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Exhibit 99.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
VIALOG CORPORATION,
GENESYS SA
AND
ABCD MERGER CORP.
Dated as of October 1, 2000
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TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER.......................................... 3
SECTION 1.1 THE MERGER.................................. 3
SECTION 1.2 EFFECT ON COMMON STOCK...................... 4
SECTION 1.3 EXCHANGE OF CERTIFICATES.................... 7
SECTION 1.4 TRANSFER TAXES; WITHHOLDING................. 11
SECTION 1.5 STOCK OPTIONS; WARRANTS..................... 12
SECTION 1.6 LOST CERTIFICATES........................... 13
SECTION 1.7 MERGER CLOSING.............................. 13
SECTION 1.8 STOCK TRANSFER BOOKS........................ 14
SECTION 1.9 RESTRICTED STOCK............................ 14
SECTION 1.10 ANTIDILUTION PROTECTION FOR EXCHANGE RATIO.. 14
ARTICLE II THE SURVIVING CORPORATION.......................... 15
SECTION 2.1 ARTICLES OF ORGANIZATION.................... 15
SECTION 2.2 BY-LAWS..................................... 15
SECTION 2.3 OFFICERS AND DIRECTORS...................... 15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..... 16
SECTION 3.1 CORPORATE EXISTENCE AND POWER............... 16
SECTION 3.2 CORPORATE AUTHORIZATION..................... 17
SECTION 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS....... 18
SECTION 3.4 CAPITALIZATION.............................. 20
SECTION 3.5 SUBSIDIARIES................................ 21
SECTION 3.6 SEC DOCUMENTS............................... 23
SECTION 3.7 FINANCIAL STATEMENTS........................ 24
SECTION 3.8 ABSENCE OF UNDISCLOSED LIABILITIES.......... 24
SECTION 3.9 PROXY STATEMENT; FORM F-4................... 25
SECTION 3.10 ABSENCE OF MATERIAL ADVERSE CHANGES, ETC.... 26
SECTION 3.11 TAXES....................................... 29
SECTION 3.12 EMPLOYEE BENEFIT PLANS...................... 31
SECTION 3.13 LITIGATION; COMPLIANCE WITH LAWS............ 35
SECTION 3.14 LABOR MATTERS............................... 37
SECTION 3.15 CONTRACTS AND ARRANGEMENTS.................. 37
SECTION 3.16 ENVIRONMENTAL MATTERS....................... 38
SECTION 3.17 INTELLECTUAL PROPERTY....................... 41
SECTION 3.18 OPINION OF FINANCIAL ADVISOR................ 44
SECTION 3.19 BOARD RECOMMENDATION; VOTE REQUIRED......... 44
SECTION 3.20 STATE TAKEOVER LAWS......................... 45
SECTION 3.21 TAX TREATMENT............................... 45
SECTION 3.22 BROKERS OR FINDERS.......................... 45
SECTION 3.23 AFFILIATE TRANSACTIONS...................... 46
SECTION 3.24 INSURANCE................................... 46
SECTION 3.25 CUSTOMERS................................... 46
SECTION 3.26 BRIDGE CAPACITY AND LOCATIONS............... 47
SECTION 3.27 ACCOUNTS RECEIVABLE......................... 47
SECTION 3.28 ACCOUNTS PAYABLE............................ 48
SECTION 3.29 NOTES EXCHANGE OFFER........................ 48
SECTION 3.30 OWNERSHIP OF CAPITAL STOCK ................. 48
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TABLE OF CONTENTS
(continued)
Page
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB... 49
SECTION 4.1 CORPORATE EXISTENCE AND POWER......................... 49
SECTION 4.2 AUTHORIZATION......................................... 50
SECTION 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS................. 51
SECTION 4.4 CAPITALIZATION........................................ 52
SECTION 4.5 SUBSIDIARIES.......................................... 54
SECTION 4.6 PUBLIC DOCUMENTS...................................... 55
SECTION 4.7 FINANCIAL STATEMENTS.................................. 55
SECTION 4.8 ABSENCE OF UNDISCLOSED LIABILITIES.................... 57
SECTION 4.9 ABSENCE OF MATERIAL ADVERSE CHANGES, ETC.............. 57
SECTION 4.10 COMPANY PROXY STATEMENT; FORM F-4.................... 60
SECTION 4.11 TAXES................................................ 61
SECTION 4.12 LITIGATION; COMPLIANCE WITH LAWS..................... 62
SECTION 4.13 LABOR MATTERS........................................ 62
SECTION 4.14 CONTRACTS AND ARRANGEMENTS............................ 63
SECTION 4.15 EMPLOYEE BENEFIT PLANS . . . . ....................... 63
SECTION 4.16 ENVIRONMENTAL MATTERS................................. 64
SECTION 4.17 INTELLECTUAL PROPERTY................................. 65
SECTION 4.18 MERGER SUB'S OPERATIONS............................... 66
SECTION 4.19 TAX TREATMENT......................................... 66
SECTION 4.20 BROKERS OR FINDERS.................................... 66
SECTION 4.21 AFFILIATE TRANSACTIONS................................ 66
SECTION 4.22 CUSTOMERS............................................ 67
SECTION 4.23 INVESTMENT COMPANY.................................... 67
SECTION 4.24 STOCK EXCHANGE LISTING................................ 67
SECTION 4.25 FORM F-4.............................................. 67
SECTION 4.26 OWNERSHIP OF CAPITAL STOCK............................ 68
ARTICLE V COVENANTS OF THE PARTIES................................... 68
SECTION 5.1 CONDUCT OF THE BUSINESS OF THE COMPANY................ 68
SECTION 5.2 CONDUCT OF THE BUSINESS OF PARENT..................... 69
SECTION 5.3 SHAREHOLDERS' MEETING; PROXY MATERIAL................. 69
SECTION 5.4 ACCESS TO INFORMATION; CONFIDENTIALITY AGREEMENT...... 73
SECTION 5.5 NO SOLICITATION....................................... 74
SECTION 5.6 DIRECTOR AND OFFICER LIABILITY........................ 76
SECTION 5.7 COMMERCIALLY REASONABLE EFFORTS....................... 77
SECTION 5.8 CERTAIN FILINGS....................................... 78
SECTION 5.9 PUBLIC ANNOUNCEMENTS.................................. 79
SECTION 5.10 CERTAIN CONSENTS .................................... 80
SECTION 5.11 EMPLOYEE MATTERS...................................... 80
SECTION 5.12 TAX-FREE REORGANIZATION TREATMENT..................... 81
SECTION 5.13 SUPPLEMENTAL WARRANT AGREEMENT........................ 82
SECTION 5.14 PARENT SHAREHOLDERS' MEETING.......................... 82
SECTION 5.15 LISTING............................................... 83
SECTION 5.16 STATE TAKEOVER LAWS................................... 84
SECTION 5.17 CERTAIN NOTIFICATIONS................................. 84
SECTION 5.18 POOLING............................................... 84
SECTION 5.19 AFFILIATE AGREEMENTS.................................. 85
SECTION 5.20 LETTERS OF ACCOUNTANTS................................ 85
SECTION 5.21 VOTING AGREEMENTS..................................... 86
SECTION 5.22 SUPPLEMENTAL INFORMATION.............................. 86
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TABLE OF CONTENTS
(continued)
Page
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SECTION 5.23 PARENT BOARD OF DIRECTORS ............................ 87
SECTION 5.24 POST-CLOSING FINANCIAL STATEMENTS..................... 87
SECTION 5.25 FURTHER ASSURANCES ................................... 87
ARTICLE VI CONDITIONS TO THE MERGER.................................. 88
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS................ 88
SECTION 6.2 CONDITIONS TO THE COMPANY'S OBLIGATION TO CONSUMMATE
THE MERGER............................................ 89
SECTION 6.3 CONDITIONS TO PARENT'S AND MERGER SUB'S OBLIGATIONS
TO CONSUMMATE THE MERGER.............................. 91
ARTICLE VII TERMINATION.............................................. 92
SECTION 7.1 TERMINATION........................................... 92
SECTION 7.2 EFFECT OF TERMINATION................................. 96
SECTION 7.3 FEES.................................................. 96
ARTICLE VIII MISCELLANEOUS........................................... 100
SECTION 8.1 NOTICES............................................... 100
SECTION 8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES............ 101
SECTION 8.3 INTERPRETATION........................................ 102
SECTION 8.4 AMENDMENTS, MODIFICATION AND WAIVER................... 103
SECTION 8.5 SUCCESSORS AND ASSIGNS................................ 103
SECTION 8.6 SPECIFIC PERFORMANCE.................................. 103
SECTION 8.7 GOVERNING LAW; SUBMISSION TO JURISDICTION............. 104
SECTION 8.8 SEVERABILITY.......................................... 105
SECTION 8.9 THIRD PARTY BENEFICIARIES............................. 105
SECTION 8.10 ENTIRE AGREEMENT...................................... 106
SECTION 8.11 COUNTERPARTS; EFFECTIVENESS........................... 106
EXHIBITS
A - Amendments to Articles of Organization of the Surviving Corporation
B - Amendments to By-laws of the Surviving Corporation
C - Form of Parent Tax Representation Letter
D - Form of Company Tax Representation Letter
E - Form of Voting Agreement
F-1 - Form of Opinion of Marie Capela-Laborde
F-2 - Form of Opinion of Cleary, Gottlieb, Steen & Hamilton
F-3 - Form of Opinion of Cadwalader, Wickersham & Taft
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SCHEDULES
3.1 Company Qualifications
3.3(a) Company Agreements
3.5 (a) and (b) Company Subsidiaries
3.10 (e), (f), (g), and (h) Company Actions
3.11(a) Company Tax Matters
3.12 (a), (f), (i), and (j) Company Employee Benefit Plans
3.13 Company Litigation
3.14 Company Labor Matters
3.17 (a) and (g) Company Intellectual Property
3.22 Company Brokers or Finders
3.25 Company Customers
3.26 Company Bridge Capacity
4.1 Parent Qualifications
4.3 Parent Agreements
4.4 Parent Securities
4.5 (a) Parent Subsidiaries
4.5 (b) Parent Liens
4.8 Parent Liabilities
4.9 Parent Material Changes
4.11 (a) Parent Tax Matters
6.3(e) Employees Requested to Sign Employment Agreements
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<PAGE>
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of October
1, 2000 (this "Agreement"), by and among Vialog Corporation, a Massachusetts
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corporation (the "Company"), Genesys SA, a corporation (societe anonym)
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organized under the laws of France ("Parent"), and ABCD Merger Corp., a
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Massachusetts corporation and a direct wholly-owned subsidiary of Parent
("Merger Sub").
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W I T N E S S E T H
WHEREAS, Parent, Merger Sub and the Company and the respective Boards
of Directors thereof deem it advisable and in the best interests of their
respective corporations and the stockholders thereof to merge Merger Sub with
and into the Company pursuant to the provisions of the Business Corporation Law
of the Commonwealth of Massachusetts (the "Massachusetts BCL");
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WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company, and Parent as sole shareholder of Merger Sub, have each approved
this Agreement and the merger of Merger Sub with and into the Company, upon the
terms and subject to the conditions set forth herein, and in accordance with the
Massachusetts BCL, whereby each issued and outstanding share of common stock,
par value $.01 per share, of the Company (the "Common Stock") (other than shares
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of Common Stock owned, directly or indirectly, by the Company or by Merger Sub
immediately prior to the Effective Time (as defined in Section 1.1(b) hereof)),
will, upon the terms and subject to the conditions and limitations set forth
herein, be converted into a fraction of a Parent American Depositary Share
(collectively, the "ADSs"), each of which ADS represents one-half of a share,
----
nominal value 30 French francs per share,
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of Parent (the "Parent Shares") in accordance with the provisions of Article I
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of this Agreement;
WHEREAS, as a condition and inducement to Parent's and Merger Sub's
entering into this Agreement and incurring the obligations set forth herein,
concurrently with the execution and delivery of this Agreement, Parent is
entering into a Voting Agreement with certain shareholders of the Company, dated
the date hereof (the "Voting Agreement"), pursuant to which, among other things,
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such shareholders have agreed, subject to the terms and conditions contained
therein, to vote all shares of Common Stock then owned by such shareholders to
approve and adopt this Agreement and the transactions contemplated hereby, and
have granted to Parent a proxy coupled with an interest to vote their shares of
Common Stock upon the terms and subject to the conditions set forth therein; and
WHEREAS, for U.S. federal income tax purposes, the Merger (as defined
in Section 1.1(a) hereof) is intended to qualify as a "reorganization" under the
provisions of Section 368(a) of the United States Internal Revenue Code of 1986,
as amended (the "Code").
----
NOW, THEREFORE, in consideration of the representations, warranties,
covenants, agreements and conditions set forth herein, and intending to be
legally bound hereby, the parties hereto agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER.
(a) Upon the terms and subject to the conditions of this Agreement,
and in accordance with the Massachusetts BCL, at the Effective Time (as defined
in Section 1.1(b) hereof), Merger Sub shall be merged (the "Merger") with and
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into the Company, whereupon the separate existence of Merger Sub shall cease,
and the Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation") and shall continue to be governed by the laws of the
----------------------
Commonwealth of Massachusetts and shall continue under the name "Patriot
Corporation."
(b) Concurrently with the Closing (as defined in Section 1.7 hereof),
the Company, Parent and Merger Sub shall cause the Merger to be consummated by
filing, as soon as practicable after the Closing, this Agreement or articles of
merger (the "Articles of Merger") with the State Secretary of the Commonwealth
------------------
of Massachusetts (the "Secretary of State") in accordance with the relevant
------------------
provisions of the Massachusetts BCL. The Merger shall become effective on the
date and time at which this Agreement or the Articles of Merger have been duly
filed with the Secretary of State or at such other date and time as is agreed in
writing between the parties and specified in the Articles of Merger, and such
date and time is hereinafter referred to as the "Effective Time."
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(c) The Merger shall have the effects set forth in the applicable
provisions of the Massachusetts BCL. Without limiting the generality of the
foregoing, and subject thereto, from and after the Effective Time, the Surviving
Corporation shall possess all properties, rights, privileges, immunities, powers
and franchises and be subject to all of the obligations, restrictions,
liabilities, debts and duties of the Company and Merger Sub.
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SECTION 1.2 EFFECT ON COMMON STOCK.
