholders of Parent approve the Capital Increase. The Parent Board has
directed that the Capital Increase be submitted to the shareholders of Parent
for their approval.
24
SECTION 4.03. Governmental Authorization.
The execution, delivery and performance by Parent of this
Agreement, and the consummation by Parent and Merger Subsidiary of the
transactions contemplated hereby require no action, by or in respect of, or
filing with, any Governmental Authority other than: (a) the filing of the
Certificate of Merger with respect to the Merger with the Secretary of State of
the State of Delaware and appropriate documents with the relevant authorities of
other states in which Merger Subsidiary is qualified to do business; (b)
compliance with any applicable requirements of the HSR Act and the EU Merger
Regulations or any foreign laws governing competition, antitrust, investment or
exchange control; (c) compliance with any applicable requirements of the 1933
Act; (d) compliance with any applicable requirements of the 1934 Act; (e)
compliance with applicable requirements of the Conseil des Marches Financiers
(the "CMF") and the Commission des Operations de Bourse (the "COB") relating to
the Parent Shares to be issued in connection with the issuance of Parent ADSs
pursuant to this Agreement and compliance with any other applicable French
securities or takeover laws and regulations; (f) those that may be required
solely by reason of the Company's (as opposed to any other third party's)
participation in the transactions contemplated by this Agreement; (g) actions or
filings which, if not taken or made, and consents, authorizations or orders
which, if not obtained, would not, individually or in the aggregate, have a
Material Adverse Effect on Parent; and (h) filings and notices not required to
be made or given until after the Effective Time.
SECTION 4.04. Non-Contravention.
Except as set forth on Section 4.04 of the Parent
Disclosure Schedule, the execution, delivery and performance by Parent of this
Agreement do not, and the consummation by Parent and Merger Subsidiary of the
transactions contemplated hereby will not: (a) assuming the Parent Requisite
Vote is obtained, contravene or conflict with the statuts, certificate of
incorporation, bylaws or similar organizational documents of Parent or any of
its Significant Subsidiaries; (b) assuming compliance with the matters referred
to in Section 4.03, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to Parent or Merger Subsidiary; (c) constitute a default (or
an event which with notice, the lapse of time or both would become a default)
under or give rise to a right of termination, cancellation or acceleration of
any right or obligation of Parent or Merger Subsidiary or to a loss of any
benefit to which Parent or Merger Subsidiary is entitled under any provision of
any agreement, contract or other instrument binding upon Parent or Merger
Subsidiary and which either has a term of more than one year or involves the
payment or receipt of money in excess of $1,000,000 or any license, franchise,
permit or other similar authorization held by Parent or Merger Subsidiary; or
(d) result in the creation or imposition of any Lien on any asset of Parent or
Merger Subsidiary, except for such contraventions, conflicts or violations
referred to in clause (b) or defaults, rights of termination, cancellation or
acceleration, losses or Liens referred to in clause (c) or (d) that would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
25
SECTION 4.05. Capitalization of Parent.
(a) As of the close of business on December 31, 1999,
7,294,478 ordinary shares, nominal value 8 Euros per share, of Parent (the
"Parent Shares") were issued and outstanding, and 300,000 Parent Shares were
held in Parent's treasury and reserved for grants under option and other
stock-based plans. All the outstanding shares of Parent's capital stock are, and
all shares which may be issued pursuant to Parent option plans will be, when
issued in accordance with the respective terms thereof, duly authorized, validly
issued, fully paid and non-assessable. Except (i) as set forth in this Section
4.05, (ii) for 980,415 bonds of Parent convertible or exchangeable for 980,415
Parent Shares, and (iii) for 5,696,261 warrants to purchase an aggregate of
284,813 Parent Shares, as of December 31, 1999 there were outstanding (x) no
shares of capital stock or other voting securities of Parent, (y) no securities
of Parent convertible into or exchangeable for shares of capital stock or voting
securities of Parent, and (z) no options, warrants or other rights to acquire
from Parent, and no preemptive or similar rights, subscriptions or other rights,
convertible securities, agreements, arrangements or commitments of any
character, relating to the capital stock of Parent, obligating Parent to issue,
transfer or sell, any capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities of Parent or
obligating Parent to grant, extend or enter into any such option, warrant,
subscription or other right, convertible security, agreement, arrangement or
commitment (including equity equivalents or stock appreciation rights) (the
items in clauses (x), (y) and (z) being referred to collectively as the "Parent
Securities"). None of Parent or its Subsidiaries has any contractual obligation
to redeem, repurchase or otherwise acquire any Parent Securities or any
securities of any Parent Subsidiary, including as a result of the transactions
contemplated by this Agreement.
(b) There are no voting trusts or other agreements or
understandings to which Parent or any of its Subsidiaries is a party with
respect to the voting of the capital stock of Parent or any of its Subsidiaries.
SECTION 4.06. COB Filings.
As of its filing date, each report, schedule, form,
statement or other document filed by Parent with the COB since September 30,
1998 (the "Parent COB Documents") (i) did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except to the extent that such statements have been
modified or superseded by a later filed Parent COB Document and (ii) complied in
all material respects with applicable French law relating to securities and
stock exchanges and the applicable rules and regulations promulgated thereunder.
SECTION 4.07. Financial Statements.
The audited consolidated financial statements and
consolidated interim financial statements of Parent included in the Parent COB
Documents have been prepared in accordance with applicable French statutory and
regulatory requirements applied on a consistent basis during the periods
26
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of Parent and its consolidated Subsidiaries
as of the dates thereof and their consolidated results of operations and cash
flows for the periods then ended.
SECTION 4.08. Disclosure Documents.
(a) The Registration Statement on Form F-4 of Parent (the
"Form F-4") to be filed under the 1933 Act relating to the registration of
Parent ADSs (including the Parent Shares underlying such Parent ADSs) in the
Merger required to be filed with the SEC in connection with the issuance of
Parent ADSs pursuant to the Merger and any amendments or supplements thereto,
will, when filed, subject to the last sentence of Section 4.08(b), comply as to
form in all material respects with the applicable requirements of the 1933 Act
and the ▇▇▇▇ ▇▇▇.
(b) The proxy statement or other materials of Parent to be
filed with the applicable regulatory authorities in connection with the Parent
Shareholder Meeting, and any amendment or supplement thereto, (i) will not, at
the date the proxy materials are first distributed or published or at the time
the holders of Parent Shares vote on the Capital Increase, contain any untrue
statement of a material fact necessary in order to make the statements therein,
in light of the circumstances in which they were made, not misleading, and (ii)
will comply in all material respects with applicable French law relating to
securities and stock exchanges and the applicable rules and regulations
thereunder. No representation or warranty is made by Parent in this Section 4.08
with respect to statements made or incorporated by reference therein based on
information supplied by the Company for inclusion or incorporation by reference
therein.
(c) Neither the Form F-4 nor any amendment or supplement
thereto will at the time it becomes effective under the 1933 Act or at the
Effective Time contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading. No representation or warranty is made by
Parent in this Section 4.08 with respect to statements made or incorporated by
reference therein based on information supplied by the Company for inclusion or
incorporation by reference therein.
SECTION 4.09. Information Supplied.
None of the information supplied by Parent or to be
supplied by Parent for inclusion or incorporation by reference in the Company
Proxy Statement or any amendment or supplement thereto will, at the date the
Company Proxy Statement or any amendment or supplement thereto is first mailed
to shareholders of the Company and at the time such shareholders vote on the
adoption and approval of this Agreement and the transactions contemplated
hereby, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
27
SECTION 4.10. Absence of Certain Changes. Except as
disclosed in the Parent COB Documents filed prior to the date of this Agreement,
as disclosed in Section 4.10 of the Parent Disclosure Schedule or as would not
have a Material Adverse Effect on Parent, since June 30, 1999, Parent and its
Subsidiaries have conducted their business in the ordinary course consistent
with past practice, and there has not been:
(a) any event, occurrence, development, change or
circumstance which has had or would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Parent;
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock of
Parent (other than payment of Parent's regular cash dividend on the Parent
Shares) or any repurchase, redemption or other acquisition by Parent of any
amount of outstanding shares of capital stock or other equity securities of, or
other ownership interests in, Parent;
(c) any amendment of any term of any outstanding security
of Parent that would materially increase the obligations of Parent under such
security; or
(d) any material change in any method of accounting or
accounting principles or practice by Parent or any of its Subsidiaries, except
for any such change required by reason of a change in or reconciliation with
GAAP.
SECTION 4.11. No Undisclosed Material Liabilities. There
have been no liabilities or obligations (whether pursuant to contracts or
otherwise) of any kind whatsoever incurred by Parent or any of its Subsidiaries
since June 30, 1999, whether accrued, contingent, absolute, determined,
determinable or otherwise, other than:
(a) liabilities or obligations (i) disclosed in the Parent
COB Documents filed prior to the date hereof or (ii) disclosed in Section 4.11
of the Parent Disclosure Schedule;
(b) liabilities or obligations which, individually and in
the aggregate, have not had and would not have a Material Adverse Effect on
Parent; or
(c) liabilities or obligations under this Agreement or
incurred directly in connection with the transactions contemplated hereby.
SECTION 4.12. Litigation. Except as disclosed in the Parent
COB Documents filed prior to the date hereof or in Section 4.12 of the Parent
Disclosure Schedule, there is no action, suit, investigation or proceeding
pending against, or to the knowledge of Parent, threatened against or affecting,
Parent or any of its Subsidiaries or any of their respective properties which,
individually or in the aggregate, would have a Material Adverse Effect on
Parent.
28
SECTION 4.13. Compliance with Laws. Neither Parent nor any
of its Subsidiaries is in violation of any statute, law, ordinance, regulation,
rule, judgment, decree, order, writ, injunction, permit or license or other
authorization or approval of any Governmental Authority applicable to its
business or operations, except for violations and failures to comply that would
not, individually or in the aggregate, result in a Material Adverse Effect on
Parent.
SECTION 4.14. No Default. None of Parent or any of its
Subsidiaries is in default or violation of any term, condition or provision of
its respective certificate of incorporation or by-laws or similar organizational
documents. Parent has all permits and licenses necessary to carry on the
business conducted by it as of the date hereof, except where the failure to have
such permit or license would not, individually or in the aggregate, have a
Material Adverse Effect on Parent.
SECTION 4.15. Finders' Fees. Except for ▇.▇. ▇▇▇▇▇▇, no
investment banker, broker, finder, other intermediary or similar person is
entitled to any fee or commission from Parent or any of its Subsidiaries upon
consummation of the transactions contemplated by this Agreement.