(a) CANCELLATION OF SHARES OF COMMON STOCK. At the Effective Time,
by virtue of the Merger and without any action on the part of the holders
thereof, each share of Common Stock held by the Company as treasury stock and
each share of Common Stock owned by Merger Sub immediately prior to the
Effective Time shall automatically be cancelled and retired and cease to exist,
and no consideration or payment shall be delivered therefor or in respect
thereto. All shares of Common Stock to be converted into ADSs pursuant to this
Section 1.2 shall, by virtue of the Merger and without any action on the part of
the holders thereof, cease to be outstanding, be cancelled and retired and cease
to exist, and each holder of a certificate (representing prior to the Effective
Time any such shares of Common Stock) shall thereafter cease to have any rights
with respect to such shares of Common Stock, except the right to receive (i) the
ADSs representing Parent Shares into which such shares of Common Stock have been
converted, (ii) any dividend and other distributions in accordance with Section
1.3(c) hereof and (iii) any cash, without interest, to be paid in lieu of any
fraction of an ADS in accordance with Section 1.3(d) hereof.
(b) CAPITAL STOCK OF MERGER SUB. At the Effective Time, by virtue of
the Merger and without any action on the part of the holders thereof, each share
of common stock of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into 140,000 shares of common stock, par value
$.01 per share, of the Surviving Corporation with the same rights, powers and
privileges as the shares so converted and such shares shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
(c) CONVERSION OF SHARES OF COMMON STOCK. At the Effective Time, by virtue
of the Merger and without any action on the part of the holders thereof, subject
to Section 1.3(d) hereof, each share of Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares of
4
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Common Stock referred to in the first sentence of Section 1.2(a) hereof and
Dissenting Shares (as defined in Section 1.2(d)) shall, by virtue of the Merger
and without any action on the part of the holder thereof, be converted into the
right to receive 0.5126 ADSs (the "Exchange Ratio")(which, together with any
--------------
cash in lieu of a fractional ADS paid pursuant to Section 1.3(d) hereof, shall
be the "Merger Consideration"). Notwithstanding the foregoing, (i) if the
--------------------
"Effective Time Parent Share Price" (as hereafter defined) shall be greater than
$59.5092, the Exchange Ratio shall be 1.15 multiplied by one over the fraction
representing the number of Parent Shares per ADS, multiplied by the amount
determined by dividing $13.2616 by the Effective Time Parent Share Price, and
(ii) if the Effective Time Parent Share Price shall be less than $43.9851, the
Exchange Ratio shall be 0.85 multiplied by one over the fraction representing
the number of Parent Shares per ADS, multiplied by the amount determined by
dividing $13.2616 by the Effective Time Parent Share Price; provided that (x) if
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the Effective Time Parent Share Price is less than $33.6356, the Exchange Ratio
shall be 0.6703; and (y) if the Effective Time Parent Share Price is greater
than $69.8587, the Exchange Ratio shall be 0.4366. In any case, the Exchange
Ratio shall be rounded to the nearest 1/10,000 of a share.
For purposes of this Agreement, the "Signing Date Parent Share Price Equivalent"
------------------------------------------
shall be the U.S. dollar equivalent (based on the spot exchange rate between the
U.S. dollar and the euro for each relevant date, as published in the Wall Street
-----------
Journal) of the volume-weighted average (as mutually determined by Parent and
-------
the Company) of the closing share prices (expressed in euros) of the Parent
Shares on the Nouveau Marche of the Paris BourseSBF S.A. (the "Nouveau Marche")
based on the closing share prices and trading volumes reported by Reuters (or,
if not so reported, as reported by any other authoritative source mutually
agreed upon by Parent and the Company) on the ten (10) consecutive trading days
ending on the second trading day immediately prior to the earlier of (i) the
execution of this
5
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Agreement and (ii) the first public announcement of the Merger by any of the
parties to this Agreement. For purposes of this Agreement, the "Effective Time
Parent Share Price" shall be the U.S. dollar equivalent (based on the spot
exchange rate between the dollar and the euro for each relevant date as
published in the Wall Street Journal) of the volume-weighted average (as
-------------------
mutually determined by Parent and the Company) of the closing prices of the
Parent Shares on the Nouveau Marche for the ten (10) consecutive trading days
ending on the second trading day prior to the date of the Special Meeting (so
long as the Closing Date occurs within five business days of the Special Meeting
or, if the Closing Date is more than five business days after the Special
Meeting, the Closing Date), based on the closing share prices and trading
volumes reported by Reuters (or, if not so reported, as reported by any other
authoritative source mutually agreed upon by Parent and the Company). All ADSs
issued as part of the Merger Consideration shall be validly issued, fully paid
and non-assessable.
(d) DISSENTING SHARES. (i) Notwithstanding any provision of this
Agreement to the contrary, any shares of Common Stock held by a holder who has
demanded and perfected dissenters' rights for such shares in accordance with the
Massachusetts BCL and who, as of the Effective Time, has not effectively
withdrawn or lost such dissenters' rights ("Dissenting Shares") shall not be
-----------------
converted into or represent a right to receive ADSs pursuant to Section 1.2(c),
but the holder thereof shall only be entitled to such rights as are granted by
the Massachusetts BCL, and any such payments for such Dissenting Shares shall be
made by the Company with its own funds.
(ii) Notwithstanding the provisions of subsection (i) above,
if any holder of shares of Common Stock who demands purchase of such shares
under the Massachusetts BCL shall effectively withdraw or lose (through failure
to perfect or otherwise) such holder's dissenters' rights, then, as
of the later of (A) the Effective Time or (B) the occurrence of such event, such
holder's shares shall automatically be converted into and represent only
6
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the right to receive ADSs and cash in lieu of any fractional ADSs as provided
herein, without interest thereon, upon surrender of the certificate formerly
representing such shares.
(iii) The Company shall give Parent (A) prompt notice of its
receipt of any written demands for purchase of any shares of Common Stock,
withdrawals of such demands, and any other instruments relating to the Merger
served pursuant to the Massachusetts BCL and received by the Company and (B) the
opportunity to participate in all negotiations and proceedings with respect to
demands for purchase of any shares of Common Stock under the Massachusetts BCL.
The Company shall not, except with the prior written consent of Parent or as may
be required under applicable laws (in which case Company shall provide prior
notice to Parent), voluntarily make any payment with respect to any demands for
the purchase of Common Stock or offer to settle or settle any such demands.
SECTION 1.3 EXCHANGE OF CERTIFICATES.
(a) Prior to the mailing of the Proxy Statement (as defined in
Section 5.3(c) hereof) Bank of New York or such other bank, trust company,
Person or Persons as shall be designated by Parent and be reasonably acceptable
to the Company shall act as the depositary and exchange agent for the delivery
of the ADSs in exchange for shares of Common Stock (the "Exchange Agent") in
--------------
connection with the Merger. At or promptly following the Effective Time, Parent
shall deposit, or cause to be deposited, with the Exchange Agent the receipts
("ADRs"), representing ADSs, for the benefit of the holders of shares of Common
------
Stock which are converted into ADSs pursuant to Section 1.2(c) hereof (together
with cash as required to (i) pay any dividends or distributions with respect
thereto in accordance with Section 1.3(c) hereof and (ii) make payments in lieu
of fractional ADSs, pursuant to Section 1.3(d) hereof (collectively, such cash
is hereinafter referred to as the "Exchange Fund")). To the extent required, the
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Exchange Agent will
7
<PAGE>
requisition from the depositary for the ADSs (the "Depositary"), from time to
-----------
time, such number of ADSs as are issuable in exchange for shares of Common Stock
properly delivered to the Exchange Agent. For purposes of this Agreement,
"Person" means any natural person, firm, individual, corporation, limited
------
liability company, partnership, association, joint venture, company, business
trust, trust or any other entity or organization, whether incorporated or
unincorporated, including a government or political subdivision or any agency or
instrumentality thereof.
(b) As of or promptly following the Effective Time, the Surviving
Corporation shall cause the Exchange Agent to mail (and to make available for
collection by hand delivery) to each holder of record of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding shares of Common Stock (other than Dissenting Shares) (the
"Certificates"), (i) a letter of transmittal (which shall specify that delivery
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shall be effected, and risk of loss and title to the Certificate or Certificates
shall pass, only upon proper delivery of the Certificate or Certificates to the
Exchange Agent in the form and with such other provisions as Parent and the
Company may reasonably specify) and (ii) instructions for effecting the
surrender of the Certificates in exchange for a certificate or certificates
representing ADRs evidencing that number of whole ADSs, if any, into which the
number of shares of Common Stock previously represented by such Certificate
shall have been converted pursuant to this Agreement (which instructions shall
provide that at the election of the surrendering holder, Certificates may be
surrendered, and ADRs evidencing the ADSs in exchange therefor collected, by
hand delivery). Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with a letter of transmittal duly completed and validly executed
in accordance with the instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such Certificate or
Certificates shall be entitled to receive, in exchange therefor, ADRs evidencing
the number of
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whole ADSs for each share of Common Stock formerly represented by such
Certificate or Certificates, and such ADRs shall be mailed (or made available
for collection by hand delivery if so elected by the surrendering holder) within
fifteen business days of receipt of the Certificate or Certificates (but in no
case prior to the Effective Time), and the Certificate or Certificates so
surrendered shall be forthwith cancelled. The Exchange Agent shall accept such
Certificate or Certificates upon compliance with such reasonable terms and
conditions as the Exchange Agent may impose to effect an orderly exchange
thereof in accordance with normal exchange practices. No interest shall be paid
or accrued, for the benefit of holders of the Certificates, on the cash payable
pursuant to subsections (c) and (d) below upon the surrender of the
Certificates.
(c) Until such Certificate is surrendered in accordance with this
Article I, no dividends or other distributions that are payable to holders of
Parent Shares with a record date on or after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the ADSs represented
thereby by reason of the conversion of shares of Common Stock pursuant to
Sections 1.2(c) hereof and no cash payment in lieu of fractional ADSs shall be
paid to any such holder pursuant to Section 1.3(d) hereof. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be paid, without interest, to the person in whose name the ADSs
representing such securities are registered (i) at the time of such surrender,
the amount of any cash payable in lieu of fractional ADSs to which such holder
is entitled pursuant to Section 1.3(d) hereof and the proportionate amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to ADSs, and (ii) at the appropriate payment date
or as promptly as practicable thereafter, the proportionate amount of dividends
or other distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender payable with
respect to such ADSs.
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(d) Notwithstanding any other provision of this Agreement, no
fraction of an ADS will be issued and no dividend or other distribution, stock
split or interest with respect to Parent Shares shall relate to any fractional
ADS, and any such fractional interest shall not entitle the owner thereof to
vote or to any rights as a security holder of the ADSs. In lieu of any such
fractional security, each holder of shares of Common Stock otherwise entitled to
a fraction of an ADS will be entitled to receive in accordance with the
provisions of this Section 1.3 from the Exchange Agent a cash payment equal to
the product obtained by multiplying such fraction of an ADS by the Effective
Time Parent Share Price and the fraction representing the number of Parent
Shares per ADS; provided, however, that all fractional share amounts held by a
-------- -------
holder of Common Stock shall be aggregated and cash payments made hereunder for
fractional shares shall only be made for the fractional share amount remaining
after such aggregation.
(e) Any portion of the Exchange Fund which remains undistributed to
the holders of the Certificate or Certificates for one year after the Effective
Time shall be delivered, upon demand, to a depositary or another agent in the
United States designated by Parent and reasonably acceptable to the Company and
any holders of shares of Common Stock prior to the Merger who have not
theretofore complied with this Article I shall thereafter look for payment of
their claim, only to such depositary or agent for their claim for ADSs, any cash
(without interest) to be paid in lieu of any fractional ADSs, and any dividends
or other distributions with respect to ADSs to which such holders may be
entitled.
(f) None of Parent, Merger Sub, the Company or the Exchange Agent
shall be liable to any Person in respect of any ADSs held in the Exchange Fund
(and any cash, dividends or other distributions payable in respect thereof)
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any Certificate or Certificates shall not have been
surrendered prior to one year after the
10
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Effective Time (or immediately prior to such earlier date on which (i) any ADSs,
(ii) any cash in lieu of fractional ADSs or (iii) any dividends or distributions
with respect to ADSs in respect of such Certificate or Certificates would
otherwise escheat to or become the property of any Governmental Entity (as
defined in Section 3.3(b) hereof), any such ADSs, cash, dividends or
distributions in respect of such Certificate or Certificates shall, to the
extent permitted by applicable law, become the property of Parent, free and
clear of all claims or interest of any Person previously entitled thereto.
SECTION 1.4 TRANSFER TAXES; WITHHOLDING. If any certificate for an ADS
is to be issued to, or cash is to be remitted to, a Person (other than the
Person in whose name the Certificate surrendered in exchange therefor is
registered), it shall be a condition of such exchange that the Certificate or
Certificates so surrendered shall be properly endorsed and otherwise in proper
form for transfer and that the Person requesting such exchange shall pay to the
Exchange Agent any transfer or other Taxes (as defined in Section 3.11(b)
hereof) required by reason of the issuance of the ADSs (or cash in lieu of
fractional ADSs) to a Person other than the registered holder of the Certificate
or Certificates so surrendered, or shall establish to the satisfaction of the
Exchange Agent that such Tax either has been paid or is not applicable. Parent
or the Exchange Agent shall be entitled to deduct and withhold from the ADSs (or
cash in lieu of fractional ADSs) otherwise payable pursuant to this Agreement to
any holder of shares of Common Stock such amounts as Parent or the Exchange
Agent are required to deduct and withhold under the Code, or any provision of
state, local or foreign Tax law, with respect to the making of such payment.
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<PAGE>
SECTION 1.5 STOCK OPTIONS; WARRANTS.
(a) Each option granted to a Company employee, consultant or
director of the Company or any Subsidiary of the Company to acquire shares of
Common Stock, which is outstanding immediately prior to the Effective Time
("Option") shall remain outstanding and continue to be effective in accordance
------
with its terms. Upon exercise of any such Option, the Person entitled to receive
shares of Common Stock shall be deemed to automatically offer to exchange such
Common Stock for a number of ADSs, determined by multiplying (i) the number of
shares of Common Stock to be received upon such exercise by (ii) the Exchange
Ratio (rounded down to the nearest whole ADS), provided, however, that in the
-------- -------
case of an Option that is intended to qualify as an incentive stock option under
Section 422 of the Code, the conversion formula shall be adjusted if necessary
to conform with Section 424(a) of the Code. The aggregate exercise price payable
by any Person who holds an Option immediately prior to the Effective Time shall
be reduced by an amount equal to the product of (w) the fractional number of
ADSs not delivered as a result of the rounding-down required by clause (ii) of
the preceding sentence, (x) the Exchange Ratio and (y) the average of the
closing prices of the Parent Shares on the Nouveau Marche during the period of
ten trading days ending two trading days prior to the Closing Date and (z) the
fraction of a Parent Share represented by an ADS.
(b) Each of the warrants of the Company expiring November 15, 2001 to
purchase 10.0886 shares of Common Stock at an exercise price of $.01 per share
(the "Warrants"), which is outstanding immediately prior to the Effective Time,
shall remain outstanding and continue to be effective in accordance with its
terms and the terms of the supplemental warrant agreement that is required to be
entered into with respect to the Warrants prior to the Effective Time pursuant
to Section 5.01 of the Warrant Agreement dated as of November 12, 1997 (the
"Company Warrant Agreement") between the Company and State Street Bank and Trust
Company, as Warrant Agent. Following the
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Effective Time, each Warrant shall represent the right to acquire Parent ADSs in
accordance with the Company Warrant Agreement and the supplemental warrant
agreement.
(c) Parent shall take such corporate action as may be necessary or
appropriate to, as soon as practicable, but in no event more than five business
days following the Effective Time, file a registration statement on Form F-1 (or
any successor or other appropriate form) with respect to the ADSs deliverable
upon the exchange of Common Stock received upon exercise of an Option or Warrant
to the extent such registration is required under applicable law in order for
such ADSs to be sold without restriction in the United States, and Parent shall
use commercially reasonable efforts to maintain the effectiveness of such
registration statement for so long as any Option or Warrant remains outstanding.
SECTION 1.6 LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the ADSs to which the holder thereof is entitled pursuant to this
Article I.
SECTION 1.7 MERGER CLOSING. Subject to the satisfaction or waiver of the
conditions set forth in Article VI hereof, the closing of the Merger (the
"Closing") will take place at 10:00 a.m., New York City time, on a date to be
--------
specified by the parties hereto, and no later than the second business day after
the satisfaction or waiver of the conditions set forth in Article VI hereof, at
the offices of Breslow & Walker, LLP, 767 Third Avenue, New York,
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N.Y. 10017, unless another time, date or place is agreed to by the parties
hereto (such date, the "Closing Date").
------------
SECTION 1.8 STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Common Stock thereafter on the records of
the Company, except upon the exercise of Options in accordance with the terms of
this Agreement. From and after the Effective Time, the holders of Certificates
shall cease to have any rights with respect to shares of Common Stock, except as
otherwise provided in this Agreement or by applicable law. If, after the
Effective Time, shares of Common Stock are presented to the Surviving
Corporation, they shall be canceled and exchanged for cash or certificates
representing ADSs, in accordance with the procedures set forth herein.
SECTION 1.9 RESTRICTED STOCK. Any unvested shares of restricted stock
existing at the Effective Time shall be converted into ADSs pursuant to Section
1.2(c) hereof and shall continue to vest upon the same terms and conditions as
under the applicable Plan and/or restricted stock agreement.
SECTION 1.10 ANTIDILUTION PROTECTION FOR EXCHANGE RATIO. If, between the
date of this Agreement and the Effective Time, the outstanding Parent Shares or
shares of Common Stock of the Company shall have been changed into a different
number of shares or a different class by reason of any reclassification,
recapitalization, stock split, combination or exchange of shares or if a stock
dividend or dividend payable in any other securities of the Company or Parent
shall be declared with a record date within such period, or if any similar event
shall have occurred, the Exchange Ratio shall be appropriately adjusted to
provide to the holders of Common Stock of the
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Company the same economic effect as contemplated by this Agreement prior to such
event.
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.1 ARTICLES OF ORGANIZATION. At the Effective Time and without
any further action on the part of the Company or Merger Sub, the Articles of
Organization of the Company, as in effect immediately prior to the Effective
Time, shall be amended as of the Effective Time in the manner set forth in
Exhibit A and, as so amended, such articles of organization shall be the
Articles of Organization of the Surviving Corporation until thereafter amended
as provided by law and by such Articles of Organization of the Surviving
Corporation.
SECTION 2.2 BY-LAWS. At the Effective Time, and without any further
action on the part of the Company or Merger Sub, the by-laws of the Company as
in effect at the Effective Time shall be amended as of the Effective Time in the
manner set forth in Exhibit B and, as so amended and restated, such by-laws
shall be the by-laws of the Surviving Corporation until thereafter amended in
accordance with applicable law, the Articles of Organization of such entity and
the by-laws of such entity.
SECTION 2.3 OFFICERS AND DIRECTORS.
(a) From and after the Effective Time, the persons named below shall
be the officers of the Surviving Corporation, until their respective successors
are duly elected or appointed and qualified in accordance with applicable law.
Name Office
---- ------
Kim Mayyasi Chief Executive Officer
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Margie Medalle President
Kevin Fletcher Clerk
(b) The Board of Directors of the Surviving Corporation effective as
of, and immediately following, the Effective Time shall consist of the directors
of Merger Sub immediately prior to the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as follows:
SECTION 3.1 CORPORATE EXISTENCE AND POWER. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, and has all corporate powers and all governmental
licenses, authorizations, consents and approvals (collectively, "Licenses")
--------
required to conduct its business as now conducted except for failures to have
any such License which would not, in the aggregate, have a Company Material
Adverse Effect (as defined below). The Company is duly qualified to do business
as a foreign corporation and is in good standing in those jurisdictions
specified in Schedule 3.1 to this Agreement, which are the only jurisdictions
where the character of the property owned, leased or operated by it or the
nature of its activities makes such qualification necessary, except in such
jurisdictions where failures to be so qualified would not reasonably be expected
to, in the aggregate, have a Company Material Adverse Effect. As used herein,
the term "Company Material Adverse Effect" means a material adverse effect on
-------------------------------
the financial condition, business, assets, prospects or results of operations of
the Company and its Subsidiaries, taken as a whole; provided, however, that in
-------- -------
no event shall any effect that results from (x) the public announcement or
16
<PAGE>
pendency of the transactions contemplated hereby or any actions taken in
compliance with this Agreement, (y) changes affecting the audio, video and
internet teleconferencing industries generally and which do not
disproportionately materially affect the Company or (z) changes affecting the
United States economy generally, constitute a Company Material Adverse Effect.
The Company has heretofore furnished to Parent true and complete copies of the
Articles of Organization and the by-laws of the Company as in effect on the date
hereof. The Company's Articles of Organization and bylaws are in full force and
effect. The Company is not in violation of any of the provisions of the
Company's Articles of Organization or its bylaws.
SECTION 3.2 CORPORATE AUTHORIZATION. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and, subject
to approval of the Company's shareholders, as set forth in Section 3.19 hereof
and as contemplated by Section 5.3 hereof, to perform its obligations hereunder
and consummate the Merger and the other transactions contemplated hereunder. The
execution and delivery of this Agreement and the performance of its obligations
hereunder and the consummation of the Merger and the other transactions
contemplated hereby have been duly and validly authorized, and this Agreement
has been approved, by the Board of Directors of the Company and no approvals,
authorizations or other corporate proceedings, on the part of the Company, other
than the approval of the Company's shareholders, are necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the Merger and the other transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Company and, upon the execution and
delivery of this Agreement by Parent and Merger Sub, will constitute a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
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insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights of creditors generally.
SECTION 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Neither the execution and delivery of this Agreement nor the
performance by the Company of its obligations hereunder will (i) conflict with
or result in any breach of any provision of the Articles of Organization or the
by-laws of the Company; (ii) except as set forth in Schedule 3.3(a) to this
Agreement, result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration or obligation to repurchase, repay,
redeem or acquire or any similar right or obligation) under any of the terms,
conditions or provisions of any note, mortgage, letter of credit, other evidence
of indebtedness, guarantee, license, lease or agreement or similar instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their respective assets may be bound (except that
the Company will be required to repay its outstanding $75,000,000 12 3/4% Series
B Senior Notes due November 15, 2001 (the "High Yield Notes") upon consummation
----------------
of the Merger if the Company does not satisfy the debt incurrence test contained
in Section 4.04(b) of the Indenture under which the High-Yield Notes were issued
(the "Company Indenture") or, if the Company does satisfy such test, will be
required to offer to purchase the High-Yield Notes not later than 60 days
following the Effective Time) or (iii) assuming that the filings, registrations,
notifications, authorizations, consents and approvals referred to in subsection
(b) below have been obtained or made, as the case may be, violate any order,
injunction, decree, statute, rule or regulation of any Governmental Entity to
which the Company or any of its Subsidiaries is subject, excluding from the
foregoing clauses (ii) and (iii) such requirements, defaults, breaches, rights
or violations that would not, in the
18
<PAGE>
aggregate, reasonably be expected to have a Company Material Adverse Effect
(without giving effect to clause (x) of the definition of Company Material
Adverse Effect) and would not reasonably be expected to have a material adverse
effect on, or materially delay, the ability of the Company to perform its
obligations hereunder.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any government or any agency, court, tribunal,
commission, board, bureau, department, political subdivision or other
instrumentality of any government (including any regulatory or administrative
agency), whether federal, state, multinational (including, but not limited to,
the European Community), provincial, municipal, domestic or foreign (each, a
"Governmental Entity") is required in connection with the execution and delivery
--------------------
of this Agreement by the Company or the performance by the Company of its
obligations hereunder, except (i) the filing of the Articles of Merger in
accordance with the Massachusetts BCL and filings to maintain the good standing
of the Surviving Corporation; (ii) compliance with any applicable requirements
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act"), the EC Merger Regulations (as
-------
defined below) or any foreign laws regulating competition, antitrust, investment
or exchange controls; (iii) compliance with any applicable requirements of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act"), and the Securities Exchange Act of 1934, as amended, and
--------------
the rules and regulations thereunder (the "Exchange Act"); (iv) compliance with
------------
any applicable requirements of state blue sky or takeover laws and (v) such
other consents, approvals, orders, authorizations, notifications, registrations,
declarations and filings, the failure of which to be obtained or made (A) would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect and (B) would not have a material adverse effect on, or
materially delay, the ability of the Company to perform its
19
<PAGE>
obligations hereunder. For purposes of this Agreement, "EC Merger Regulations"
---------------------
mean Council Regulation (EEC) No. 4064/89 of December 21, 1989 on the Control of
Concentrations Between Undertakings, 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.
SECTION 3.4 CAPITALIZATION. The authorized capital stock of the Company
consists of 30,000,000 shares of Common Stock and 10,000,000 shares of preferred
stock, par value $.01 per share, of the Company (the "Preferred Stock"). As of
---------------
September 29, 2000, there were (i) 9,532,676 shares of Common Stock issued and
9,522,045 shares of Common Stock outstanding, (ii) 10,631 shares of Common Stock
held in treasury, (iii) an aggregate of 4,027,022 shares of Common Stock
reserved for issuance upon exercise of options or warrants, (iv) 36,877 issued
and outstanding Warrants and (v) no shares of Preferred Stock issued and
outstanding. All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable and were
not issued in violation of any preemptive rights. As of September 29, 2000,
there were outstanding Options to purchase 2,411,136 shares of Common Stock. The
Company has provided to Parent schedules detailing each outstanding Option, the
name of the holder of such Option, the number of shares of Common Stock subject
to such Option, the exercise price of such Option and the vesting schedule of
such Option, including the extent vested to date and whether the exercisability
of such Option will be accelerated and become exercisable by the transactions
contemplated by this Agreement. Except as set forth in this Section 3.4 and
except for changes since September 29, 2000 resulting from the exercise of
Options outstanding on such date, there are outstanding (i) no shares of capital
stock or other voting securities of the Company, (ii) no securities of the
Company or any Subsidiary of the Company convertible into or
20
<PAGE>
exchangeable for shares of capital stock or voting securities of the Company and
(iii) no options or other rights to acquire from the Company, and no obligation
of the Company to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of the
Company (the items in the preceding clauses (i), (ii) and (iii) being referred
to collectively as the "Company Securities"). At the date of this Agreement, the
------------------
number of shares of Common Stock issued and outstanding or deemed to be issued
and outstanding on a "fully-diluted" basis, after giving effect to the assumed
issuance of shares of Common Stock upon the exercise of Options and Warrants
(taking such Options and Warrants into account on the "treasury method" using
the price per share of Common Stock utilized in calculating the Exchange Ratio)
is 11,402,774 shares of Common Stock. There are no outstanding obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any Company Securities. No Subsidiary of the Company owns any capital
stock or other voting securities of the Company. There are no outstanding
contractual obligations of the Company to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
other Person. Except as described in the final prospectus dated February 5, 1999
for the initial public offering of 4,867,826 shares of Common Stock, the Company
has not agreed to register any Company Securities under the Securities Act or
under any state securities law or granted registration rights to any person or
entity (which rights are currently exercisable). The Company does not know of
any person who beneficially owns (within the meaning of Rule 13d-3 under the
Exchange Act) more than 5% of the outstanding Common Stock, except for John
Hassett.
SECTION 3.5 SUBSIDIARIES.
(a) Each Subsidiary of the Company that is actively engaged in any
business or owns any material assets (each, an "Active Company
--------------
21
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Subsidiary") (i) is a corporation duly incorporated, validly existing and in
----------
good standing under the laws of its jurisdiction of incorporation, (ii) has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to conduct its business as now conducted and
(iii) is duly qualified to do business as a foreign corporation and is in good
standing in those jurisdictions specified in Schedule 3.5(a) to this Agreement
which are the only jurisdictions where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary,
except for those jurisdictions where any failures to be so qualified would not,
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect. For purposes of this Agreement, "Subsidiary" means with respect to any
Person, any ---------- corporation or other legal entity of which such Person
owns, directly or indirectly, more than 50% of the outstanding stock or other
equity interests, the holders of which are entitled to vote for the election of
the board of directors or other governing body of such corporation or other
legal entity. All Active Company Subsidiaries and their respective jurisdictions
of incorporation and the percentage of each such Subsidiary's outstanding
capital stock or equity interest owned by the Company are accurately identified
in Schedule 3.5 to this Agreement. The Company does not own, directly or
indirectly, any capital stock or other equity interest in any corporation,
partnership, joint venture or other entity or enterprise, except for the Active
Company Subsidiaries.