SECTION 4.16. Merger Subsidiary. Merger Subsidiary is a
newly-formed direct wholly-owned Subsidiary of Parent that has engaged in no
business activities other than as specifically contemplated by this Agreement.
Article 5
Covenants
SECTION 5.01. Conduct of the Company.
The Company covenants and agrees that, from the date hereof
until the Effective Time, except as expressly provided otherwise in this
Agreement, including Section 5.01 of the Company Disclosure Schedule hereto, the
Company and its Subsidiaries shall conduct their business in the ordinary course
consistent with past practice and shall use their reasonable best efforts to
preserve intact their business organizations and relationships with customers,
suppliers, creditors and business partners and shall use their reasonable best
efforts to keep available the services of their present officers and employees.
Without limiting the generality of the foregoing, from the date hereof until the
Effective Time, without the prior written approval of Parent (which approval
shall not be unreasonably withheld):
(a) The Company will not adopt or propose any change in its
certificate of incorporation or any material change in its bylaws;
(b) The Company will not, and will not permit any of its
Subsidiaries to, adopt a plan or agreement of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
material reorganization of the Company or any of its Subsidiaries (other than a
29
liquidation or dissolution of any Subsidiary or a merger or consolidation
between wholly owned Subsidiaries);
(c) The Company will not, and will not permit any of its
Subsidiaries to, make any investment in or acquisition of any business of any
person or any material amount of assets (other than inventory), except for (i)
acquisitions for cash not to exceed $500,000 per acquisition or $5,000,000 in
the aggregate and (ii) any capital expenditure permitted by Section 5.01(i);
(d) The Company will not, and will not permit any of its
Subsidiaries to, sell, lease, license, close, shut down or otherwise dispose of
any assets (other than inventory), except (i) pursuant to existing contracts or
commitments listed on Section 5.01 of the Company Disclosure Schedule or (ii)
sales, leases, licenses, closings, shutdowns or other dispositions of assets in
the ordinary course of business consistent with past practice;
(e) The Company will not, and will not permit any of its
Subsidiaries to, split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to its capital stock (or otherwise make any
payments to stockholders in their capacity as such) other than dividends paid by
any Subsidiary of the Company to the Company or any other Subsidiary of the
Company;
(f) The Company will not, and will not permit any of its
Subsidiaries to, issue, sell, transfer, pledge, dispose of or encumber any
additional shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire any
shares of, capital stock of any class or series of the Company or its
Subsidiaries (or any equity equivalents), other than (i) issuances pursuant to
the exercise of stock-based awards or options under the plans described in
Section 3.05(a) outstanding on the date hereof, (ii) issuances by any Subsidiary
of the Company to the Company or any other Subsidiary of the Company and (iii)
issuances of options to purchase shares of Common Stock granted to newly hired
employees in accordance with the Company's past practice covering the issuance
of not more than an aggregate of 300,000 shares of Company Common Stock and not
more than 75,000 shares of Company Common Stock to any single individual;
(g) The Company will not, and will not permit any of its
Subsidiaries to, redeem, purchase or otherwise acquire directly or indirectly
any of the Company's capital stock;
(h) Except in connection with investments or acquisitions
permitted by Section 5.01(c), the Company will not, and will not permit any of
its Subsidiaries to, (i) enter into (or commit to enter into) any new lease
(except pursuant to commitments for such lease existing as of the date hereof
and leases in the ordinary course of business provided for in the budgets
adopted by the Company and its Subsidiaries and furnished to Parent prior to the
date of this Agreement) or (ii) purchase or acquire or enter into any agreement
30
to purchase or acquire any real estate (except pursuant to commitments existing
as of the date hereof);
(i) The Company will not, and will not permit any of its
Subsidiaries to, make or commit to make any capital expenditure (including for
information systems) except for capital expenditure projects or items not
exceeding $150,000 per project or item or $1,200,000 in the aggregate and those
projects or items committed to or set forth in the capital budgets adopted by
the Company and its Subsidiaries and furnished to Parent prior to the date of
this Agreement;
(j) The Company will not, and will not permit any of its
Subsidiaries to, enter into, adopt, amend or terminate any bonus, profit
sharing, compensation, severance, termination, stock option, stock appreciation
right, restricted stock, performance unit, stock equivalent, stock purchase
agreement, pension, retirement, deferred compensation, employment, severance or
other employee benefit agreement, trust, plan, fund, award or other arrangement
for the benefit or welfare of any director, officer or employee in any manner,
or (except for normal increases in the ordinary course of business consistent
with past practice that, in the aggregate, do not result in a material increase
in benefits or compensation expense to the Company or any of its Subsidiaries)
increase in any manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any plan and arrangement
as in effect as of the date hereof (including, without limitation, the granting
of stock appreciation rights or performance units);
(k) The Company will not, and will not permit any of its
Subsidiaries to, (i) incur or assume any indebtedness for borrowed money or
issue any debt securities, except for borrowings (A) under lines of credit
existing on the date hereof and (B) in the ordinary course of business
consistent with past practice not in excess of $5,000,000 in the aggregate; (ii)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person,
except for obligations incurred in the ordinary course of business consistent
with past practice not in excess of $500,000 in the aggregate, and except for
obligations of wholly owned Subsidiaries of the Company; (iii) make any loans,
advances or capital contributions to, or investments in, any other person (other
than to wholly owned Subsidiaries of the Company or customary loans or advances
to employees in the ordinary course of business consistent with past practice
and in amounts not material to the maker of such loan or advance); (iv) pledge
or otherwise encumber shares of capital stock of the Company or its
Subsidiaries, except pursuant to the terms of credit facilities existing on the
date hereof; or (v) mortgage or pledge any of its material assets, tangible or
intangible, or create or suffer to exist any material lien or encumbrance
thereupon, except pursuant to the terms of credit facilities existing on the
date hereof;
(l) The Company will not, and will not permit any of its
Subsidiaries to, change any of the accounting principles or practices used by
it, except as may be required as a result of a change in law or in generally
accepted accounting principles;
31
(m) The Company will not, and will not permit any of its
Subsidiaries to, revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing-off notes or
accounts receivable, other than in the ordinary course of business;
(n) The Company will not, and will not permit any of its
Subsidiaries to, make or revoke any tax election or settle or compromise any tax
liability material to the Company or any of its Subsidiaries taken as a whole or
change (or make a request to any taxing authority to change) any material aspect
of its method of accounting for tax purposes;
(o) The Company will not, and will not permit any of its
Subsidiaries to, pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business consistent with past practice of liabilities reflected or
reserved against in, or contemplated by, the Company Balance Sheet (or the notes
thereof) of the Company or its Subsidiaries or incurred in the ordinary course
of business consistent with past practice and the payment, discharge and
satisfaction of all obligations under the Company's existing bank credit
facility prior to or concurrently with the Effective Time;
(p) The Company will not, and will not permit any of its
Subsidiaries to, settle or compromise any pending or threatened suit, action or
claim relating to the transactions contemplated hereby;
(q) The Company will not, and will not permit any of its
Subsidiaries to, agree or commit to do any of the foregoing; and
(r) The Company will not, and will not permit any of its
Subsidiaries to take or agree or commit to take any action that would make any
representation and warranty of the Company hereunder inaccurate in any material
respect at, or as of any time prior to, the Effective Time.
SECTION 5.02. Conduct of Parent.
From the date hereof until the Effective Time, except as
expressly provided otherwise in this Agreement, Parent will not, and will not
permit any of its Subsidiaries to, take or agree or commit to take any action
that would make any representation and warranty of Parent hereunder inaccurate
in any material respect at, or as of any time prior to, the Effective Time.
SECTION 5.03. Shareholder Meetings; Proxy Materials;
Registration Statement.
(a) The Company shall cause a meeting of its shareholders
(the "Company Shareholder Meeting") to be duly called and held as soon as
reasonably practicable after the date of this Agreement for the purpose of
32
voting on the approval and adoption of this Agreement (the "Company Shareholder
Approval"). Except as provided in Section 5.05(c), the Company Board shall
recommend approval and adoption of this Agreement by the Company's shareholders.
In connection with the Company Shareholder Meeting, the Company will use its
reasonable best efforts, subject to the immediately preceding sentence, to
obtain the Company Shareholder Approval and otherwise comply with all legal
requirements applicable to such meeting.
(b) Parent shall cause a meeting of its shareholders (the
"Parent Shareholder Meeting") to be duly called and held as soon as reasonably
practicable after the date of this Agreement for the purpose of voting on the
Capital Increase (the "Parent Shareholder Approval"). The Parent Board shall
recommend approval and adoption of the Capital Increase. In connection with the
Parent Shareholder Meeting, Parent will (x) promptly prepare and file with the
applicable regulatory authorities any proxy statement or other materials
necessary for such meeting, (y) use its reasonable best efforts to obtain the
Parent Shareholder Approval and (z) otherwise comply with all legal requirements
applicable to such meeting.
(c) Parent shall promptly prepare and file with the SEC the
Form F-4, containing a proxy statement (such proxy statement being the "Company
Proxy Statement") as part of a prospectus, in connection with (i) the
registration under the 1933 Act of the Parent ADSs (including the Parent Shares
underlying the Parent ADSs) issuable in connection with the Merger, (ii) the
vote of the shareholders of the Company with respect to the Merger, and (iii)
the other transactions contemplated by this Agreement. Parent agrees to provide
the Company with an opportunity to review and comment on the Form F-4 and the
Company Proxy Statement before filing. Parent agrees promptly to provide the
Company with copies of all correspondence from and all responsive correspondence
to the SEC regarding the Form F-4 and the Company Proxy Statement. Parent agrees
promptly to notify the Company of all stop orders or threatened stop orders of
which it becomes aware with respect to the Form F-4 and of the occurrence of any
event prior to the Effective Time relating to Parent or its affiliates or any of
its or their respective officers or directors discovered by Parent which should
be set forth in an amendment to the Form F-4 or a supplement to the Company
Proxy Statement. Subject to the terms and conditions of this Agreement, each of
Parent and the Company shall use its reasonable best efforts to have or cause
the Form F-4 to become effective under the 1933 Act as promptly as practicable
after the Form F-4 is filed, and shall take any action required to be taken
under any applicable federal or state securities laws in connection with the
issuance of Parent ADSs in the Merger. Each of Parent and the Company shall
furnish all information concerning it and the holders of its capital stock as
the other may reasonably request in connection with such actions. As promptly as
practicable after the Form F-4 shall have become effective, the Company shall
mail the Company Proxy Statement to its shareholders, and the Company shall
comply with the proxy solicitation rules and regulations under the 1934 Act in
connection with the solicitation of such shareholders. If at any time prior to
the Effective Time any event or circumstance relating to the Company or any of
33
its affiliates, or its or their respective officers or directors, should be
discovered by the Company which should be set forth in an amendment to the Form
F-4 or a supplement to the Company Proxy Statement, the Company shall promptly
inform Parent.