(b) Except as set forth in Schedule 3.5(b) to this Agreement, (i) all
of the outstanding shares of capital stock of each Subsidiary of the Company are
duly authorized, validly issued, fully paid and nonassessable, and such shares
are owned by the Company or by a Subsidiary of the Company free and clear of any
Liens (as defined hereafter) or limitations on voting rights; (ii) there are no
subscriptions, options, warrants, calls, rights, convertible securities or other
agreements or commitments of any character
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<PAGE>
relating to the issuance, transfer, sale, delivery, voting or redemption
(including any rights of conversion or exchange under any outstanding security
or other instrument) for any of the capital stock or other equity interests of
any of such Subsidiaries; and (iii) there are no agreements requiring the
Company or any of its Subsidiaries to make contributions to the capital of, or
lend or advance funds to, any Subsidiaries of 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 3.6 SEC DOCUMENTS. The Company has timely filed with the
Securities and Exchange Commission (the "SEC") all required reports, proxy
---
statements, registration statements, forms and other documents required to be
filed by it with the SEC since February 5, 1999 (the "Company SEC Documents").
---------------------
As of their respective dates, and giving effect to any amendments thereto, the
Company SEC Documents (including any financial statements and schedules included
therein) complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the applicable rules
and regulations of the SEC promulgated thereunder, each as in effect on the date
so filed, and none of the Company SEC Documents, when filed (or, if amended or
superseded by a filing prior to the date hereof, then on the date of such
filing), contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. No forms, reports and documents filed after the date of
this Agreement and prior to the Effective Time by the Company will contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading. No
Subsidiary
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of the Company is subject to the periodic reporting requirements of the Exchange
Act or is required to file any form, report or other document with the SEC, the
American Stock Exchange, Inc. (the "AmEx") or any other stock exchange or
Governmental Entity.
SECTION 3.7 FINANCIAL STATEMENTS. The financial statements of the
Company (including, in each case, any notes and schedules thereto) included in
the Company SEC Documents (a) were prepared from the books and records of the
Company and its Subsidiaries, (b) comply as to form in all material respects
with all applicable accounting requirements and the rules and regulations of the
SEC with respect thereto, (c) are in conformity with generally accepted
accounting principles in the United States ("U.S. GAAP"), applied on a
consistent basis (subject to normal and recurring year-end audit adjustments in
the case of unaudited statements, as permitted by Form 10-Q under the Exchange
Act) during the periods involved (except in the case of audited financial
statements, as set forth in the notes thereto) and (d) fairly present, in all
material respects, the consolidated financial position of the Company and its
consolidated Subsidiaries as of the respective dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, for the absence of
footnotes and to normal and recurring year-end audit adjustments which were not
and are not expected to be, individually or in the aggregate, material in
amount).
SECTION 3.8 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the
extent disclosed or reserved against on the balance sheet of the Company as of
December 31, 1999 included in the Company SEC Documents filed prior to the date
hereof, and except for liabilities and obligations incurred since December 31,
1999 in the ordinary course of business consistent with prior practice, neither
the Company nor any of its Subsidiaries has incurred any
24
<PAGE>
liabilities or obligations of any nature (whether absolute, accrued, contingent
or otherwise and whether due or to become due) that, individually or in the
aggregate, have had or could have a Company Material Adverse Effect. Without
limiting the generality of the foregoing, the Company's reserves for
restructuring charges at June 30, 2000 are adequate to provide for the payment
of all remaining costs and expenses incurred or anticipated to be incurred by
the Company or any of its Subsidiaries in connection with (i) the consolidation
of its Atlanta, Georgia and Montgomery, Alabama, Operating Centers in 1998 and
(ii) the consolidation of its Oradell, New Jersey, Danbury, Connecticut, Palm
Springs, California and Houston, Texas Operating Centers in 1999.
SECTION 3.9 PROXY STATEMENT; FORM F-4.
(a) None of the information contained or incorporated by reference in
the Proxy Statement (defined in Section 5.3(c)) (and any amendments thereof or
supplements thereto) will, at the date the Proxy Statement is first mailed to
the shareholders of the Company and at the time of the Special Meeting (defined
in Section 5.3(a)), contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by the Company with
respect to statements made or omitted in the Proxy Statement relating to Parent
or Merger Sub based on information supplied by Parent in writing for inclusion
in the Proxy Statement. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated thereunder, except that no representation is made by the
Company with respect to the statements made or omitted in the Proxy Statement
relating to Parent or Merger Sub based on information supplied by Parent in
writing for inclusion in the Proxy Statement.
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(b) None of the information supplied or to be supplied by the Company
in writing for inclusion or incorporation by reference in the registration
statement on Form F-4 (and/or such other form as may be applicable and used) to
be filed with the SEC in connection with the issuance of ADSs and the underlying
Parent Shares by reason of the transactions contemplated by this Agreement (such
registration statement, as it may be amended or supplemented, is herein referred
to as the "Form F-4") will, with respect to information relating to the Company,
--------
at the time the Form F-4 is filed with the SEC, and at any time it is amended or
supplemented or at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. No
representation is made by the Company with respect to the statements made or
omitted in the Form F-4 based on information supplied by Parent or Merger Sub in
writing for inclusion therein.
(c) None of the information supplied or to be supplied by the Company
in writing for inclusion or incorporation by reference in the Parent Listing
Prospectus (as defined in Section 4.3 hereof) will, with respect to information
relating to the Company, at the time the visa on the Parent Listing Prospectus
is granted by the COB, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. No representation is made by the Company with respect to
the statements made or omitted in the Parent Listing Prospectus based on
information supplied by Parent or Merger Sub in writing for inclusion therein.
SECTION 3.10 ABSENCE OF MATERIAL ADVERSE CHANGES, ETC. Except for the
execution and delivery of this Agreement and the transactions to take
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<PAGE>
place pursuant hereto on or prior to the Closing Date and except as set forth in
the Company SEC Documents filed prior to the date hereof, since December 31,
1999, there has not been a Company Material Adverse Effect and the Company and
its Subsidiaries have conducted their respective businesses in the ordinary
course consistent with past practice. Without limiting the foregoing, except as
disclosed in the Company SEC Documents filed by the Company prior to the date
hereof or as contemplated by this Agreement, since December 31, 1999 there has
not been:
(a) 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 Subsidiary
(other than any wholly-owned Subsidiary) of the Company of any outstanding
shares of capital stock or other equity securities of, or other ownership
interests in, the Company or of any Company Securities;
(b) any amendment of any provision of the Articles of Incorporation or
by-laws of, or of any material term of any outstanding security issued by, the
Company or any Subsidiary (other than any wholly-owned Subsidiary) of the
Company;
(c) any incurrence, assumption or guarantee by the Company or any
Subsidiary of the Company of any indebtedness for borrowed money other than (i)
indebtedness for borrowed money reflected on the Company's balance sheet at June
30, 2000 included in its report on Form 10-Q for the six months ended on such
date as filed with the SEC and (ii) borrowings under the Loan and Security
Agreement dated as of September 30, 1998 (the "Coast Business Credit Agreement")
among the Company, certain of its Subsidiaries and Coast Business Credit (and,
for purposes of the forbearance required of the Company by the penultimate
sentence of Section 5.1, from the date of this Agreement to and including the
Effective Time, the Company and its Subsidiaries shall be permitted to make
additional borrowings under the Coast Business Credit
27
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Agreement provided that the aggregate principal amount of borrowings outstanding
at any time shall not exceed $15,000,000);
(d) any change in any method of accounting or accounting practice by
the Company or any Subsidiary of the Company, except for any such change
required by reason of a change in U.S. GAAP;
(e) except as set forth in Schedule 3.10(e) of this Agreement, any (i)
grant of any severance or termination pay to any director, officer or employee
of the Company or any Subsidiary of the Company, (ii) 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
Subsidiary of the Company entered into, (iii) increase in benefits payable under
any employee benefit plan or any severance or termination pay policies or
employment agreements, (iv) increase in compensation, bonus or other benefits
payable to directors, officers or employees of the Company or any Subsidiary of
the Company, in each case other than in the ordinary course of business and
consistent with past practices or (v) any accrual of bonuses for officers or
employees of the Company in excess of the amounts, if any, specified in their
respective employment agreements;
(f) except as set forth in Schedule 3.10(f) to this Agreement, any
issuance of Company Securities other than pursuant to the exercise of Options or
Warrants outstanding as of December 31, 1999 or Options issued pursuant to any
stock option plan of the Company in effect on such date and the issuance of
Company Securities pursuant thereto;
(g) except as set forth in Schedule 3.10(g) to this Agreement, any
acquisition, disposition or exclusive license of assets material to the Company
and its Subsidiaries or any contract or agreement that limits or purports to
limit the ability of the Company or any of its Subsidiaries to compete in any
line of business or with any person or in any geographical area or any contract
or agreement which involves or purports to involve exclusivity arrangements or
exclusive dealings to which the Company or any of
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its Subsidiaries is a party, except for sales in the ordinary course of business
consistent with past practice, or any acquisition or disposition of capital
stock of any third party, or any merger or consolidation with any third party,
by the Company or any Subsidiary;
(h) except as set forth in Schedule 3.10(h) to this Agreement, any
entry into any consulting, financial advisory or similar agreement including a
commitment on behalf of the Company in excess of $15,000;
(i) any entry into any other contract or agreement involving a
commitment on behalf of the Company of up to an aggregate of $100,000 other than
in the ordinary course of business;
(j) any capital expenditure, other than capital expenditures which are
not, in the aggregate, in excess of $2,300,000 for the Company and its
Subsidiaries taken as a whole during the period from and including July 1, 2000
to and including the date of this Agreement (and, for purposes of the
forbearance required of the Company and its Subsidiaries pursuant to the
penultimate sentence of Section 5.1, during the period from the date of this
Agreement to and including March 29, 2001, the Company and its Subsidiaries
shall be permitted to make capital expenditures in an aggregate amount not
exceeding $6,000,000);
(k) any settlement, compromise or other disposition of any claim,
action or proceeding seeking monetary damages in excess of $100,000 or otherwise
material to the Company;
(l) any entry by the Company into any joint venture, partnership or
similar agreement with any person other than a wholly-owned Subsidiary; or
(m) any authorization of, or commitment or agreement to take any of,
the foregoing actions except as otherwise permitted by this Agreement.
SECTION 3.11 TAXES.
(a) Except as set forth in Schedule 3.11(a) to this Agreement, (1) all
federal, state, local and foreign Tax Returns (as defined below)
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required to be filed by or on behalf of the Company and each of its Subsidiaries
have been timely filed, and all Tax Returns are complete and accurate except to
the extent any failure to file or any inaccuracies in filed Tax Returns would
not, individually or in the aggregate, have a Company Material Adverse Effect;
(2) all Taxes (as defined below) due and owing by the Company or any Subsidiary
of the Company have been paid, or adequately reserved for in accordance with
GAAP, except to the extent any failure to pay or reserve would not, individually
or in the aggregate, have a Company Material Adverse Effect; (3) there is no
presently pending and, to the knowledge of the Company, contemplated or
scheduled audit examination, deficiency, refund litigation, proposed adjustment
or matter in controversy which, individually or in the aggregate, would have a
Company Material Adverse Effect with respect to any Taxes due and owing by the
Company or any Subsidiary of the Company nor has the Company or any Subsidiary
of the Company filed any waiver of the statute of limitations applicable to the
assessment or collection of any Tax which, individually or in the aggregate,
would have a Company Material Adverse Effect; (4) all assessments for Taxes due
and owing by the Company or any Subsidiary of the Company with respect to
completed and settled examinations or concluded litigation have been paid; (5)
neither the Company nor any Subsidiary of the Company is a party to any tax
indemnity agreement, tax sharing agreement or other agreement under which the
Company or any Subsidiary of the Company could become liable to another person
as a result of the imposition of a Tax upon any person, or the assessment or
collection of such a Tax; and (6) the Company and each of its Subsidiaries has
complied in all material respects with all rules and regulations relating to the
withholding of Taxes.
(b) For purposes of this Agreement, (i) "Taxes" means all taxes,
-----
levies or other like assessments, charges or fees (including estimated taxes,
charges and fees), including, without limitation, income, corporation, advance
corporation, gross receipts, transfer, excise, property, sales, use,
30
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value- added, license, payroll, withholding, social security and franchise or
other governmental taxes or charges, imposed by the United States or any state,
county, local or foreign government or subdivision or agency thereof, and such
term shall include any interest, penalties or additions to tax attributable to
such Taxes and (ii) "Tax Return" means any report, return or statement required
----------
to be supplied to a taxing authority in connection with Taxes.
SECTION 3.12 EMPLOYEE BENEFIT PLANS.
(a) Except for any plan, fund, program, agreement or arrangement that
is subject to the laws of any jurisdiction outside the United States, Schedule
3.12(a) to this Agreement contains a true and complete list of: (1) each
deferred compensation, incentive compensation and equity compensation plan; (2)
each "welfare" plan, fund or program (within the meaning of section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")); (3) each
-----
"pension" plan, fund or program (within the meaning of section 3(2) of ERISA);
(4) each employment, termination or severance agreement; and (5) each other
employee benefit plan, fund, program, agreement, policy or arrangement, in each
case, that is sponsored, maintained or contributed to or required to be
contributed to by the Company or by any trade or business, whether or not
incorporated (each, an "ERISA Affiliate"), that together with the Company would
---------------
be deemed a "single employer" within the meaning of section 4001(b) of ERISA, or
to which the Company or an ERISA Affiliate is party, whether written or oral,
for the benefit of any employee, consultant, director or former employee,
consultant or director of the Company or any Subsidiary of the Company (the
"Plans"). Schedule 3.12(a) to this Agreement contains an accurate and complete
------
list of the Plans.
(b) With respect to each Plan, the Company has heretofore delivered or
made available to Parent (i) a true and complete copy of the Plan and any
amendments thereto, (ii) all written communications regarding
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any Plan and relating to any amendments to any Plan which both would result in
any material liability to the Company and are not already reflected in the
applicable Plan document (or if the Plan is not a written Plan, a description
thereof), (iii) any related trust or other funding vehicle, (iv) the most recent
reports or summaries thereof required under ERISA or the Code, (v) the most
recent determination letter received from the Internal Revenue Service and any
material correspondence with the Internal Revenue Service or the Department of
Labor with respect to each Plan intended to qualify under section 401 of the
Code, (vi) the most recent annual actuarial valuations, if any, prepared for
each Plan; (vii) if the Plan is funded, the most recent annual and periodic
accounting of Plan assets; (viii) the most recent summary Plan description
together with the most recent summary of material modifications, if any,
required under ERISA with respect to each Plan; and (ix) all communications
material to any employee or employees relating to any Plan and any proposed Plan
and not reflected in the applicable Plan document, in each case, relating to any
increases in benefits, acceleration of payments or vesting schedules or other
increases in benefits, acceleration of payments or vesting schedules or other
events which would result in any material liability to the Company.
(c) Neither the Company nor any of its ERISA Affiliates has, for the
past six (6) years, maintained, established, sponsored, participated in, or
contributed to, any employee benefit plan which is subject to Part 3 of Subtitle
B of Title I of ERISA, Title IV of ERISA or Section 412 of the Code.
(d) No Plan is a "multiemployer plan," as defined in section 3(37) of
ERISA, nor is any Plan a plan described in section 4063(a) of ERISA.
(e) All contributions required to be made to any Plan by applicable
law or regulation or by any Plan document or other contractual undertaking, and
all premiums due or payable with respect to insurance policies funding any Plan,
for any period through the date hereof have been timely made or paid in full or,
to the extent not required to be made or paid
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on or before the date hereof, have been fully reflected on the financial
statements included in the Company SEC Documents. Each Plan that is an employee
welfare benefit plan under Section 3(1) of ERISA is either (i) funded through an
insurance company contract and is not a "welfare benefit fund" with the meaning
of Section 419 of the Code or (ii) unfunded.
(f) Except as set forth in Schedule 3.12(f) to this Agreement, (i)
each Plan has been established, operated and administered in all material
respects in accordance with its terms and applicable law, including, but not
limited to, ERISA and the Code; (ii) the Company has performed in all material
respects all obligations required to be performed by it under each Plan; (iii)
there are no actions, suits or claims pending or, to the knowledge of the
Company, threatened or anticipated by or on behalf of, or against, any Plan or
against the assets of any Plan, or otherwise involving any such Plan (other than
routine claims for benefits); (iv) each Plan can be amended, terminated or
otherwise discontinued after the Effective Time in accordance with its terms,
without material liability to the Company, Parent or any of their Subsidiaries
(other than ordinary administration expenses typically incurred in connection
with a termination event); (v) there are no inquiries or proceedings pending or,
to the knowledge of the Company or any ERISA Affiliate, threatened by the
Internal Revenue Service or the Department of Labor with respect to any Plan;
and (vi) neither the Company nor any ERISA Affiliate is subject to any penalty
or tax with respect to any Plan under Section 502(i) of ERISA or Sections 4975
through 4980 of the Code.
(g) Each Plan intended to be "qualified" within the meaning of section
401(a) of the Code (a "Qualified Plan") has received a favorable determination
--------------
letter from the Internal Revenue Service or, in the case of such a Plan for
which a favorable determination letter has not yet been received, the applicable
remedial amendment period under Section 401(b) of the Code has not expired and
such a letter will be timely applied for. To the knowledge of the Company,
there are no circumstances and no events have
33
<PAGE>
occurred that could adversely affect the qualified status of any Qualified Plan.
(h) With respect to each Plan, if any, that is subject to Title IV or
Section 302 of ERISA or Section 412 or 4971 of the Code, (i) there does not
exist any accumulated funding deficiency within the meaning of Section 412 of
the Code or Section 302 of ERISA, whether or not waived; (ii) no reportable
event within the meaning of Section 4043(c) of ERISA for which the 30-day notice
requirement has not been waived has occurred, and the consummation of the
transactions contemplated by this Agreement will not result in the occurrence of
any such reportable event; (iii) all premiums to the Pension Benefit Guaranty
Corporation ("PBGC") have been timely paid in full; (iv) no liability (other
----
than for premiums to the PBGC) under Title IV of ERISA has been or is expected
to be incurred by the Company or any of its Subsidiaries; and (v) the PBGC has
not instituted proceedings to terminate any such Plan and, to the Company's
knowledge, no condition exists that presents a risk that such proceedings will
be instituted or which would constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any such
Plan.
(i) Except as set forth in Schedule 3.12(i) to this Agreement, no Plan
provides medical, surgical, hospitalization, death or similar benefits (whether
or not insured) for employees or former employees of the Company or any
Subsidiary for periods extending beyond their retirement or other termination of
service, other than (i) coverage mandated by applicable law, (ii) death benefits
under any "pension plan," or (iii) benefits the full cost of which is borne by
the current or former employee (or his or her beneficiary), dependent or other
covered person. The Company has never represented or contracted (whether in
oral or written form) to any employee (either individually or to employees as a
group) that such employee(s) would be provided with life insurance, medical or
other employee welfare benefits
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<PAGE>
upon their retirement or termination of employment, except to the extent
required by statute.
(j) Except as set forth in Schedule 3.12(j) to this Agreement, the
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not, either alone or in combination with
another event, (i) entitle any current or former employee or officer of the
Company or any ERISA Affiliate to severance pay, forgiveness of indebtedness,
unemployment compensation or any other payment, except as expressly provided in
this Agreement, or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee or officer, other than
payments, accelerations or increases mandated by applicable law.
(k) No payment or benefit which may be made under the Plans will be
characterized as an "excess parachute payment" within the meaning of section
280G of the Code.
(l) The Company, in all material respects, (i) is in compliance with
all applicable federal, state and local laws, rules and regulations respecting
employment, employment practices, terms and conditions of employment and wages
and hours, in each case, with respect to employees; (ii) has withheld all
amounts required by law or by agreement to be withheld from the wages, salaries
and other payments to employees; (iii) is not liable for any arrears of wages or
any taxes or any penalty for failure to comply with any of the foregoing; and
(iv) is not liable for any payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
employees (other than routine payments to be made in the normal course of
business and consistent with past practice).
SECTION 3.13 LITIGATION; COMPLIANCE WITH LAWS.
(a) Except as set forth in the Company SEC Documents filed prior to
the date hereof, there is no action, suit or proceeding pending against
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or, to the knowledge of the Company, threatened against, the Company or any of
its Subsidiaries or any of their respective properties before any court or
arbitrator or any Governmental Entity which (i) could reasonably be expected to
have a Company Material Adverse Effect or (ii) seeks to delay or prevent the
consummation of the Merger or the other transactions contemplated by this
Agreement. Neither the Company nor any of its Subsidiaries nor any property or
asset of the Company or any of its Subsidiaries is subject to any order of,
consent decree, settlement agreement or other similar written agreement with,
or, to the knowledge of the Company, continuing investigation by, any
Governmental Entity, or any order, writ, judgment, injunction, decree,
determination or award of any court, Governmental Entity or arbitrator that
could have a Company Material Adverse Effect. Schedule 3.13(a) to this Agreement
lists all actions, suits or proceedings pending against or, to the knowledge of
the Company, threatened against, the Company or any of its Subsidiaries or any
of their respective properties before any court or arbitrator or any
Governmental Entity. Schedule 3.13(a) also lists any orders of, consent decrees,
settlement agreements or other similar written agreements with, or, to the
knowledge of the Company, continuing investigations by, any Government Entity,
or any order, writ, judgment, injunction, decree, determination or award of any
court, Governmental Entity or arbitrator to which the Company or any of its
Subsidiaries or any of its property or assets are subject.
(b) The Company and its Subsidiaries are in compliance with all
applicable laws, ordinances, rules and regulations of any federal, state, local
or foreign governmental authority applicable to their respective businesses and
operations, except for such violations, if any, which, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect. All governmental approvals, permits and licenses (collectively,
"Permits") required to conduct the business of the Company and its Subsidiaries
-------
have been obtained, are in full force and effect
36
<PAGE>
and are being complied with except for such violations and failures to have
Permits in full force and effect, if any, which, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect.
SECTION 3.14 LABOR MATTERS. As of the date of this Agreement (i) there
are no collective bargaining agreements with any union covering employees of the
Company or any Subsidiary; (ii) there is no labor strike, dispute, slowdown,
stoppage or lockout actually pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary; (iii) to the knowledge of the
Company, no union organizing campaign with respect to the Company's employees is
underway; (iv) there is no unfair labor practice charge or complaint against the
Company or any Subsidiary pending or, to the knowledge of the Company or any
Subsidiary, threatened before the National Labor Relations Board or any similar
state or foreign agency; (v) there is no written grievance pending relating to
any collective bargaining agreement or other grievance procedure; and (vi)
except as set forth in Schedule 3.14 to this Agreement, to the knowledge of the
Company, no charges with respect to or relating to the Company or any Subsidiary
are pending before the Equal Employment Opportunity Commission or any other
agency responsible for the prevention of unlawful employment practices.
SECTION 3.15 CONTRACTS AND ARRANGEMENTS. All written or oral contracts,
agreements, guarantees, leases and executory commitments to which the Company or
any of its Subsidiaries is a party or by which any of them or their assets is
bound which are material to the Company (each, a "Company Contract") is in full
----------------
force and effect, and neither the Company nor any of its Subsidiaries, nor, to
the knowledge of the Company, any other party thereto, is in breach of, or
default under (nor does there exist any condition which upon the passage of time
or the giving of notice would cause
37
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such a violation of or default under) any Company Contract or agreement, and no
event has occurred that with notice or passage of time or both would constitute
such a breach or default thereunder by the Company or any of its Subsidiaries,
or, to the knowledge of the Company, any other party thereto, except for such
failures to be in full force and effect and such breaches and defaults that,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect.
SECTION 3.16 ENVIRONMENTAL MATTERS.
(a) As used in this Section 3.16:
(i) "Cleanup" means all actions required to: (A) cleanup, remove,
-------
treat or remediate Hazardous Materials (as defined hereafter) in the indoor or
outdoor environment; (B) prevent the Release (as defined hereafter) of Hazardous
Materials so that they do not migrate, endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment; (C) perform remedial
studies and investigations and post-remedial monitoring and care; or (D) respond
to any government requests for information or documents relating to cleanup,
removal, treatment or remediation or potential cleanup, removal, treatment or
remediation of Hazardous Materials in the indoor or outdoor environment.
(ii) "Environmental Claim" means any claim, action, cause of action,
-------------------
investigation or written notice by any Person alleging liability (including,
without limitation, liability for investigatory costs, Cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, or penalties) arising out of, based on or resulting from (A)
the presence or Release of any Hazardous Materials at any location, whether or
not owned or operated by the Company or any of its Subsidiaries or (B)
circumstances forming the basis of any violation of any Environmental Law (as
defined hereafter).
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(iii) "Environmental Laws" means all federal, state, local and foreign
------------------
laws and regulations (and enforceable judicial or administrative interpretations
thereof) relating to pollution or protection of the environment, including,
without limitation, laws relating to Releases or threatened Releases of
Hazardous Materials or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, transport or handling of Hazardous
Materials.
(iv) "Hazardous Materials" means all substances defined as Hazardous
-------------------
Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous
Substances Pollution Contingency Plan, 40 C.F.R. Section 300.5, or defined as
such by, or regulated as such under, any Environmental Law.
(v) "Release" means any release, spill, emission, discharge,
-------
leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration
into the environment (including, without limitation, ambient air, surface water,
groundwater and surface or subsurface strata) or into or out of any property,
including the movement of Hazardous Materials through or in the air, soil,
surface water, groundwater or property.
(b) (i) The Company and its Subsidiaries are in compliance with all
applicable Environmental Laws (which compliance includes, but is not limited to,
the possession by the Company and its Subsidiaries of all permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof), except where failures to be
in compliance would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. Since January 1, 1997 and
prior to the date of this Agreement, neither the Company nor any of its
Subsidiaries has received any written communication, whether from a Governmental
Entity, citizens' group, employee or otherwise, alleging that the Company or any
of its Subsidiaries is not in such compliance, except where failures to be in
compliance, individually or in the aggregate, would not be expected to have a
Company Material Adverse Effect.
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<PAGE>
(ii) There is no Environmental Claim pending or, to the knowledge of
the Company, threatened against the Company or any of its Subsidiaries or, to
the knowledge of the Company, against any Person whose liability for any
Environmental Claim the Company or any of its Subsidiaries has or may have
retained or assumed either contractually or by operation of law that would be
expected to have a Company Material Adverse Effect.
(iii) To the knowledge of the Company, there are no present or past
actions, activities, circumstances, conditions, events or incidents, including,
without limitation, the Release or presence of any Hazardous Material that could
form the basis of any Environmental Claim against the Company or any of its
Subsidiaries or against any Person whose liability for any Environmental Claim
the Company or any of its Subsidiaries has or may have retained or assumed
either contractually or by operation of law that in either case, individually or
in the aggregate, would be expected to have a Company Material Adverse Effect.
(iv) The Company agrees to use all reasonable efforts to attempt to
effect the retention of any permits or other governmental authorizations under
Environmental Laws that will be required to permit the Company to conduct the
business as conducted by the Company and its Subsidiaries immediately prior to
the Closing Date.
(v) None of the real property owned or leased by the Company or any
Subsidiary of the Company is listed or, to the knowledge of the Company,
proposed for listing on the "National Priorities List" under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, or
any similar list of sites in the United States or any other jurisdiction
requiring investigation or Cleanup, where such listing would reasonably be
expected to result in a liability to the Company that would have a Company
Material Adverse Effect.
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SECTION 3.17 INTELLECTUAL PROPERTY.
(a) Schedule 3.17(a) to this Agreement sets forth a list of all
United States, international and foreign (i) patents and patent applications,
(ii) registered trademarks and trademark applications, and (iii) registered
copyrights and copyright applications, in each case owned by the Company and its
Subsidiaries and material to the business of the Company and its Subsidiaries
("Company Registered Intellectual Property"). All registrations relating to the
------------------------------------------
Company Registered Intellectual Property are subsisting, unexpired and free of
Liens.
(b) The Company and its Subsidiaries own or have the right to use all
Intellectual Property (as defined hereafter) material to the conduct of their
businesses as currently conducted and as currently anticipated to be conducted
until Closing.