(d) Parent shall promptly prepare and cause the depositary
to file with the SEC a registration statement on Form F-6 (the "Form F-6") with
respect to the registration of the Parent ADSs under the 1933 Act and use its
reasonable best efforts to have the Form F-6 declared effective as promptly as
practicable.
SECTION 5.04. Access to Information.
(a) To the extent permitted by applicable law, from the
date hereof until the Effective Time, the Company will give Parent, its counsel,
financial advisors, auditors and other authorized representatives reasonable
access during normal business hours to the offices, properties, books and
records of the Company and its Subsidiaries, will furnish to Parent, its
counsel, financial advisors, auditors and other authorized representatives such
financial and operating data and other information as such persons may
reasonably request and will instruct the Company's employees, auditors, counsel
and financial advisors to cooperate with Parent in its investigation of the
business of the Company and its Subsidiaries; provided that no investigation
pursuant to this Section shall affect any representation or warranty given by
the Company to Parent hereunder. The foregoing information shall be held in
confidence to the extent required by, and in accordance with, the provisions of
the letter agreement dated January 4, 2000, executed by Parent and the Company
(the "Parent Confidentiality Agreement").
(b) To the extent permitted by applicable law, from the
date hereof until the Effective Time, Parent will furnish to the Company such
financial and other data that the Company may reasonably request; provided that
no investigation pursuant to this Section shall affect any representation or
warranty given by Parent to the Company hereunder. Such information shall be
held in confidence to the extent required by, and in accordance with, the letter
agreement dated February 17, 2000 executed by the Company and Parent (the
"Company Confidentiality Agreement").
SECTION 5.05. No Solicitation.
(a) From the date hereof until the termination hereof, the
Company agrees that neither it nor any of its Subsidiaries nor any of the
officers or directors of it or any of its Subsidiaries shall, and that it shall
direct and use its best reasonable efforts to cause its and its Subsidiaries'
officers, directors, employees, investment bankers, consultants and other agents
not to, directly or indirectly, take any action to solicit, initiate, encourage
or facilitate the making of any Acquisition Proposal or any inquiry with respect
thereto or engage in discussions or negotiations with any person with respect
thereto, or disclose any non-public information relating to the Company or any
of its Subsidiaries, as the case may be, or afford access to the properties,
books or records of the Company or any of its Subsidiaries to any person that
has made any Acquisition Proposal; provided, that nothing contained in this
Section 5.05 shall prevent the Company, after providing prior notice thereof to
34
Buyer that it is taking such action, from furnishing non-public information to,
or entering into discussions or negotiations with, any person in connection with
an unsolicited bona fide Acquisition Proposal received from such person that the
Company Board determines in good faith could lead to a Superior Proposal, so
long as (i) the Company has received prior to the date hereof an executed
confidentiality agreement or prior to furnishing non-public information to, or
entering into discussions or negotiations with, such person, the Company
receives from such person an executed confidentiality agreement with terms no
less favorable to the Company than those contained in the Parent Confidentiality
Agreement and (ii) the Company Board determines in good faith, based on such
matters that it deems relevant, including the advice of independent legal
counsel, that such action is necessary for the Company Board to comply with its
fiduciary duties to the Company's shareholders under applicable law; provided,
further, that nothing contained in this Agreement shall prevent the Company or
its board of directors from complying with Rule 14e-2 or 14d-9 under the 1934
Act with regard to an Acquisition Proposal.
(b) The Company will (i) promptly (and in no event later
than 48 hours after the receipt of any Acquisition Proposal) notify (which
notice shall be provided orally and in writing and shall identify the person
making such Acquisition Proposal and set forth the material terms thereof)
Parent after receipt of any Acquisition Proposal or any request for nonpublic
information relating to the Company or any of its Subsidiaries or for access to
the properties, books or records of the Company or any of its Subsidiaries by
any person that may be considering making, or has made, an Acquisition Proposal,
and (ii) keep Parent informed on a current basis of the status and content of
any discussions or negotiations with any third party regarding any Acquisition
Proposal. The Company will, and will cause the other applicable persons listed
in the first sentence of Section 5.05(a) to, immediately cease and cause to be
terminated all discussions and negotiations, if any, that have taken place prior
to the date hereof with any parties with respect to any Acquisition Proposal.
(c) Except as set forth in this Section 5.05(c), the
Company Board shall not (i) withdraw or modify, or propose publicly to withdraw
or modify, in a manner adverse to Parent, its approval or recommendation of this
Agreement, or any of the transactions contemplated hereby, including the Merger,
(ii) approve or recommend, or propose publicly to approve or recommend, any
Acquisition Proposal, or (iii) cause the Company to enter into any agreement
(including, without limitation, any letter of intent but excluding any
confidentiality agreement) with respect to any Acquisition Proposal.
Notwithstanding the foregoing, if the Company Board, after consultation with and
based upon the advice of independent legal counsel, determines in good faith
that it is necessary to do so in order to comply with its fiduciary duties under
applicable law, it may (i) withdraw or modify, or propose publicly to withdraw
or modify, in a manner adverse to Parent, its approval and recommendation of
this Agreement, or any of the transactions contemplated hereby, including the
Merger, (ii) approve or recommend, or propose publicly to approve or recommend,
a Superior Proposal or (iii) cause the Company to enter into an agreement with
respect to a Superior Proposal, but in the case of clause (iii) only after the
35
expiration of three (3) business days after the date on which the Company
provides written notice (a "Notice of Superior Proposal") to Parent advising
that the Company Board has received a Superior Proposal, specifying the terms
and conditions of such Superior Proposal and identifying the person making such
Superior Proposal; provided, that prior to or concurrently with entering into an
agreement (including a letter of intent) with respect to a Superior Proposal,
the Company shall terminate this Agreement pursuant to Section 7.01(d)(i).
For purposes of this Agreement, "Acquisition Proposal"
means any offer or proposal for, or any indication of interest in, a merger or
other business combination involving the Company or any of its Subsidiaries, or
the acquisition of any equity interest in, or a substantial portion of the
assets of, or any tender offer or exchange offer that, if consummated, would
result in any person beneficially owning 20% or more of any class of equity
securities of, the Company or any of its Subsidiaries, other than the
transactions contemplated by this Agreement and other than an offer for a bona
fide de minimis equity interest, or for an amount of assets not material to the
Company and its Subsidiaries taken as a whole, that the Company has no reason to
believe would lead to a Change of Control of the Company (or to the acquisition
of a substantial portion of the assets of the Company and its Subsidiaries). For
purposes of this Agreement, "Superior Proposal" means any bona fide Acquisition
Proposal (i) on terms that the Company Board determines in its good faith
judgment (based on the advice of a financial advisor of nationally recognized
reputation, taking into account all the terms and conditions of the Acquisition
Proposal, including any break-up fees, expense reimbursement provisions and
conditions to consummation) are more favorable to the Company's shareholders
than this Agreement and the Merger taken as a whole, (ii) for which financing,
to the extent required, is then fully committed or reasonably determined to be
available by the Company Board, and (iii) pursuant to which no less than 100% of
the SNC Common Stock (or a corresponding amount of the assets of the Company and
its Subsidiaries) is proposed to be acquired. For purposes of this Agreement,
"Change of Control" means any event or occurrence, or series of related events
or occurrences, pursuant to which 20% or more of the voting power of the Company
is acquired by a third party or group acting in concert in connection with the
transactions contemplated by any Acquisition Proposal.
SECTION 5.06. Notice of Certain Events.
(a) The Company and Parent shall promptly notify each other
of:
(i) any notice or other communication from any person
alleging that the consent of such person is or may be required in connection
with the transactions contemplated by this Agreement; and
(ii) any notice or other communication from any
Governmental Authority in connection with the transactions contemplated by this
Agreement.
36
(b) The Company shall promptly notify Parent of any
actions, suits, claims, investigations or proceedings commenced or, to its
knowledge, threatened against, relating to or involving or otherwise affecting
the Company or any of its Subsidiaries which, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to Section
3.13 or which relate to the consummation of the transactions contemplated by
this Agreement.
(c) Parent shall promptly notify the Company of any
actions, suits, claims, investigations or proceedings commenced or, to its
knowledge, threatened against, relating to or involving or otherwise affecting
Parent or any Subsidiary of Parent which, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to Section
4.12 or which relate to the consummation of the transactions contemplated by
this Agreement.
SECTION 5.07. Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement,
each party will use its reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate the Merger and the
other transactions contemplated by this Agreement. In furtherance and not in
limitation of the foregoing, each party hereto agrees to (i) make an appropriate
filing of a Notification and Report Form pursuant to the HSR Act with respect to
the transactions contemplated hereby as promptly as practicable and in any event
within ten (10) business days of the date hereof and to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and to take all other actions reasonably
necessary to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable and (ii) make appropriate
filings required under any other applicable Antitrust Laws (as defined below) as
promptly as practicable and in any event within fifteen (15) business days of
the date hereof.
(b) Each of Parent and the Company shall, in connection
with the efforts referenced in Section 5.07(a) to obtain all requisite approvals
and authorizations for the transactions contemplated by this Agreement under the
HSR Act or any other Antitrust Law, use its reasonable best efforts to (i)
cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry, including
any proceeding initiated by a private party; (ii) keep the other party informed
in all material respects of any material communication received by such party
from, or given by such party to, the Federal Trade Commission (the "FTC"), the
Antitrust Division of the Department of Justice (the "DOJ") or any other
Governmental Authority and of any material communication received or given in
connection with any proceeding by a private party, in each case regarding any of
the transactions contemplated hereby; and (iii) permit the other party to review
any material communication given by it to, and consult with each other in
advance of any meeting or conference with, the FTC, the DOJ or any such other
Governmental Authority or, in connection with any proceeding by a private party,
37
with any other person, and to the extent permitted by the FTC, the DOJ or such
other applicable Governmental Authority or other person, give the other party
the opportunity to attend and participate in such meetings and conferences. For
purposes of this Agreement, "Antitrust Law" means the ▇▇▇▇▇▇▇ Act, as amended,
the ▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, the EU Merger Regulations and all other federal, state and foreign, if
any, statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines and other laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade or lessening of competition through merger or acquisition.