(c) (i) To the knowledge of the Company, the operation of the
business of the Company and its Subsidiaries as currently conducted and
currently anticipated to be conducted until Closing does not infringe upon the
Intellectual Property of any other Person the effect of which, individually or
in the aggregate, could reasonably be expected to have a Company Material
Adverse Effect; (ii) no claim of infringement is pending or, to the knowledge of
the Company, threatened; (iii) no judgment, decree, injunction, rule or order
has been rendered by any Governmental Entity or arbitral body that would
restrict the Company's or its Subsidiaries' rights to use any Intellectual
Property owned by the Company or its Subsidiaries; (iv) neither the Company nor
its Subsidiaries have received notice of any pending suit, action, arbitration
or administrative proceeding that seeks to invalidate any Intellectual Property
owned by the Company or its Subsidiaries; and (v) the consummation of the
transactions contemplated by this Agreement will not result in the termination
of any of the Company or Subsidiary owned or licensed Intellectual Property.
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(d) To the knowledge of the Company, no person is engaging in any
activity that infringes upon any Intellectual Property owned by the Company and
its Subsidiaries.
(e) The Company and its Subsidiaries have made available to Parent
copies of all material agreements relating to Licensed Intellectual Property (as
defined in Section 3.17(h)(ii) below). With respect to each such material
agreement:
(i) Such agreement will not cease to be in full force and effect on
its terms as a result of the consummation of the transactions contemplated by
this Agreement, nor will the consummation of the transactions contemplated by
this Agreement permit acceleration of or constitute a breach or default under
such agreement or otherwise give rise to a right to terminate such agreement,
except where such termination, acceleration, breach, default or right of
termination would not have a Company Material Adverse Effect;
(ii) Neither the Company nor its Subsidiaries have (A) received any
notice of acceleration, termination or cancellation under such agreement, nor
(B) received any notice of breach or default under such agreement, which breach
or default has not been cured;
(iii) To the knowledge of the Company and its Subsidiaries, neither
the Company, its Subsidiaries, nor any other party to such agreement is in
breach or default thereof in any material respect, and no event has occurred
that, with the giving of notice or lapse of time or both, would constitute such
a breach or default or permit termination, modification or acceleration under
such agreement; and
(iv) To the Company's knowledge, such agreement is valid and binding
and in full force and effect.
(f) The Company and its Subsidiaries have taken reasonable steps in
accordance with industry practice to maintain the confidentiality of their trade
secrets and other confidential information of the Company and its
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Subsidiaries. To the knowledge of the Company and its Subsidiaries: (i) no
person has misappropriated any material trade secrets or other material
confidential information owned by the Company and its Subsidiaries; (ii) no
employee, independent contractor or agent of the Company and its Subsidiaries
has misappropriated any trade secrets of any other person in the course of such
performance as an employee, independent contractor or agent; and (iii) no
employee, independent contractor or agent of the Company and its Subsidiaries is
in breach of any material term of any employment agreement, non-disclosure
agreement or assignment of invention agreement relating to the protection or
ownership of Intellectual Property material to the business of the Company and
its Subsidiaries.
(g) Schedule 3.17(g) to this Agreement lists all computer software (i)
material to the operation of the business of the Company and its Subsidiaries or
(ii) distributed or licensed by the Company or its Subsidiaries (collectively,
"Software"), except for licensed shrink-wrapped, off-the-shelf software, and
---------
sets forth which of the Software is owned and which is licensed. The Company
has (whether by ownership, lease or license) either good, valid and marketable
ownership rights in and to, or valid licenses to use, to all such Software
(including any and all modifications, additions and alterations to such
Software) such that, immediately after the Effective Time, the Surviving
Corporation will be able to use and operate the Software substantially in the
manner now being used in connection with the business of the Company and its
Subsidiaries. To the knowledge of the Company and its Subsidiaries, the Software
is free of all viruses, worms or trojan horses that materially disrupt its
operation or have a material adverse impact on the operation of other software
programs or operating systems.
(h) For purposes of this Agreement:
(i) "Intellectual Property" shall mean all rights provided under
---------------------
United States, state and foreign law relating to intellectual property,
including without limitation all: (A) (1) patents and utility models and
43
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applications therefor and all reissues, divisions, re-examinations, renewals,
extensions, provisionals, continuations and continuations-in-part thereof; (2)
copyrights and copyrightable works, including, but not limited to, 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) rights to
domain names and the "webconferencing.com" portal; and (5) trade secrets and
other confidential information; and (B) all registrations, applications and
recordings for any of the foregoing; and
(ii) "Licensed Intellectual Property" shall mean (A) Intellectual
------------------------------
Property licensed to the Company and its Subsidiaries by any third party, and
(B) Intellectual Property licensed by the Company and its Subsidiaries to any
third party.
SECTION 3.18 OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Lehman Brothers (the "Company Financial Advisor") dated the date of
-------------------------
this Agreement to the effect that, as of such date, the consideration to be
received by the holders of Common Stock pursuant to this Agreement is fair from
a financial point of view to such holders. The Company has previously provided
copies of such opinion to Parent and such opinion has not been withdrawn or
revoked or modified in any material respect.
SECTION 3.19 BOARD RECOMMENDATION; VOTE REQUIRED. The Board of Directors
of the Company, at a meeting duly called and held, has approved this Agreement
and (i) determined that this Agreement and the transactions contemplated hereby,
including the Merger, taken together are fair to and in the best interests of
the shareholders of the Company; and (ii) resolved to recommend that the
shareholders of the Company adopt this Agreement and approve the Merger. Under
applicable law and the Articles of Organization the affirmative vote of the
holders of two-thirds of the shares of Common Stock
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outstanding on the record date, as such date is established by the Board of
Directors of the Company in accordance with the by-laws of the Company and
applicable law, is the only vote required to approve the Merger and adopt this
Agreement, and no other vote of stockholders is required under the rules of the
AmEx.
SECTION 3.20 STATE TAKEOVER LAWS. Prior to the execution of this
Agreement, the Board of Directors of the Company has taken all action necessary
to exempt under or make not subject to any state takeover law or state law
(including chapter 110D of the Massachusetts General Laws) and any restrictive
charter or similar provision that purports to limit or restrict business
combinations or the ability to acquire or vote shares with respect to: (i) the
execution of this Agreement, (ii) the Merger and (iii) the transactions
contemplated hereby.
SECTION 3.21 TAX TREATMENT. Neither the Company nor any of its
affiliates has taken or agreed to take any action or knows of any fact,
agreement, plan or other circumstance that could (i) prevent the Merger from
qualifying as a "reorganization" under the provisions of Section 368(a) of the
Code, or (ii) prevent the exchange of shares of Common Stock from meeting the
requirements of Treasury Regulation Section 1.367(a)-3(c)(1).
SECTION 3.22 BROKERS OR FINDERS. Except for the Company Financial
Advisor, whose fees will be paid by the Company, and except as identified on
Schedule 3.22 to this Agreement, there is no investment banker, broker, finder
or other intermediary that will be entitled to any fee or commission from the
Company, any Subsidiary of the Company, or any of the Company's affiliates as a
result of the consummation of the transactions contemplated by this Agreement.
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SECTION 3.23 AFFILIATE TRANSACTIONS. Except as set forth in the Company
SEC Documents filed prior to the date hereof, there are no material contracts,
commitments, agreements, arrangements or other transactions between the Company
or any of its Subsidiaries, on the one hand, and any (i) officer or director of
the Company or any of its Subsidiaries, (ii) record or beneficial owner of five
percent or more of the voting securities of the Company or (iii) to the
knowledge of the Company, any affiliate (as such term is defined in Regulation
12b-2 promulgated under the Exchange Act) of any such officer, director or
beneficial owner, on the other hand.
SECTION 3.24 INSURANCE. The Company has provided or made available to
Parent true, correct and complete copies of all material policies of insurance
currently in effect that insure the business, operations, employees or directors
of the Company and to which the Company or any of its Subsidiaries are a party
or are a beneficiary or named insured. The Company and its Subsidiaries maintain
insurance coverage with reputable insurers, each rated at least A by Moody's
Investor Services, Inc. or A.M. Best Company, as to claims paying ability, in
such amounts and covering such risks as are in accordance with normal industry
practice for companies engaged in business similar to that of the Company and
its Subsidiaries (taking into account the cost and availability of such
insurance).
SECTION 3.25 CUSTOMERS. Prior to the date hereof, the Company has
provided to Parent true and correct list containing the top thirty (30) retail
customers of the Company for the fiscal year ended 1999 and the six months ended
June 30, 2000, and the total dollar amounts of services billed to such customers
during such periods. Except as set forth in Schedule 3.25 to this Agreement,
none of the top 30 retail customers included in the list provided to Parent as
set forth in the previous sentence has given written or
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oral notification to the Company of its intent to cancel, terminate,
significantly reduce or otherwise suspend such relationship.
SECTION 3.26 BRIDGE CAPACITY AND LOCATIONS. Schedule 3.26 to this
Agreement sets forth the port capacity and location of bridges operated by the
Company and any of its Subsidiaries and indicates which are owned and which are
leased. None of such bridges will require relocation after the Effective Time
if the business of the Company and its Subsidiaries continues to be operated as
currently conducted. All such bridges are Year 2000 compliant and, to the
knowledge of the Company, are capable of reliably handling the business of the
Company and its Subsidiaries up to their respective capacity.
SECTION 3.27 ACCOUNTS RECEIVABLE. Prior to the date hereof, the Company
has provided to Parent an accurate summary of the accounts receivable of the
Company as at December 31, 1999 and June 30, 2000, grouped by those which are
(i) current (outstanding 30 days or less from the date invoicing), (ii)
outstanding 31-60 days, (iii) outstanding 61-90 days and (iv) outstanding 91
days or more, and also showing (A) the number of days sales outstanding at each
such date and (B) the allowance for doubtful accounts as a percentage of the
total of accounts receivable and of each such group of accounts. The allowance
for doubtful accounts at June 30, 2000 has been established in accordance with
generally accepted accounting principles and in a manner consistent with past
practice. All the accounts receivable reflected on such summary are valid
accounts and arose in the ordinary course of the business of the Company and its
Subsidiaries. To the knowledge of the Company, except as reflected on such
summary, there are no valid offsets or defenses to such accounts receivable and
there is no reason to believe that such accounts receivable will not be
collected in the ordinary course of business.
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SECTION 3.28 ACCOUNTS PAYABLE. Prior to the date hereof, the Company has
provided to Parent an accurate summary of the accounts payable of the Company as
at December 31, 1999 and June 30, 2000, grouped by those which are, as of such
dates, (i) currently due and payable without penalty, (ii) past due from 1-30
days, (iii) past due 31-60 days, (iv) past due 61-90 days and (v) past due more
than 90 days, and the percentage of all accounts payable represented by each
such category. Annex 1 to this summary is an accurate list of the individual
payees and amounts due that are summarized therein.
SECTION 3.29 NOTES EXCHANGE OFFER. On May 4, 2000, the Company
commenced an offer to exchange cash and newly-issued shares of a new class of
convertible preferred stock for all of its outstanding High Yield Notes on the
terms set forth in the Company's Offering Memorandum dated May 3, 2000, as
supplemented by a Supplement Offering Memorandum and Solicitation Document dated
May 24, 2000 (collectively, the "Exchange Offer"). As currently in effect, the
Exchange Offer will expire on October 31, 2000. The only fees payable by the
Company to investment bankers, financial advisors, brokers or finders in
connection with the Exchange Offer and the transactions contemplated thereby are
the fees payable to Houlihan Lokey pursuant to the Letter Agreement, dated
December 1, 1999, between the Company and Houlihan Lokey (as heretofore amended,
modified or supplemented, the "Houlihan Lokey Agreement"). The Company has
provided Merger Sub and Parent with a true and correct copy of the Houlihan
Lokey Agreement as in effect as of the date of this Agreement.
SECTION 3.30 OWNERSHIP OF CAPITAL STOCK. To the knowledge of the Company,
neither the Company nor any of its affiliates beneficially owns, directly or
indirectly, any capital stock of Parent or is a party to any
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agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any capital stock of Parent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub, jointly and severally, represent and warrant to the
Company as follows:
SECTION 4.1 CORPORATE EXISTENCE AND POWER. Each of Parent and Merger Sub
is a corporation duly incorporated (or other entity duly organized), validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has all corporate or other power, as the case may be, and all
Licenses required to conduct its business as now conducted, except for failures
to have any such License which would not, in the aggregate, have a Parent
Material Adverse Effect (as defined below). Each of Parent and Merger Sub is
duly qualified to do business and is in good standing in those jurisdictions
specified in Schedule 4.1 to this Agreement, which are the only jurisdictions
where the character of the property owned, leased or operated by it or the
nature of its activities makes such qualification necessary, except for those
jurisdictions where failures to be so qualified would not reasonably be expected
to, in the aggregate, have a Parent Material Adverse Effect. As used herein, the
term "Parent Material Adverse Effect" means a material adverse effect on the
------------------------------
financial condition, business, assets, prospects or results of operations of
Parent and its Subsidiaries, taken as a whole; provided, however, that in no
-------- -------
event shall any effect that results from (x) the public announcement or pendency
of the transactions contemplated hereby or any actions taken in compliance with
this Agreement, (y) changes affecting the audio, video or internet
teleconferencing industries generally and which do not disproportionately
materially affect Parent or (z) changes
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affecting the economies in which such entity operates generally, constitute a
Parent Material Adverse Effect. Parent has heretofore furnished or made
available to the Company true and complete copies of the governing documents or
other organizational documents of like import, as in effect on the date hereof,
of each of Parent and Merger Sub. The Parent and Merger Sub are not in violation
of any provisions of such organizational documents.
SECTION 4.2 AUTHORIZATION. Each of Parent and Merger Sub has the
requisite corporate power and authority to execute and deliver this Agreement
and, subject to the approval of Parent's shareholders as set forth in Section
5.14 hereof, to perform its obligations hereunder and to consummate the Merger
and the other transactions contemplated hereby. The execution and delivery of
this Agreement and the performance of their respective obligations hereunder
have been duly and validly authorized by the Boards of Directors of Parent and
Merger Sub, and by Parent as the sole shareholder of Merger Sub, this Agreement
has been approved by the Board of Directors of Merger Sub, and no approvals,
authorizations or other proceedings on the part of Parent, Merger Sub or their
respective shareholders are necessary to authorize the execution, delivery and
performance of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby, except that the approval of Parent's
shareholders is required to authorize an increase in the authorized number of
ordinary shares of Parent in order to permit the issuance of the Parent Shares
contemplated by this Agreement. This Agreement has been duly executed and
delivered by each of Parent and Merger Sub and, upon the execution and delivery
of this Agreement by the Company, will constitute a valid and binding obligation
of each of Parent and Merger Sub, enforceable against each of them in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally.