(c) In furtherance and not in limitation of the covenants
of the parties contained in Sections 5.07(a) and (b), each of Parent and the
Company shall use its reasonable best efforts to resolve such objections if any,
as may be asserted with respect to the transactions contemplated hereby under
any Antitrust Law. In connection with the foregoing, if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Antitrust Law, each of Parent
and the Company shall cooperate in all respects with each other and use its
respective reasonable best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement. Notwithstanding
the foregoing or any other provision of this Agreement, nothing in this Section
5.07 shall limit a party's right to terminate this Agreement pursuant to Section
7.01(b)(i) or 7.01(c) so long as such party has up to then complied in all
material respects with its obligations under this Section 5.07.
(d) If any objections are asserted with respect to the
transactions contemplated hereby under any Antitrust Law or if any suit is
instituted by any Governmental Authority or any private party challenging any of
the transactions contemplated hereby as violative of any Antitrust Law, each of
Parent and the Company shall use its reasonable best efforts to resolve any such
objections or challenge as such Governmental Authority or private party may have
to such transactions under such Antitrust Law so as to permit consummation of
the transactions contemplated by this Agreement; provided, however, that in no
event shall Parent be required to hold separate (including by establishing a
trust or otherwise) or to sell or otherwise dispose of operations of Parent (and
its Subsidiaries) and/or the Surviving Corporation (and its Subsidiaries).
(e) In the event any of the conditions set forth in Section
6.01(f), 6.02(b) or 6.03(b) are not capable of fulfillment prior to the End
Date, the parties shall, if requested by the Company, waive any such conditions
and effect such modifications to the relevant security holder disclosure and
solicitation materials as may reasonably be requested by the Company to reflect
the Merger as a taxable transaction to the Company's shareholders.
38
SECTION 5.08. Cooperation.
Without limiting the generality of Section 5.07, Parent and
the Company shall together, or pursuant to an allocation of responsibility to be
agreed between them, coordinate and cooperate (i) in connection with the
preparation of the Company Proxy Statement and the Form F-4, (ii) in determining
whether any action by or in respect of, or filing with, any Governmental
Authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts, in connection
with the consummation of the transactions contemplated by this Agreement, and
(iii) in seeking any such actions, consents, approvals or waivers or making any
such filings, furnishing information required in connection therewith or with
the Company Proxy Statement or the Form F-4 and seeking timely to obtain any
such actions, consents, approvals or waivers.
SECTION 5.09. Public Announcements.
So long as this Agreement is in effect, Parent and the
Company will consult with each other before issuing any press release or making
any SEC or COB filing or other public statement with respect to this Agreement
or the transactions contemplated hereby and, except as may be required by
applicable law or the requirements of any securities exchange, will not issue
any such press release or make any such SEC filing or other public statement
prior to such consultation and providing the other party with a reasonable
opportunity to comment thereon.
SECTION 5.10. Further Assurances.
At and after the Effective Time, the officers and directors
of the Surviving Corporation will be authorized to execute and deliver, in the
name and on behalf of the Company or Merger Subsidiary, any deeds, bills of
sale, assignments or assurances and to take and do, in the name and on behalf of
the Company or Merger Subsidiary, any other actions and things to vest, perfect
or confirm of record or otherwise in the Surviving Corporation any and all
right, title and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the Surviving Corporation as
a result of, or in connection with, the Merger.
SECTION 5.11. Affiliates.
Prior to the Closing Date, the Company shall cause to be
delivered to Parent a letter identifying, to the best of the Company's
knowledge, all persons who are, at the time of the Company Shareholder Meeting
described in Section 5.03(a), deemed to be "affiliates" for purposes of Rule 145
under the 1933 Act (the "Affiliates"). The Company shall use its reasonable best
efforts to cause each person who is so identified as an Affiliate to deliver to
Parent on or prior to the Closing Date a letter agreement substantially in the
form of Exhibit C to this Agreement.
39
SECTION 5.12. Director and Officer Liability.
From and after the Effective Time, Parent shall, or shall
cause the Surviving Corporation to, indemnify each person who is now, or has
been at any time prior to the date hereof, an employee, agent, director or
officer of the Company or of any of its Subsidiaries, its successors and assigns
(individually an "Indemnified Party" and collectively the "Indemnified
Parties"), to the fullest extent such persons can be indemnified by the Company
under applicable law with respect to any claim, liability, loss, damage,
judgment, fine, penalty, amount paid in settlement or compromise, cost or
expense (including reasonable fees and expenses of legal counsel), against any
Indemnified Party in his or her capacity as an employee, agent, officer or
director of the Company or its Subsidiaries, whenever asserted or claimed, based
in whole or in part on, or arising in whole or in part out of, any facts or
circumstances occurring at or prior to the Effective Time whether commenced,
asserted or claimed before or after the Effective Time, including, without
limitation, liability arising under the 1933 Act, the 1934 Act or state law;
provided, however, that the Surviving Corporation shall not be liable for any
settlement or compromise effected without its written consent (which shall not
be unreasonably withheld). In the event of any claim, liability, loss, damage,
judgment, fine, penalty, amount paid in settlement or compromise, cost or
expense indemnified pursuant to the preceding sentence, Parent shall pay the
reasonable fees and expenses of counsel selected by the Indemnified Parties
promptly after statements are received and otherwise advance to such Indemnified
Party upon request reimbursement of documented expenses reasonably incurred. The
Indemnified Parties as a group may retain only one law firm with respect to each
matter except to the extent there is, in the opinion of counsel to an
Indemnified Party, under applicable standards of professional conduct, a
conflict on any significant issue between positions of any two or more
Indemnified Parties.
Parent shall, or shall cause the Surviving Corporation to,
maintain in effect for not less than six (6) years after the Effective Time the
current policies of directors' and officers' liability insurance maintained by
the Company and its Subsidiaries on the date hereof (provided that Parent may
substitute therefor policies with reputable and financially sound carriers
having at least the same coverage and amounts thereof and containing terms and
conditions which are no less advantageous to the persons currently covered by
such policies as insured) with respect to facts or circumstances occurring at or
prior to the Effective Time; provided that if the aggregate annual premiums for
such insurance during such six-year period shall exceed 300% of the per annum
rate of the aggregate premium currently paid by the Company and its Subsidiaries
for such insurance on the date of this Agreement, then Parent shall cause the
Surviving Corporation to, and the Surviving Corporation shall, provide the most
advantageous coverage that shall then be available at an annual premium equal to
300% of such rate. Parent agrees to pay all expenses (including fees and
expenses of counsel) that may be incurred by any Indemnified Party in
successfully enforcing the indemnity or other obligations under this Section
5.12. The rights under this Section 5.12 are in addition to rights that an
Indemnified Party may have under the certificate of incorporation, bylaws, or
other similar organizational documents of the Company or any of its Subsidiaries
or the DGCL. The rights under this Section 5.12 shall survive consummation of
the Merger and are expressly intended to benefit each Indemnified Party. Parent
40
agrees to cause the Surviving Corporation and any of its Subsidiaries (or their
successors) to maintain in effect for a period of six (6) years the provisions
of its articles of incorporation or bylaws or similar organizational documents
providing for indemnification of Indemnified Parties, with respect to facts or
circumstances occurring at or prior to the Effective Time, to the fullest extent
provided by law.
SECTION 5.13. Obligations of Merger Subsidiary.
Parent will take all action necessary to cause Merger
Subsidiary to perform its obligations under this Agreement and to consummate the
Merger on the terms and conditions set forth in this Agreement.
SECTION 5.14. Listing.
Parent shall use its reasonable best efforts to cause the
Parent ADSs to be issued in connection with the Merger to be approved for
listing, subject to official notice of issuance, on the New York Stock Exchange
on or prior to the day immediately preceding the Closing Date.
SECTION 5.15. Antitakeover Statutes.
If any Takeover Statute is or may become applicable to the
Merger, each of Parent and the Company shall take such actions as are necessary
so that the transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of any Takeover Statute on the Merger.
SECTION 5.16. Tax Treatment.
Each of Parent and the Company shall not take any action
and shall not fail to take any action which action or failure to act would
prevent, or would be reasonably likely to prevent, the Merger from qualifying as
a reorganization within the meaning of Section 368(a) of the Code.
SECTION 5.17. Employee Benefits.
(a) Following the Effective Time, Parent shall cause the
Surviving Corporation to (i) honor all obligations under employment or severance
agreements of the Company or its Subsidiaries and (ii) pay all benefits accrued
through the Effective Time under employee benefit plans, programs, policies and
arrangements of the Company or its Subsidiaries in accordance with the terms
thereof. In furtherance and not in limitation of the foregoing, Parent shall
cause the Surviving Corporation to provide, employees of the Company who
continue to be employed by the Surviving Corporation or its Subsidiaries as of
the Effective Time ("Continuing Employees") for a period of not less than two
(2) years following the Effective Time with (A) annual compensation not less
favorable than the annual compensation which they were receiving immediately
41
prior to the Effective Time, and (B) benefits which, in the aggregate, are no
less favorable than the benefits provided to similarly situated Parent
employees. In addition to the foregoing, for a period of two (2) years following
the Effective Time, Parent shall cause the Surviving Corporation or its
Subsidiaries to establish and maintain a plan to provide severance and
termination benefits to all non-union employees of the Company and its
Subsidiaries which are no less favorable than the severance and termination
benefits provided under the Company's plans and arrangements in effect as of the
date of this Agreement. If Continuing Employees are included in any benefit plan
(including without limitation, provision for vacation) of Parent or its
Subsidiaries, the Continuing Employees shall receive credit as employees of the
Company and its Subsidiaries for service prior to the Effective Time with the
Company and its Subsidiaries to the same extent such service was counted under
similar Company Benefit Plans for purposes of eligibility, vesting, eligibility
for retirement and, for any Company Benefit Plan that is not a pension benefit
plan, benefit accrual. If Continuing Employees are included in any medical,
dental or health plan other than the plan or plans they participated in as of
the Effective Time, any such plans shall not include pre-existing condition
exclusions, except to the extent such exclusions were applicable under the
similar Company Benefit Plan as of the Effective Time, and shall provide credit
for any deductibles and co-payments applied or made with respect to each
Continuing Employee in the calendar year of the change. The rights under this
Section 5.17 shall survive consummation of the Merger and are expressly intended
to benefit each Continuing Employee. Notwithstanding anything contained herein
to the contrary, nothing in this Section 5.17 shall be deemed to be a commitment
on the part of Parent or the Surviving Corporation to provide employment to any
person for any period of time and, except as otherwise provided in this Section
5.17, nothing herein shall be deemed to prevent Parent or the Surviving
Corporation from amending or terminating any Company Benefit Plan in accordance
with its terms.
(b) Upon the Effective Time, the Company's Employee Stock
Purchase Plan shall be terminated with the effect that the then current offering
period under such plan will be terminated effective as of the Effective Time.
SECTION 5.18. Rule 144 Reporting.
From and after the Effective Time, unless and until each
"affiliate" of the Company (as such term is defined for purposes of paragraphs
(c) and (d) of Rule 145 under the Securities Act) has disposed of all Parent
ADSs received by it as Merger Consideration, such shares are permitted to be
resold pursuant to Rule 145(d)(3) under the 1933 Act or such shares are covered
by an effective registration statement under Section 5 of the 1933 Act, Parent
shall make and keep "available adequate current public information" (as those
terms are understood and defined in Rule 144 under the ▇▇▇▇ ▇▇▇) with respect to
Parent and, upon any reasonable request by such an affiliate, provide a
statement as to such availability.
42
SECTION 5.19. Comfort Letters.
(a) The Company shall use its reasonable best efforts to
cause to be delivered to Parent "comfort" letters of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the
Company's independent public accountants, dated the date on which the F-4 shall
become effective and as of the Effective Time, and addressed to Parent and the
Company, in form and substance reasonably satisfactory to Parent and reasonably
customary in scope and substance for letters delivered by independent public
accountants in connection with transactions such as those contemplated by this
Agreement.
(b) Parent shall use its reasonable best efforts to cause
to be delivered to the Company "comfort" letters of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
Parent's independent public accountants, dated the date on which the F-4 shall
become effective and as of the Effective Time, and addressed to the Company and
Parent, in form and substance reasonably satisfactory to the Company and
reasonably customary in scope and substance for letters delivered by independent
public accountants in connection with transactions such as those contemplated by
this Agreement.
SECTION 5.20. Third Party Consents.
(a) The Company and Parent shall give (or shall cause their
respective Subsidiaries to give) any notices to third parties, and use, and
cause their respective Subsidiaries to use, their reasonable best efforts to
obtain any third party consents, approvals or waivers (i) necessary, proper or
advisable to consummate the transactions contemplated in this Agreement, or (ii)
required to prevent a Material Adverse Effect on the Company from occurring
prior to or after the Effective Time or a Material Adverse Effect on Parent from
occurring prior to or after the Effective Time.
(b) In the event that any party shall fail to obtain any
third party consent, approval or waiver described in subsection (a) above, such
party shall use its reasonable best efforts, and shall take any such actions
reasonably requested by the other parties hereto, to minimize any adverse effect
upon the Company and Parent, their respective Subsidiaries, and their respective
businesses resulting, or which could reasonably be expected to result after the
Effective Time, from the failure to obtain such consent, approval or waiver.
SECTION 5.21. Certain Contributions. Promptly following the
Effective Time Parent will (i) transfer all of the SNC Common Stock of the
Surviving Corporation to Havas Advertising International ("International") and
cause International to transfer all of such stock to EWDB North America, Inc.
("US Parent"), in each case as a contribution to capital and (ii) cause US
Parent to contribute to the SNC Group (as such term is defined in the Surviving
Corporation's certificate of incorporation) a note receivable from US Parent in
the principal amount of not less than $500,000,000.
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Article 6
Conditions to the Merger
SECTION 6.01. Conditions to the Obligations of Each Party.
The obligations of the Company and Parent to consummate the
Merger are subject to the satisfaction (or waiver by the party for whose benefit
the applicable condition exists) of the following conditions:
(a) (i) this Agreement and the transactions contemplated
hereby, including the Merger, shall have been approved and adopted by the
shareholders of the Company by the Company Requisite Vote and (ii) the Capital
Increase shall have been approved by the shareholders of Parent by the Parent
Requisite Vote;
(b) any applicable waiting period under the HSR Act and the
EU Merger Regulations relating to the transactions contemplated by this
Agreement shall have expired, and all consents, waivers, approvals and
authorizations required to be obtained, and all filings or notices required to
be, made by the Company, Parent or any of their Subsidiaries under any other
applicable Antitrust Law in connection with the transactions contemplated in
this Agreement shall have been obtained from or made with all required
Governmental Authorities, except for such consents, waivers, approvals or
authorizations which the failure to obtain, or such filings or notices which the
failure to make, would not have a Material Adverse Effect on the Company, Parent
or the Surviving Corporation.
(c) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit or enjoin the consummation
of the Merger;
(d) (i) the Form F-4 and Form F-6 shall have been declared
effective under the 1933 Act and no stop order suspending the effectiveness of
the Form F-4 and Form F-6 shall be in effect and no proceedings for such purpose
shall be pending before or threatened by the SEC and (ii) Parent shall have
received appropriate decisions and visas from the CMF and the COB;
(e) the Parent ADSs to be issued in the Merger shall have
been approved for listing on the New York Stock Exchange, subject to official
notice of issuance; and
(f) the SNC Common Stock shall represent control of the
Company within the meaning of Section 368(c) of the Code.
SECTION 6.02. Conditions to the Obligations of Parent and
Merger Subsidiary.
44
The obligations of Parent and Merger Subsidiary to
consummate the Merger are subject to the satisfaction (or waiver by Parent) of
the following further conditions:
(a) (i) the Company shall have performed in all material
respects all of its obligations and complied in all material respects with all
of its covenants hereunder required to be performed or complied with by it at or
prior to the Effective Time and (ii) the representations and warranties of the
Company contained in this Agreement (which representations and warranties shall
be deemed, for purposes of this condition, to include any qualifications with
respect to materiality, including references to Material Adverse Effect) shall
be true and correct at and as of the Effective Time, as if made at and as of
such time (other than representations and warranties that address matters only
as of a particular date, which shall be true and correct as of such date), with
only such exceptions as, individually or in the aggregate, have not had and
would not have a Material Adverse Effect on the Company; and Parent shall have
received a certificate signed by an executive officer of the Company to the
effect set forth in clauses (i) and (ii);
(b) Parent shall have received an opinion from ▇▇▇▇▇ &
▇▇▇▇▇▇▇ L.L.P., counsel to Parent, in form and substance reasonably satisfactory
to Parent, dated as of the Effective Time, substantially to the effect that the
Merger should constitute a reorganization for United States federal income tax
purposes within the meaning of Section 368(a) of the Code. In rendering such
opinion, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P. may rely upon representations contained in
certificates of officers of Parent, Merger Subsidiary and the Company
substantially in the forms annexed as Exhibit D to this Agreement; or
(c) there shall not have been a material breach of the
Company Stockholder Voting Agreement by the Designated Company Stockholders.
SECTION 6.03. Conditions to the Obligations of the Company.
The obligations of the Company to consummate the Merger are
subject to the satisfaction (or waiver by the Company) of the following further
conditions:
(a) (i) Parent shall have performed in all material
respects all of its obligations and complied in all material respects with all
of its covenants hereunder required to be performed or complied with by it at or
prior to the Effective Time and (ii) the representations and warranties of
Parent contained in this Agreement (which representations and warranties shall
be deemed, for purposes of this condition, not to include any qualifications
with respect to materiality, including references to Material Adverse Effect)
shall be true and correct at and as of the Effective Time, as if made at and as
of such time (other than representations and warranties that address matters
only as of a particular date which shall be true and correct as of such date),
with only such exceptions as, individually or in the aggregate, have not had and
would not have a Material Adverse Effect on Parent; and the Company shall have
received a certificate signed by an executive officer of Parent to the effect
set forth in clauses (i) and (ii);
45
(b) The Company shall have received an opinion from Weil,
Gotshal & ▇▇▇▇▇▇ LLP, counsel to the Company, in form and substance reasonably
satisfactory to the Company, dated as of the Effective Time, substantially to
the effect that the Merger should constitute a reorganization for United States
federal income tax purposes within the meaning of Section 368(a) of the Code. In
rendering such opinion, Weil, Gotshal & ▇▇▇▇▇▇ LLP may rely upon representations
contained in certificates of officers of Parent, Merger Subsidiary and the
Company substantially in the forms thereof annexed as Exhibit D to this
Agreement; or
(c) there shall not have been a material breach of the
Parent Stockholder Voting Agreement by the Designated Parent Stockholder.
Article 7
Termination
SECTION 7.01. Termination.
This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time (notwithstanding any approval
of this Agreement by the shareholders of the Company or Parent):
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent:
(i) if the Merger has not been consummated by December 31,
2000 (the "End Date"); provided that the right to terminate this Agreement under
this Section 8.01(b)(i) shall not be available to any party whose failure to
fulfill its obligations or to comply with its covenants under this Agreement in
all material respects has been the cause of, or resulted in, the failure of the
Merger to be consummated by the End Date.
(ii) if the Company Shareholder Approval shall not have
been obtained by reason of the failure to obtain the Company Requisite Vote at a
duly held meeting of shareholders or any adjournment thereof; or
(iii) if the Parent Shareholder Approval shall not have
been obtained by reason of the failure to obtain the Parent Requisite Vote at a
duly held meeting of shareholders or any adjournment thereof; or
(c) by either the Company or Parent (so long as such party
has complied in all material respects with its obligations under Section 5.07),
if consummation of the Merger would be prohibited by any law or regulation or if
any injunction, judgment, order or decree enjoining the Company or Parent from
consummating the Merger is entered and such injunction, judgment, order or
decree shall become final and nonappealable; or
46
(d) by the Company:
(i) if the Company Board shall have received an Acquisition
Proposal which the Company Board has determined in good faith is a Superior
Proposal and the Company promptly following such termination enters into an
agreement (including a letter of intent) providing for the transactions
contemplated by such Superior Proposal after complying with Section 5.05(c)
(including, without limitation, the expiration of the three (3) business day
period set forth therein); provided that it shall be a condition to the
effectiveness of such termination that the Company shall have made the payment
referred to in Section 7.03(b) hereof;
(ii) upon a breach of any representation, warranty,
covenant or agreement of Parent, or if any representation or warranty of Parent
shall become untrue, in either case which breach or misrepresentation or
warranty shall not have been cured within 30 days following written notice from
the Company such that the conditions set forth in Section 6.03(a) would be
incapable of being satisfied by the End Date; or
(iii) if the Parent Board shall have withdrawn or modified,
or publicly proposed to withdraw or modify, in a manner adverse to the Company,
its approval or recommendation of the Merger and this Agreement; or
(e) by Parent:
(i) if the Company Board shall have (A) withdrawn or
modified, or publicly proposed to withdraw or modify, in a manner adverse to
Parent, its approval or recommendation of the Merger and this Agreement or (B)
approved or recommended, or publicly proposed to approve or recommend, any
Acquisition Proposal; or
(ii) upon a breach of any representation, warranty,
covenant or agreement of the Company, or if any representation or warranty of
the Company shall become untrue, in either case which breach or
misrepresentation or warranty shall not have been cured within 30 days following
written notice from Parent such that the conditions set forth in Section 6.02(a)
would be incapable of being satisfied by the End Date.