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SECTION 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Neither the execution and delivery of this Agreement nor the
performance by each of Parent and Merger Sub of its obligations hereunder will
(i) conflict with or result in any breach of any provision of the articles of
incorporation or by-laws (or other governing or organizational documents) of
Parent or Merger Sub, as the case may be, or (ii) except as set forth in
Schedule 4.3 to this Agreement, result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation or acceleration or obligation to
repurchase, repay, redeem or acquire or any similar right or obligation) under
any of the terms, conditions or provisions of any note, mortgage, letter of
credit, other evidence of indebtedness, guarantee, license, lease or agreement
or similar instrument or obligation to which any of Parent or any of its
Subsidiaries is a party or by which any of them or any of their respective
assets may be bound or (iii) assuming that the filings, registrations,
notifications, authorizations, consents and approvals referred to in subsection
(b) below have been obtained or made, as the case may be, violate any order,
injunction, decree, statute, rule or regulation of any Governmental Entity to
which either Parent or any of its Subsidiaries is subject, excluding from the
foregoing clauses (ii) and (iii) such requirements, defaults, breaches, rights
or violations (A) that would not, in the aggregate, reasonably be expected to
have a Parent Material Adverse Effect (without giving effect to clause (x) of
the definition of Parent Material Adverse Effect) and would not reasonably be
expected to have a material adverse effect on, or materially delay, the ability
of either Parent or Merger Sub to perform its obligations hereunder or (B) that
become applicable as a result of the business activities in which the Company or
any of its affiliates is or proposes to be engaged or any acts or omissions by,
or facts specifically pertaining to, the Company.
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(b) No filing or registration with, notification to, or authorization,
consent or approval of, any Governmental Entity is required in connection with
the execution and delivery of this Agreement by each of Parent and Merger Sub or
the performance by any of them of their respective obligations hereunder, except
(i) the filing of the Articles of Merger in accordance with the Massachusetts
BCL and filings to maintain the good standing of the Surviving Corporation; (ii)
compliance with any applicable requirements of the HSR Act, the EC Merger
Regulations or any other foreign laws regulating competition, antitrust,
investment or exchange controls; (iii) compliance with any applicable
requirements of the Securities Act and the Exchange Act; (iv) compliance with
any applicable requirements of state blue sky or takeover laws; (v) the filing
of a listing prospectus (the "Parent Listing Prospectus") relating to the new
-------------------------
Parent Shares to be issued in connection with the issuance of the ADSs with the
French Commission des Operations de Bourse (the "COB"); (vi) the approval (visa)
---
of the Parent Listing Prospectus by the COB; (vii) the admission of such new
Parent Shares for listing by Paris BourseSBF SA; (viii) the admission of the
ADSs for trading on the Nasdaq National Market; and (ix) such other consents,
approvals, orders, authorizations, notifications, registrations, declarations
and filings the failure of which to be obtained or made would not reasonably be
expected to have a Parent Material Adverse Effect and would not have a material
adverse effect on the ability of either Parent or Merger Sub to perform their
respective obligations hereunder.
SECTION 4.4 CAPITALIZATION. As of September 29, 2000 there were: (i)
12,568,609 Parent Shares authorized; (ii) 3,516,948 Parent Shares authorized but
unissued (including shares reserved under clause in (iv) below); (iii) 9,051,661
Parent Shares issued and outstanding; (iv) 964,054 Parent Shares reserved for
issuance upon the conversion of convertible bonds issued by Parent, 683,500
Parent Shares reserved for issuance upon the exercise of
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outstanding warrants to acquire Parent Shares ("Parent Warrants") and 919,894
------ --------
Parent Shares reserved for issuance upon the exercise of options to purchase
Parent Shares ("Parent Options"); and (v) issued and outstanding options to
------ -------
purchase a total of 643,394 Parent Shares ("Issued Parent Options"). The
------ ------ -------
authorized capital stock of Merger Sub consists of 1,000 shares of common stock,
par value $.01 per share, of which 100 shares are outstanding, all of which are
owned by Parent. All outstanding shares of capital stock of Parent and Merger
Sub have been duly authorized and validly issued and are fully paid and
non-assessable. All ADSs to be issued at the Effective Time shall be, when
issued, duly authorized and validly issued and fully paid and nonassessable and
free of preemptive rights with respect thereto. Except as set forth in this
Section 4.4 or in Schedule 4.4 to this Agreement and except for changes since
September 29, 2000 resulting from the exercise of Parent Options, Parent
Warrants or other convertible securities outstanding on such date, there are
outstanding (i) no shares of capital stock or other voting securities of Parent
or Merger Sub, (ii) no securities of Parent or any Subsidiary of Parent or
Merger Sub convertible into or exchangeable for shares of capital stock or
voting securities of Parent or Merger Sub and (iii) no options or other rights
to acquire from Parent or Merger Sub, and no obligation of Parent or Merger Sub
to issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Parent or Merger Sub (the
items in the preceding clauses (i), (ii) and (iii) being referred to
collectively as the "Parent Securities"). As of the date of this Agreement, the
------ ----------
number of Parent Shares issued and outstanding or deemed issued and outstanding
on a "fully-diluted" basis, after giving effect to the assumed issuance of
Parent Shares upon the conversion of convertible bonds and the exercise of
Parent Warrants and Parent Options (taking such Parent Warrants and Parent
Options into account on the "treasury method" using the Signing Date Share Price
Equivalent) is 10,614,241 Parent Shares.
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SECTION 4.5 SUBSIDIARIES.
(a) Each Subsidiary of Parent that is actively engaged in any
business or owns any material assets (each, an "Active Parent Subsidiary") (i)
------------------------
is a corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, (ii) has all corporate powers and
all material governmental licenses, authorizations, consents and approvals
required to conduct its business as now conducted and (iii) is duly qualified to
do business as a foreign corporation and is in good standing in those
jurisdictions specified in Schedule 4.5(a) to this Agreement which are the only
jurisdictions where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary, except for those
jurisdictions where any failures to be so qualified would not, in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. All Active
Parent Subsidiaries and their respective jurisdictions of incorporation and the
percentage of each such Subsidiary's outstanding capital stock or equity
interest owned by the Company are accurately identified in Schedule 4.5 to this
Agreement. Except as set forth in Schedule 4.5(a) to this Agreement, Parent
does not own, directly or indirectly, any capital stock or other equity interest
in any corporation, partnership, joint venture or other entity or enterprise,
except for the Active Parent Subsidiaries.
(b) Except as set forth in Schedule 4.5(b) to this Agreement, (i) all
of the outstanding shares of capital stock of each Subsidiary of Parent are duly
authorized, validly issued, fully paid and nonassessable, and such shares are
owned by Parent or by a Subsidiary of Parent free and clear of any Liens or
limitations on voting rights; (ii) there are no subscriptions, options,
warrants, calls, rights, convertible securities or other agreements or
commitments of any character relating to the issuance, transfer, sale, delivery,
voting or redemption (including any rights of
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conversion or exchange under any outstanding security or other instrument) for
any of the capital stock or other equity interests of any of such Subsidiaries;
and (iii) there are no agreements requiring the Company or any of its
Subsidiaries to make contributions to the capital of, or lend or advance funds
to, any Subsidiaries of Parent.
SECTION 4.6 PUBLIC DOCUMENTS. Parent has filed all required periodic
reports with the COB since January 1, 1999 (the "Parent Public Documents"). As
-----------------------
of their respective dates, and giving effect to any amendments thereto, (a) the
Parent Public Documents complied in all material respects with the requirements
of French law and the applicable rules and regulations, if any, of the COB
promulgated thereunder and (b) none of the reports contained in the Parent
Public Documents when filed (or, if amended or superseded by a filing prior the
date hereof, then on the date of such filing) contained any untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. No forms, reports and
documents filed after the date of this Agreement and prior to the Effective Time
by the Parent will contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading. Neither Parent nor any Subsidiary of the Parent
has, prior to the date of this Agreement, been required to file any form, report
or other document with the SEC or any national securities exchange in the United
States.
SECTION 4.7 FINANCIAL STATEMENTS. (a) The consolidated financial
statements of Parent (including, in each case, any notes and schedules thereto),
including Parent's unconsolidated accounts (comptes sociaux) and
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Parent's consolidated accounts (comptes consolides), included in the Parent
Public Documents (a) were prepared from the books and records of Parent and its
Subsidiaries and are in conformity with generally accepted accounting principles
in France ("French GAAP") applied on a consistent basis (subject to normal year-
end audit adjustments in the case of unaudited statements) during the periods
involved (except in the case of audited financial statements as set forth in the
notes thereto) and (b) present fairly, in all material respects, the
consolidated financial position and results of operations of Parent and its
Subsidiaries as of the respective dates thereof for the respective periods
covered thereby except, in the case of unaudited financial statements, for the
absence of footnotes and normal year-end adjustments, which were not, and are
not expected to be, individually or in the aggregate, material in amount.
(b) The consolidated financial statements of Parent and its
Subsidiaries (including, in each case, any notes and schedules thereto) that are
prepared in accordance with U.S. GAAP covering the periods included in the
Parent Public Documents that have been provided to the Company prior to
execution of this Agreement (including but not limited to the consolidated
statement of operations for the year ended December 31, 1999, the consolidated
statements of financial position as of December 31, 1999, and the consolidated
statement of cash flows for the year ended December 31, 1999 (a) were prepared
from the books and records of Parent and its Subsidiaries and are in conformity
with U.S. GAAP applied on a consistent basis (subject to normal year-end audit
adjustments in the case of unaudited statements) during the periods involved
(except in the case of audited financial statements as set forth in the notes
thereto) and (b) present fairly, in all material respects, the consolidated
financial position and results of operations of Parent and its Subsidiaries as
of the respective dates thereof for the respective periods covered thereby
except, in the case of unaudited financial statements, for the absence of
footnotes and normal year-end
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adjustments, which were not, and are not expected to be, individually or in the
aggregate, material in amount.
SECTION 4.8 ABSENCE OF UNDISCLOSED LIABILITIES. Since the date of the last
financial statements of Parent (comptes sociaux and comptes consolides) included
in the Parent Public Documents, and except for (i) liabilities and obligations
incurred since such date in the ordinary course of business consistent with past
practice, (ii) liabilities and obligations which have been satisfied or repaid
and (iii) as set forth in Schedule 4.8 to this Agreement, neither Parent nor any
of its Subsidiaries has incurred any liabilities or obligations of any nature
(whether absolute, accrued, contingent or otherwise and whether due or to become
due) that, individually or in the aggregate, have had or could have a Parent
Material Adverse Effect.
SECTION 4.9 ABSENCE OF MATERIAL ADVERSE CHANGES, ETC. Except for the
execution and delivery of this Agreement and the transactions to take place
pursuant hereto or prior to the Closing Date and except as set forth in Schedule
4.9 to this Agreement, since December 31, 1999 there has not been a Parent
Material Adverse Effect and Parent and its Subsidiaries have conducted their
respective businesses in the ordinary course consistent with past practice.
Without limiting the foregoing, except as disclosed in the Parent Public
Documents filed by the Parent prior to the date hereof or in Schedule 4.9 to
this Agreement, or as contemplated by this Agreement, since December 31, 1999
there has not been:
(a) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of Parent, or any
repurchase, redemption or other acquisition by Parent or any Subsidiary (other
than any wholly-owned Subsidiary) of Parent of any outstanding shares of capital
stock or other equity securities of, or other ownership interests in, Parent or
of any Parent Securities;
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(b) any amendment of any provision of the organizational documents or
by-laws (statuts) of, or of any material term of any outstanding security issued
-------
by, Parent or any Subsidiary (other than any wholly-owned Subsidiary) of Parent
that has had or would have a Parent Material Adverse Effect or would impair in
any material respect Parent's ability to perform its obligations under this
Agreement or to consummate the transactions contemplated hereby;
(c) any incurrence, assumption or guaranty by Parent or any Subsidiary
of Parent of any indebtedness for borrowed money other than (i) indebtedness for
borrowed money reflected on the Parent's balance sheet at June 30, 2000 prepared
in accordance with French GAAP previously delivered by Parent to the Company and
(ii) borrowings not exceeding $5,000,000 (or the equivalent in euros at the date
of incurrence) in the aggregate (and, with respect to the forbearance required
of Parent pursuant to the last sentence of Section 5.2, Parent shall be
permitted to incur, assume or guaranty, from the date of this Agreement to and
including the Effective Time, indebtedness for borrowed money not exceeding the
sum of (i) the amount referred to in item 9 of Schedule 4.9 to this Agreement
and (ii) $10,000,000 (or the equivalent in euros at the date of incurrence) in
the aggregate);
(d) any change in any method of accounting or accounting practice by
the Parent or any Subsidiary of the Parent, except for any such change required
by reason of a change in French GAAP or a change in U.S. GAAP;
(e) any acquisition, disposition or exclusive license of assets
material to Parent and its Subsidiaries or any contract or agreement that limits
or purports to limit the ability of the Parent or any of its Subsidiaries to
compete in any line of business or with any person or in any geographical area
or any contract or agreement which involves or purports to involve exclusivity
arrangements or exclusive dealings to which the Parent or any of its
Subsidiaries is a party, except for sales in the ordinary course of business
consistent with past practice, or any acquisition or disposition
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of capital stock of any third party, or any merger or consolidation with any
third party, by the Parent or any Subsidiary, material to the Parent and its
Subsidiaries, taken as a whole (provided that, with respect to the forbearance
required of Parent pursuant to the last sentence of Section 5.2, from the date
of this Agreement to the Effective Time, Parent and its Subsidiaries shall be
permitted to enter into the transaction described in item 1 of Schedule 4.4 to
this Agreement and other mergers or consolidations involving, individually or in
the aggregate, the issuance of up to 1,500,000 Parent Shares) (or convertible or
exchangeable securities providing for the issuance of Parent Shares) in
connection therewith); or
(f) any issuance of Parent Securities other than (i) pursuant to the
exercise of Parent Options or Parent Warrants or the conversion of convertible
debentures outstanding on or before June 30, 2000 and (ii) options issued
pursuant to any stock option plan of Parent in effect on such date and up to
585,000 stock options under the stock option plan approved by the Board of
Directors of Parent on September 8, 2000 (provided that for purposes of the
forbearance required of Parent pursuant to the second sentence of Section 5.2,
from the date of this Agreement to the Effective Time, Parent shall be permitted
to issue (1) up to an aggregate of 1,200,000 Parent Shares for the purpose
described in item 1 of Schedule 4.4 to this Agreement and (2) up to an aggregate
of 1,500,000 additional Parent Shares (or convertible or exchangeable securities
providing for the issuance of Parent Shares) less the number of Parent Shares,
if any, issued in connection with acquisitions as provided in paragraph (e)
above;
(g) entry by Parent into any joint venture, partnership or similar
agreement with any person other than a wholly-owned Subsidiary; or
(h) any authorization of, or commitment or agreement to take, any of, the
foregoing actions, except as otherwise permitted by this Agreement, or for the
dissolution or liquidation of Parent.