The party desiring to terminate this Agreement pursuant to
clauses (b), (c), (d) or (e) of this Section 7.01 shall give written notice of
such termination to the other party in accordance with Section 8.02, specifying
the provision hereof pursuant to which such termination is effected.
SECTION 7.02. Effect of Termination.
If this Agreement is terminated pursuant to Section 7.01,
this Agreement shall become void and of no effect with no liability on the part
of any party hereto, except that (a) the agreements contained in this Section
47
7.02 and in Section 7.03 and in the Parent Confidentiality Agreement and the
Company Confidentiality Agreement shall survive the termination hereof and (b)
no such termination shall relieve any party of any liability or damages
resulting from any material breach by that party of this Agreement; provided
that the maximum aggregate liability of any party for any material breach of its
representations, warranties, covenants or agreements in this Agreement shall be
limited to $85,000,000; provided, further, that such limitation shall not apply
to any such material breach that is willful (as contemplated by Section 7.03).
SECTION 7.03. Payments.
(a) Except as otherwise specified in this Section 7.03 or
agreed in writing by the parties, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated by this Agreement shall be
paid by the party incurring such cost or expense.
(b) If (i) the Company shall terminate this Agreement
pursuant to Section 7.01(d)(i) hereof, (ii) Parent shall terminate this
Agreement pursuant to Section 7.01(e)(i) hereof, or (iii) the Company or Parent
shall terminate this Agreement pursuant to Section 7.01(b)(ii) hereof, the
Company shall pay to Parent (by wire transfer of immediately available funds not
later than the date of termination of this Agreement) an amount equal to
$85,000,000 (inclusive of value added tax, if any). If Parent shall terminate
this Agreement pursuant to Section 7.01(e)(ii) (solely with respect to a willful
breach of a representation, warranty, covenant or agreement of the Company
contained in this Agreement), the Company shall pay to Parent (by wire transfer
of immediately available funds not later than the date of termination of this
Agreement) an amount equal to the greater of (i) $85,000,000 (inclusive of value
added tax, if any), or (ii) the actual damages resulting from any such breach.
Acceptance by Parent of the payment referred to in the foregoing sentences shall
constitute conclusive evidence that this Agreement has been validly terminated
and upon payment of such amount the Company shall be fully released and
discharged from any liability or obligation resulting from or under this
Agreement.
(c) If (i) the Company or Parent shall terminate this
Agreement pursuant to Section 7.01(b)(iii), or (ii) the Company shall terminate
this Agreement pursuant to Section 7.01(d)(iii) hereof, Parent shall pay to the
Company (by wire transfer of immediately available funds not later than the date
of termination of this Agreement) an amount equal to $85,000,000 (inclusive of
value added tax, if any). If the Company shall terminate this Agreement pursuant
to Section 7.01(d)(ii) (solely with respect to a willful breach of a
representation, warranty, covenant or agreement of Parent contained in this
Agreement), Parent shall pay to the Company (by wire transfer of immediately
available funds not later than the date of termination of this Agreement) an
amount equal to the greater of (i) $85,000,000 (inclusive of value added tax, if
any), or (ii) the actual damages resulting from any such breach. Acceptance by
the Company of the payment referred to in the foregoing sentences shall
constitute conclusive evidence that this Agreement has been validly terminated
and upon payment of such amount Parent shall be fully released and discharged
from any liability or obligation resulting from or under this Agreement.
48
Article 8
Miscellaneous
SECTION 8.01. Certain Definitions.
For purposes of this Agreement, the following terms shall
have the meanings specified in this Section 8.01:
(a) "KNOW" or "KNOWLEDGE" means, with respect to the
Company, the actual knowledge of the Company's executive officers, and with
respect to Parent and Merger Subsidiary, the actual knowledge Parent's executive
directors.
(b) "PERSON" means an individual, corporation, limited
liability company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in the 1934 Act). (c) "SUBSIDIARY" means, when
used with reference to any entity, any corporation or other organization,
whether incorporated or unincorporated, (i) of which such party or any other
subsidiary of such party is a general or managing partner or (ii) the
outstanding voting securities or interests of which, having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization, is directly or indirectly owned or controlled by such party or by
any one or more of its subsidiaries.
SECTION 8.02. Notices.
All notices, requests and other communications to any party
hereunder shall be in writing (including telecopy or similar writing) and shall
be given:
if to Parent, to:
Havas Advertising
▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
Attention: Chief Financial Officer
49
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
if to the Company, to:
▇▇▇▇▇▇ Communications, Inc.
Two Democracy Center
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (a) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section 8.02
and the appropriate telecopy confirmation is received or (b) if given by any
other means, when delivered at the address specified in this Section 8.02.
SECTION 8.03. Entire Agreement; Non-Survival of
Representations and Warranties; Third Party Beneficiaries.
(a) This Agreement (including any exhibits hereto), the
other agreements referred to in this Agreement and the Parent Confidentiality
Agreement and the Company Confidentiality Agreement constitute the entire
agreement among the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements, understandings and negotiations,
both written and oral, between the parties with respect to such subject matter.
None of this Agreement, the Parent Confidentiality Agreement, the Company
Confidentiality Agreement or any other agreement contemplated hereby or thereby
(or any provision hereof or thereof) is intended to confer on any person other
than the parties hereto or thereto any rights or remedies (except that Article 1
and Sections 5.12, 5.17, 5.18 and 5.21 are intended to confer rights and
remedies on the persons specified therein).
50
(b) The representations and warranties contained herein or
in any schedule, instrument or other writing delivered pursuant hereto shall not
survive the Effective Time.
SECTION 8.04. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or
waived prior to the Effective Time if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by the Company and Parent
or, in the case of a waiver, by the party against whom the waiver is to be
effective; provided that after the adoption of this Agreement by the
shareholders of the Company, there shall be made no amendment that by law
requires further approval by shareholders without the further approval of such
shareholders.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 8.05. Successors and Assigns.
The provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the written consent of the other parties hereto.
SECTION 8.06. Governing Law.
This Agreement shall be construed in accordance with and
governed by the law of the State of Delaware, without regard to the choice of
law principles thereof.
SECTION 8.07. Jurisdiction.
Any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Agreement or the transactions contemplated by this Agreement may be brought
against any of the parties in any Federal court located in the State of Delaware
or any Delaware state court, and each of the parties hereto hereby consents to
the exclusive jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and waives any
objection to venue laid therein. Process in any such suit, action or proceeding
may be served on any party anywhere in the world, whether within or without the
State of Delaware. Without limiting the generality of the foregoing, each party
hereto agrees that service of process upon such party at the address referred to
51
in Section 8.02, together with written notice of such service to such party,
shall be deemed effective service of process upon such party.
SECTION 8.08. Counterparts; Effectiveness.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received counterparts hereof signed
by all of the other parties hereto.
SECTION 8.09. Interpretation.
When a reference is made in this Agreement to a Section or
Disclosure Schedule, such reference shall be to a Section of this Agreement or
to the Company Disclosure Schedule or Parent Disclosure Schedule as applicable,
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation".
SECTION 8.10. Severability.
If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable or against its regulatory policy, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated. Upon such determination that any term, provision, covenant or
restriction of this Agreement is invalid, void, unenforceable or against
regulatory policy, 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.
SECTION 8.11. Specific Performance.
The parties hereto agree that irreparable damage would
occur in the event any provision of this Agreement was not performed in
accordance with the terms hereof and that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any Federal court
located in the State of Delaware or any Delaware state court, in addition to any
other remedy to which they are entitled at law or in equity.
52
SECTION 8.12. Joint and Several Liability.
Parent and Merger Subsidiary hereby agree that they will be
jointly and severally liable for all covenants, agreements, obligations and
representations and warranties made by either of them in this Agreement.
53
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
HAVAS ADVERTISING
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director-General
HAS ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and Treasurer
▇▇▇▇▇▇ COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and
Chief Executive Officer
54
Exhibit A To merger agreement Company Voting Agreement
[Intentionally omitted; see Exhibit 10.1 to this Form 8-K]
55
Exhibit B to merger agreement Parent Voting Agreement
[Intentionally omitted; see Exhibit 10.2 to this Form 8-K]
56
EXHIBIT C TO MERGER AGREEMENT
[FORM OF AFFILIATE LETTER]
Havas Advertising
▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
Gentlemen:
Reference is made to the provisions of the Agreement and
Plan of Merger, dated as of February __, 2000 (together with any amendments
thereto, the "Merger Agreement"), among ▇▇▇▇▇▇ Communications, Inc., a Delaware
corporation (the "Company"), Havas Advertising, a societe anonyme organized
under the laws of the French Republic ("Parent"), and HAS Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of Parent ("Merger Sub"),
pursuant to which Merger Sub will be merged with and into the Company, with the
Company continuing as the surviving corporation (the "Merger"). This letter
constitutes the undertakings of the undersigned contemplated by the Merger
Agreement.
I understand that I may be deemed to be an "affiliate" of
the Company, as such term is defined for purposes of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
and that the transferability of the American Depository Shares of Parent (the
"Parent ADSs"), with each Parent ADS representing ___ of an ordinary share,
nominal value 8 Euros per share, of Parent (the "Parent Share") evidenced by
American Depository Receipts of Parent ("Parent ADRs") which I will receive upon
the consummation of the Merger in exchange for my shares of common stock of the
Company (the "Company Shares"), or upon exercise of certain options I hold to
purchase shares of common stock of the Company is restricted. Nothing herein
shall be construed as an admission that I am an affiliate or as a waiver of any
rights that I may have to object to any claim that I am such an affiliate on or
after the date of this letter.
I will not transfer, sell or otherwise dispose of any of
the Parent ADRs except (i) pursuant to an effective registration statement under
the Securities Act, or (ii) as permitted by, and in accordance with, Rule 145,
if applicable, or another applicable exemption under the Securities Act; and
I shall execute and deliver to Weil, Gotshal & ▇▇▇▇▇▇ LLP,
counsel to the Company and to the Company a certificate in such form as and at
such time or times as may be reasonably requested by such law firm or the
Company, as the case may be, in connection with such law firm's delivery of an
57
opinion with respect to the transaction contemplated by the Merger Agreement and
shall provide a copy thereof to Parent.
I hereby acknowledge that, except as otherwise provided in the Merger
Agreement, Parent is under no obligation to register the sale, transfer, pledge
or other disposition of the Parent ADRs or to take any other action necessary
for the purpose of making an exemption from registration available.
I understand that Parent may issue stop transfer instructions to its
transfer agents with respect to the Parent ADRs and that a restrictive legend
will be placed on the certificates delivered to me evidencing the Parent ADRs in
substantially the following form:
"This certificate and the shares represented hereby have been issued
pursuant to a transaction governed by Rule 145 ("Rule 145") promulgated under
the Securities Act of 1933, as amended (the "Securities Act"), and may not be
sold or otherwise disposed of unless registered under the Securities Act
pursuant to a Registration Statement in effect at the time or unless the
proposed sale or disposition another exemption therefrom."
I have carefully read this letter agreement and the Merger Agreement
and have discussed the requirements of each and the limitations upon the
disposition of any Parent ADRs I may receive in the Merger with my counsel or
counsel to the Company to the extent I deemed necessary.
The term Parent ADRs as used in this letter shall mean and include
not only Parent ADRs, Parent ADSs and ordinary shares of Parent as presently
constituted, but also any other stock which may be issued in exchange for, in
lieu of, or in addition to, all or any part of such Parent ADRs or Parent ADSs.
This letter agreement shall be binding upon and enforceable against
me and my administrators, executors, representations, heirs, legatees, devisees
and successors and any pledge holding Parent ADRs as collateral. This letter
agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original, but all of which constitute one and the same
agreement.
Very truly yours,
--------------------
[AFFILIATE]
Acknowledged and agreed to
HAVAS ADVERTISING
By: __________________________
Name: ________________________
Title: _________________________
58
EXHIBIT D to merger agreement TAX REPRESENTATIONS
▇▇▇▇▇▇ COMMUNICATIONS, INC.
CERTIFICATE
In connection with the merger (the "Merger") of HAS
ACQUISITION CORP. ("Merger Sub"), a Delaware corporation and a direct
wholly-owned subsidiary of HAVAS ADVERTISING, a societe anonyme organized under
the laws of the French Republic ("Parent"), with and into ▇▇▇▇▇▇ COMMUNICATIONS,
INC., a Delaware corporation (the "Company"), pursuant to the Agreement and Plan
of Merger dated as of February 20, 2000 (the "Merger Agreement"), among Parent,
Merger Sub and the Company, the Company hereby certifies the following (any
capitalized term used but not defined herein having the meaning given to such
term in the Merger Agreement):
1. The fair market value of the American Depositary Shares of
Parent ("Parent ADSs") to be received in the Merger by each
holder of the common stock of the Company designated as
"▇▇▇▇▇▇ Communications, Inc. Common Stock" in the certificate
of incorporation of the Company ("SNC Common Stock") will be
approximately equal to the fair market value of the SNC Common
Stock surrendered in the exchange.
2. The payment of cash in lieu of a fraction of a Parent ADS is
solely for the purpose of avoiding the expense and
inconvenience to Parent of issuing a fraction of a Parent ADS,
and does not represent separately bargained for consideration.
The total cash consideration that will be paid in the Merger
to holders of SNC Common Stock instead of issuing fractions of
Parent ADSs will not exceed one percent (1%) of the total
consideration that will be issued in the Merger to holders of
SNC Common Stock in exchange for their SNC Common Stock.
3. Prior to and in connection with the Merger, no shares of
Company Common Stock have been (i) redeemed by the Company,
(ii) acquired by a person related to the Company (within the
meaning of Treasury Regulation Section 1.368-1(e)(3)
determined without regard to Treasury Regulation Section
1.368-1(e)(3)(i)(A)) for consideration other than Parent
Shares, Parent ADSs or Company Common Stock, or (iii) the
subject of any extraordinary distribution by the Company.
4. There is no plan or intention on the part of any holder of SNC
Common Stock who owns 5% or more of the SNC Common Stock and
to the best of the knowledge of the management of the Company,
there is no plan or intention on the part of the remaining
holders of SNC Common Stock, to sell, exchange or otherwise
dispose of any Parent ADSs to be received in the Merger by
such holder directly or indirectly to Parent or to a person
59
related to Parent (within the meaning of Treasury Regulation
Section 1.368-1(e)(3)) for consideration other than Parent
Shares or Parent ADSs.
5. The Company has no outstanding equity interests other than as
described in Section 3.05 of the Merger Agreement. At the
Effective Time and following the Merger, the Company will not
have outstanding any warrants, options, convertible
securities, or any other type of right pursuant to which any
person could acquire stock in the Company that, if exercised
or converted, would affect Parent's acquisition or retention
of control of the Company within the meaning of Section 368(c)
of the Internal Revenue Code of 1986, as amended (the "Code").
6. The Company has no plan or intention to alter the terms of the
Company Common Stock or to issue additional shares of its
stock that, in either case, would result in Parent losing
control of the Company within the meaning of Section 368(c) of
the Code.
7. There will be no dissenters to the Merger.
8. The Company and its shareholders will pay their respective
expenses, if any, incurred in connection with the Merger.
9. The Company is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
10. The Company is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section
368(a)(3)(A) of the Code.
11. There is no intercorporate indebtedness existing between
Parent and the Company or between Merger Sub and the Company
that was issued, acquired or will be settled at a discount.
12. In the Merger, shares of Company Common Stock representing
control of the Company within the meaning of Section 368(c) of
the Code will be exchanged solely for Parent ADSs. In
connection with the Merger, no shares of Company Common Stock
will be exchanged for cash or other property originating with
Parent or any person related to Parent (within the meaning of
Treasury Regulation Section 1.368-1(e)(3)). Further, no
liabilities of the Company or of the shareholders of the
Company will be assumed by Parent, nor to the best of the
knowledge of the management of the Company will any SNC Common
Stock be subject to any liabilities.
13. In connection with the Merger, the Company has not sold,
transferred or otherwise disposed of any of its assets to the
extent that would prevent Parent or members of its qualified
group (within the meaning of Treasury Regulation Section
1.368-1(d)(4)(ii)) from causing the Company after the Merger
60
to continue the historic business of the Company or to use a
significant portion of the Company's historic business assets
in a business.
14. On the date of the Merger, the fair market value of the assets
of the Company will exceed the sum of its liabilities, plus
the amount of liabilities, if any, to which the assets are
subject.
15. Following the Merger, the Company will hold at least 90% of
the fair market value of its net assets and at least 70% of
the fair market value of its gross assets held immediately
prior to the Merger and at least 90% of the fair market value
of the net assets and at least 70% of the fair market value of
the gross assets of Merger Sub held immediately prior to the
Merger. For purposes of this representation, amounts paid by
the Company to its shareholders who receive cash or other
property in the Merger, amounts used by the Company to pay its
reorganization expenses and those of its shareholders, and all
redemptions and distributions (except for regular, normal
dividends) made by the Company will be included as assets of
the Company immediately prior to the Merger.
16. None of the compensation to be received by any
shareholder-employee of the Company in the Merger will be
separate consideration for, or allocable to, any of their
shares of SNC Common Stock; none of the Parent ADSs to be
received by any shareholder-employee of the Company will be
separate consideration for, or allocable to, any employment or
consulting agreement; and the compensation to be paid to any
shareholder-employee after the Merger pursuant to arrangements
entered into in connection with the Merger will be for
services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's length for
similar services.
17. All options, warrants or rights to acquire shares of Company
Common Stock were issued with an exercise price no less than
fair market value at the time of issue.
18. At the Effective Time there will be no accrued but unpaid
dividends on the SNC Common Stock.
19. The Merger is being effected for bona fide business reasons.
20. The Merger Agreement represents the full and complete
agreement between Parent, Merger Sub and the Company regarding
the Merger, and there are no other written or oral agreements
regarding the Merger.
21. In the Merger, U.S. transferors (as defined in Treasury
Regulation Section 1.367(a)-3(c)(5)(v)) will receive, in the
aggregate, (taking into account any attribution or
constructive ownership rules of Treasury Regulation Section
61
1.367(a)-3(c)) Parent ADSs representing 50% or less of both
the total voting power and the total value of all of the
capital stock of Parent outstanding immediately after the
Merger.
22. Officers, directors and five-percent target shareholders (as
defined in Treasury Regulation Section 1.367(a)-3(c)(5)(iii))
of the Company will own, in the aggregate, (taking into
account any attribution or constructive ownership rules of
Treasury Regulation Section 1.367(a)-3(c)) Parent ADSs
representing 50% or less of both the total voting power and
total value of all of the capital stock of Parent outstanding
immediately after the Merger.
23. No U.S. person (as defined in Treasury Regulation Section
1.367(a)-3(c)(5)(iv)) will be a five percent transferee
shareholder (as defined in Treasury Regulation Section
1.367(a)-3(c)(5)(ii)) of Parent.
24. The shareholders of the Company have no intention to
substantially dispose of or discontinue any active trade or
business (within the meaning of Treasury Regulation Section
1.367(a)-2T(b) and 1.367(a)-3(c)(3)(i)) that Parent, any
qualified subsidiary (as defined in Treasury Regulation
Section 1.367(a)-3(c)(5)(vii)) or any qualified partnership
(as defined in Treasury Regulation Section
1.367(a)-3(c)(5)(viii)) of Parent is engaged in outside the
United States.
25. At the time of the Merger, the substantiality test (as defined
in Treasury Regulation Section 1.367(a)-3(c)(3)(iii)) will be
satisfied.
26. The Company has neither issued or acquired options (or an
interest similar to an option) for a principal purpose (within
the meaning of Treasury Regulation Section
1.367(a)-3(c)(4)(ii)) of avoiding the general rule of Section
367(a)(1) of the Code.
27. The Company will not, immediately after the Merger, own
directly or indirectly (applying the attribution rules of
Sections 267(c)(1) and (5) of the Code) any Parent Shares or
Parent ADSs.
IN WITNESS WHEREOF, the Company has executed this
Certificate on this day of , 2000.
--- ---------
▇▇▇▇▇▇ COMMUNICATIONS, INC.
By:
--------------------------
Name:
Title:
62
HAVAS ADVERTISING
CERTIFICATE
In connection with the merger (the "Merger") of HAS ACQUISITION CORP.
("Merger Sub"), a Delaware corporation and a direct wholly-owned subsidiary of
HAVAS ADVERTISING, a societe anonyme organized under the laws of the French
Republic ("Parent"), with and into ▇▇▇▇▇▇ COMMUNICATIONS, INC., a Delaware
corporation (the "Company"), pursuant to the Agreement and Plan of Merger dated
as of February 20, 2000 (the "Merger Agreement"), among Parent, Merger Sub and
the Company, Parent hereby certifies, on behalf of Parent and Merger Sub, the
following (any capitalized term used but not defined herein having the meaning
given to such term in the Merger Agreement):
1. The fair market value of the American Depositary Shares of Parent ("Parent
ADSs") to be received in the Merger by each holder of the common stock of
the Company designated as "▇▇▇▇▇▇ Communications, Inc. Common Stock" in
the certificate of incorporation of the Company ("SNC Common Stock") will
be approximately equal to the fair market value of the SNC Common Stock
surrendered in the exchange.
2. The payment of cash in lieu of a fraction of a Parent ADS is solely for
the purpose of avoiding the expense and inconvenience to Parent of issuing
a fraction of a Parent ADS, and does not represent separately bargained
for consideration. The total cash consideration that will be paid in the
Merger to holders of SNC Common Stock instead of issuing fractions of
Parent ADSs will not exceed one percent (1%) of the total consideration
that will be issued in the Merger to holders of SNC Common Stock in
exchange for their SNC Common Stock.
3. In connection with the Merger, no shares of Company Common Stock will be
acquired by Parent or any person related to Parent (within the meaning of
Treasury Regulation Section 1.368-1(e)(3)) for consideration other than
Parent Shares or Parent ADSs.
4. In connection with the Merger, neither Parent nor any person related to
Parent (within the meaning of Treasury Regulation Section 1.368-1(e)(3))
will purchase, exchange, redeem or otherwise acquire (directly or
indirectly) any Parent ADSs issued to holders of SNC Common Stock in the
Merger.
5. In the Merger, shares of Company Common Stock representing control of the
Company, within the meaning of Section 368(c) of the Internal Revenue Code
of 1986, as amended (the "Code"), will be exchanged solely for Parent
ADSs. In connection with the Merger, no shares of Company Common Stock
will be exchanged for cash or other property originating with Parent or
any person related to Parent (within the meaning of Treasury Regulation
Section 1.368-1(e)(3)). Further, no liabilities of the Company or of the
shareholders of the Company will be assumed by Parent, nor to the best
63
knowledge of the management of Parent will any SNC Common Stock be subject
to any liabilities.
6. Following the Merger, Parent will cause the Company to hold at least 90%
of the fair market value of its net assets and at least 70% of the fair
market value of its gross assets held immediately prior to the Merger and
at least 90% of the fair market value of the net assets and at least 70%
of the fair market value of the gross assets of Merger Sub held
immediately before the Merger. For purposes of this representation, assets
transferred from Parent to Merger Sub are not included as assets of Merger
Sub immediately before the Merger where such assets are used to pay
reorganization expenses, to pay creditors of the Company or to enable
Merger Sub to satisfy state minimum capitalization requirements (where the
money is returned to Parent as part of the transaction).
7. Following the Merger, the historic business of the Company will be
continued by, or a significant portion of the Company's historic business
assets will be used in a business of, Parent or a corporation within
Parent's qualified group (within the meaning of Treasury Regulation
Section 1.368-1(d)(4)(ii)).
8. Parent has no plan or intention to liquidate the Company; to merge the
Company with or into another corporation; to sell, distribute or otherwise
dispose of the SNC Common Stock acquired in the Merger except for
transfers or successive transfers of SNC Common Stock to one or more
corporations controlled (within the meaning of Section 368(c) of the Code)
in each case by the transferor; or to cause the Company to sell or
otherwise dispose of any of its assets or of any of the assets acquired
from Merger Sub, except for dispositions made in the ordinary course of
business or transfers or successive transfers of assets to one or more
corporations controlled (within the meaning of Section 368(c) of the Code)
in each case by the transferor.
9. Following the Merger, Parent intends to cause the Company to continue the
active conduct of its trade or business within the meaning of Section
355(b) of the Code.
10. There will be no dissenters to the Merger.
11. Parent and Merger Sub will pay their respective expenses, if any, incurred
in connection with the Merger, and will not pay any of the expenses of the
shareholders of the Company incurred in connection with the Merger.
12. Neither Parent nor any person related to Parent (within the meaning of
Treasury Regulation Section 1.368-1(e)(3)) has owned during the past five
(5) years any shares of Company Common Stock.
13. Neither Parent nor Merger Sub is an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
64
14. Prior to the Merger, Parent will be in control of Merger Sub within the
meaning of Section 368(c) of the Code.
15. Parent has no plan or intention to cause the Company to alter the terms of
the Company Common Stock or to issue additional shares of stock of the
Company that, in either case, would result in Parent losing control of the
Company within the meaning of Section 368(c) of the Code.
16. There is no intercorporate indebtedness existing between Parent and the
Company or between Merger Sub and the Company that was issued, acquired or
will be settled at a discount.
17. Merger Sub will have no liabilities assumed by the Company, and will not
transfer to the Company any assets subject to liabilities, in the Merger.
18. None of the compensation to be received by any shareholder-employee of the
Company in the Merger will be separate consideration for, or allocable to,
any of their shares of SNC Common Stock; none of the Parent ADSs to be
received by any shareholder-employee of the Company will be separate
consideration for, or allocable to, any employment, management or
consulting agreement; and the compensation to be paid to any
shareholder-employee after the Merger pursuant to arrangements entered
into in connection with the Merger will be for services actually rendered
and will be commensurate with amounts paid to third parties bargaining at
arm's length for similar services.
19. The Merger is being effected for bona fide business reasons.
20. The Merger Agreement represents the full and complete agreement between
Parent, Merger Sub and the Company regarding the Merger, and there are no
other written or oral agreements regarding the Merger.
21. A Parent ADS and a Parent Share entitles the holder thereof to vote for
the election of the members of the board of directors of Parent.
22. No holder of SNC Common Stock is acting as agent for Parent in connection
with the Merger or approval thereof, and neither Parent nor Merger Sub
will reimburse any holder of SNC Common Stock for the SNC Common Stock
such holder may have purchased, or for other obligations such holder may
have incurred, as agent for Parent or Merger Sub.
23. In the Merger, U.S. transferors (as defined in Treasury Regulation Section
1.367(a)-3(c)(5)(v)) will receive, in the aggregate, (taking into account
any attribution or constructive ownership rules of Treasury Regulation
Section 1.367(a)-3(c)) Parent ADSs representing 50% or less of both the
total voting power and the total value of all of the capital stock of
Parent outstanding immediately after the Merger.
65
24. Officers, directors and five-percent target shareholders (as defined in
Treasury Regulation Section 1.367(a)-3(c)(5)(iii)) of the Company will
own, in the aggregate (taking into account any attribution or constructive
ownership rules of Treasury Regulation Section 1.367(a)-3(c)) Parent ADSs
representing 50% or less of both the total voting power and total value of
all of the capital stock of Parent outstanding immediately after the
Merger.
25. No U.S. person (as defined in Treasury Regulation Section
1.367(a)-3(c)(5)(iv)) will be a five-percent transferee shareholder (as
defined in Treasury Regulation Section 1.367(a)-3(c)(5)(ii)) of Parent.
26. Parent or one or more of its qualified subsidiaries (as defined in
Treasury Regulation Section 1.367(a)-3(c)(5)(vii)) or one or more of its
qualified partnerships (as defined in Treasury Regulation Section
1.367(a)-3(c)(5)(viii)) has been engaged in an active trade or business
outside the United States, within the meaning of Treasury Regulation
Sections 1.367(a)-2T(b) and 1.367(a)-3(c)(3)(ii), for the entire 36-month
period immediately before the Merger. None of Parent, its qualified
subsidiaries or its qualified partnerships has an intention to
substantially dispose of or discontinue such trade or business.
27. At the time of the Merger, the substantiality test (as defined in Treasury
Regulation Section 1.367(a)-3(c)(3)(iii)) will be satisfied.
28. Following the Merger, Parent will cause the Company to comply with the
reporting requirements of Treasury Regulation Section 1.367(a)-3(c)(6).
29. Parent has neither issued or acquired options (or an interest similar to
an option) for a principal purpose (within the meaning of Treasury
Regulation Section 1.367(a)-3(c)(4)(ii)) of avoiding the general rule of
Section 367(a)(1) of the Code.
30. The Company will not, immediately after the transfer, own directly or
indirectly (applying the attribution rules of Sections 267(c)(1) and (5)
of the Code) any Parent Shares or Parent ADSs.
31. Following the Merger, Parent intends to maintain control of the Company
(within the meaning of Section 368(c) of the Code) and will take no action
in connection with the Merger which reasonably could be expected to result
in Parent losing control of the Company (within the meaning of Section
368(c) of the Code).
32. Prior to the Merger, Parent will be in control of Havas Advertising
International S.A. ("Havas Advertising International") within the meaning
of Section 368(c) of the Code. Parent has no plan or intention to issue
additional shares of stock of Havas Advertising International that would
result in Parent losing control of Havas Advertising International within
the meaning of Section 368(c) of the Code.
66
33. Prior to the Merger, Havas Advertising International will be in control of
EWDB North America, Inc. ("US Parent") within the meaning of Section
368(c) of the Code. Havas Advertising International has no plan or
intention to issue additional shares of stock of US Parent that would
result in Havas Advertising International losing control of US Parent
within the meaning of Section 368(c) of the Code.
IN WITNESS WHEREOF, Parent, on behalf of Parent and Merger
Sub, has executed this Certificate on this day of , 2000.
HAVAS ADVERTISING
By:
--------------------------------
Name:
Title:
67