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SECTION 4.10 COMPANY PROXY STATEMENT; FORM F-4.
(a) None of the information supplied or to be supplied by Parent or
Merger Sub, as the case may be, in writing for inclusion in the Proxy Statement
(and any amendments thereof or supplements thereto) will, with respect to
information relating to such entities, at the time of the mailing the Proxy
Statement to the shareholders of the Company and at the time of the Special
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) None of the information supplied or to be supplied by Parent or
Merger Sub, as the case may be, for inclusion or incorporation by reference in
the Form F-4 will, with respect to information relating to such entities, at the
time the Form F-4 is filed with the SEC, and at any time it is amended or
supplemented or at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(c) None of the information included or incorporated by reference in
the Parent Listing Prospectus will, at the time the visa on the Parent Listing
Prospectus is granted by the COB, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that no representation is made by
Parent with respect to statements made or to be made or omitted or to be omitted
from the Parent Listing Prospectus relating to the Company or its Subsidiaries
based on information supplied by the Company in writing for inclusion in the
Parent Listing Prospectus, or with
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respect to any Company SEC Documents included or incorporated by reference
therein.
SECTION 4.11 TAXES. Except as set forth in Schedule 4.11(a) to this
Agreement, (1) all federal, state, local and foreign Tax Returns required to be
filed by or on behalf of Parent and each of its Subsidiaries have been timely
filed, and all Tax Returns are complete and accurate except to the extent any
failure to file or any inaccuracies in filed Tax Returns would not, individually
or in the aggregate, have a Parent Material Adverse Effect; (2) all Taxes due
and owing by Parent or any Subsidiary of Parent have been paid, or adequately
reserved for in accordance with French GAAP, except to the extent any failure to
pay or reserve would not, individually or in the aggregate, have a Parent
Material Adverse Effect; (3) there is no presently pending and, to the knowledge
of Parent, contemplated or scheduled audit examination, deficiency, refund
litigation, proposed adjustment or matter in controversy which, individually or
in the aggregate, would have a Parent Material Adverse Effect with respect to
any Taxes due and owing by Parent or any Subsidiary of Parent nor has Parent or
any Subsidiary of Parent filed any waiver of the statute of limitations
applicable to the assessment or collection of any Tax which, individually or in
the aggregate, would have a Parent Material Adverse Effect; (4) all assessments
for Taxes due and owing by Parent or any Subsidiary of Parent with respect to
completed and settled examinations or concluded litigation have been paid; (5)
neither Parent nor any Subsidiary of Parent is a party to any tax indemnity
agreement, tax sharing agreement or other agreement under which Parent or any
Subsidiary of Parent could become liable to another person as a result of the
imposition of a Tax upon any person, or the assessment or collection of such a
Tax; and (6) Parent and each of its Subsidiaries has complied in all material
respects with all rules and regulations relating to the withholding of Taxes.
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SECTION 4.12 LITIGATION; COMPLIANCE WITH LAWS.
(a) Except as set forth in either the Parent Public Documents or
otherwise fully covered by insurance, there is no action, suit or proceeding
pending against or, to the knowledge of Parent threatened against, Parent or any
Subsidiary of Parent or any of their respective properties before any court or
arbitrator or any Governmental Entity which (i) could reasonably be expected to
have a Parent Material Adverse Effect or (ii) could reasonably be expected to
result in the issuance of any orders restraining, enjoining or otherwise
prohibiting or making illegal the consummation of the Merger or the other
transactions contemplated by this Agreement. Neither the Parent nor any of its
Subsidiaries nor any property or asset of the Parent or any of its Subsidiaries
is subject to any order that could reasonably be expected to have a Parent
Material Adverse Effect.
(b) Parent and its Subsidiaries are in compliance with all applicable
laws, ordinances, rules and regulations of any federal, state, local or foreign
governmental authority applicable to their respective businesses and operations,
except for such violations, if any, which, in the aggregate, would not
reasonably be expected to have a Parent Material Adverse Effect.
SECTION 4.13 LABOR MATTERS. As the date of this Agreement (i) except as
set forth on Schedule 4.13 to this Agreement, there is no collective bargaining
agreement applicable to Parent and to any of its Subsidiaries, (ii) if
applicable, employee representatives or workers' committees (collectively,
"Workers' Representatives") have been validly set up in compliance in all
material respects with applicable regulations for Parent and each of its
Subsidiaries,(iii) to the knowledge of Parent, no attempt to organize for
collective bargaining purposes with respect to Parent and any of its
Subsidiaries is underway, except for any national collective bargaining
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agreement which would become applicable by law, and (iv) there is no labor
strike, dispute, slowdown, stoppage or lockout currently pending.
SECTION 4.14 CONTRACTS AND ARRANGEMENTS. All written or oral contracts,
agreements, guarantees, leases and executory commitments to which Parent or any
of its Subsidiaries is a party or by which any of them or their assets is bound
which are material to Parent (each, a "Parent Material Contract") are in full
------------------------
force and effect, and neither Parent nor any of its Subsidiaries, nor, to the
knowledge of Parent, any other party thereto, is in breach of, or default under
(nor does there exist any condition which upon the passage of time or the giving
of notice would cause such a violation of or default under) any Parent Material
Contract, and no event has occurred that with notice or passage of time or both
would constitute such a breach or default thereunder by Parent or any of its
Subsidiaries, or, to the knowledge of Parent, any other party thereto, except
for such failures to be in full force and effect and such breaches and defaults
that, individually or in the aggregate, would not reasonably be expected to have
a Parent Material Adverse Effect.
SECTION 4.15 EMPLOYEE BENEFIT PLANS. Except for an employee savings plan
under Section 401(k) of the Code, medical and health plans, group life
insurance, dependent care, disability, employee assistance, incentive bonus and
a "cafeteria" plan (collectively, the "Parent Benefit Plans"), the Subsidiaries
of Parent doing business in the United States do not maintain or contribute to,
and employees of such Subsidiaries are not covered by, any benefit plan, fund,
program, agreement, policy or arrangement, including but not limited to any
"employee benefit plan", within the meaning of Section 3(3) of ERISA. There is
no liability arising under any of the Parent Benefit Plans, other than such
liabilities as arise in the ordinary course of the operation of such Parent
Benefit Plans in accordance with their terms, such as liability for
contributions, premiums, and administrative expenses.
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SECTION 4.16 ENVIRONMENTAL MATTERS.
(a) Parent and its Subsidiaries are in compliance with all applicable
Environmental Laws (which compliance includes, but is not limited to, the
possession by Parent and its Subsidiaries of all permits and other governmental
authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof), except where failures to be in compliance
would not, individually or in the aggregate, reasonably be expected to have a
Parent Material Adverse Effect. Since January 1, 1997 and prior to the date of
this Agreement, neither Parent nor any of its Subsidiaries has received any
written communication from a Governmental Entity alleging that Parent or any of
its Subsidiaries is not in such compliance, except where failures to be in
compliance, individually or in the aggregate, would not be expected to have a
Parent Material Adverse Effect.
(b) To the knowledge of Parent, there is no Environmental Claim
pending or threatened against Parent or any of its Subsidiaries or against any
Person whose liability for any Environmental Claim Parent or any of its
Subsidiaries has or may have retained or assumed, either contractually or by
operation of law, that would be expected to have a Parent Material Adverse
Effect.
(iii) To the knowledge of Parent, there are no present or past
actions, activities, circumstances, conditions, events or incidents, including,
without limitation, the Release or presence of any Hazardous Material that could
form the basis of any Environmental Claim against Parent or any of its
Subsidiaries or against any Person whose liability for any Environmental Claim
Parent or any of its Subsidiaries has or may have retained or assumed, either
contractually or by operation of law, that in either case, individually or in
the aggregate, would be expected to have a Parent Material Adverse Effect.
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(d) None of the real property owned or leased by Parent or any
Subsidiary of Parent is listed or, to the knowledge of Parent, proposed for
listing on the "National Priorities List" under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, or any similar
list of sites in the United States or any other jurisdiction requiring
investigation or Cleanup, where such listing would reasonably be expected to
result in a liability to Parent that would have a Parent Material Adverse
Effect.
SECTION 4.17 INTELLECTUAL PROPERTY.
(a) Parent and its Subsidiaries own or have the right to use all
material Intellectual Property reasonably necessary for Parent and its
Subsidiaries to conduct their business as it is currently conducted.
(b) To the knowledge of Parent, neither Parent nor any of its
Subsidiaries infringes upon the intellectual property rights of any Person in
any respect that would reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect and no such claim is pending or, to
the knowledge of Parent, threatened. No judgment, decree, injunction, rule or
order has been rendered by a Governmental Entity which would limit, cancel or
question the validity of, or Parent's or its Subsidiaries' rights in and to, any
Intellectual Property owned by Parent in any respect that would reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect. Parent has not received notice of any pending or threatened suit, action
or adversarial proceeding that seeks to limit, cancel or question the validity
of, or Parent's or its Subsidiaries' rights in and to, any Intellectual Property
owned or licensed by Parent or any of its Subsidiaries, which would reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
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SECTION 4.18 MERGER SUB'S OPERATIONS. Merger Sub has not incurred,
directly or indirectly, any liabilities or obligations, and has acquired no
assets of any kind, except those incurred or acquired in connection with its
incorporation or with the negotiation of this Agreement and the consummation of
the transactions contemplated hereby. Merger Sub has been formed solely to
facilitate the transactions contemplated in this Agreement and has not engaged,
directly or indirectly, in any business or activity of any type of kind, or
entered into any Agreement or arrangement with any person or entity, and is not
subject to or bound by any obligation or undertaking, that is not contemplated
by or in connection with this Agreement and the transactions contemplated
hereby.
SECTION 4.19 TAX TREATMENT. Neither Parent nor any of its affiliates has
taken or agreed to take any action or knows of any fact, agreement, plan or
other circumstance that could (i) prevent the Merger from qualifying as a
"reorganization" under the provisions of Section 368(a) of the Code or (ii)
prevent the exchange of shares of Common Stock from meeting the requirements of
Treasury Regulation Section 1.367(a)-3(c)(1).
SECTION 4.20 BROKERS OR FINDERS. Except for CIBC World Markets Corp. and
Mille Capital, whose fees will be paid by Parent, neither Parent nor Merger Sub
has incurred any obligation or liability, contingent or otherwise, for brokers'
or finders' fees or commissions or similar fees in connection with or upon
consummation of the transactions contemplated by this Agreement.
SECTION 4.21 AFFILIATE TRANSACTIONS. Except as set forth in Parent
Public Documents filed prior to the date hereof or in Schedule 4.21 to this
Agreement, to the knowledge of Parent, there are no material contracts,
commitments, agreements, arrangements or other transactions between Parent or
any of its Subsidiaries, on the one hand, and any (i) officer or director of
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Parent or any of its Subsidiaries or (ii) any affiliate (as such term is defined
in Regulation 12b-2 promulgated under the Exchange Act) of any such officer or
director, on the other hand.
SECTION 4.22 CUSTOMERS. Prior to the date hereof, Parent has provided
the Company a true and correct list of the top thirty (30) customers (as defined
by Parent) of Parent and its Subsidiaries for the fiscal year ended December 31,
1999 and the six months ended June 30, 2000 and the total dollar amount of
services billed to such customers during such periods. Except as set forth in
Schedule 4.21 to this Agreement, no customer included on the list provided as
set forth in the previous sentence has given written or oral notification to
Parent or any of its Subsidiaries of its intent to cancel, terminate,
significantly reduce or otherwise suspend such relationship.
SECTION 4.23 INVESTMENT COMPANY. Neither Parent nor any of its
subsidiaries is an "investment company" as defined under the Investment Company
Act of 1940 and neither Parent nor any of its Subsidiaries sponsors any person
that is such an investment company.
SECTION 4.24 STOCK EXCHANGE LISTING. Based solely on the published
listing rules and standards of the Nasdaq Stock Market and the Nouveau Marche,
respectively, as of the date of this Agreement Parent does not know of any
reason why the ADSs to be issued in the Merger would not be approved for listing
on the Nasdaq Stock Market or why the underlying Parent Shares would not be
listed on the Nouveau Marche.
SECTION 4.25 FORM F-4. The Parent is a "foreign private issuer" as that
term is defined in Rule 3b-4 under the Securities Exchange Act of 1934 and is
qualified to use Form F-4 to register the offering of securities
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contemplated hereunder. Based solely on the Securities Act and the published
rules and regulations of the SEC as of the date of this Agreement, and with
reference solely to the information required to be included or incorporated by
reference in the Form F-4 with regard to Parent and Merger Sub, Parent, after
consulting with its professional and financial advisors, has no reason to
believe that Parent cannot file the Form F-4 in conformity with the Securities
Act or that the Form F-4 could not be declared effective within six months of
the date of execution of this Agreement.
SECTION 4.26 OWNERSHIP OF CAPITAL STOCK. To the knowledge of Parent,
neither Parent nor any of its affiliates beneficially owns, directly or
indirectly, any capital stock of the Company or is a party to any agreement,
arrangement or understanding or the purpose of acquiring, holding, voting or
disposing or any capital stock of the Company.
ARTICLE V
COVENANTS OF THE PARTIES
SECTION 5.1 CONDUCT OF THE BUSINESS OF THE COMPANY. From the date hereof
until the Closing Date, the Company and its Subsidiaries shall conduct their
businesses in the ordinary course consistent with past practice and shall use
all reasonable efforts to preserve intact their business organizations and
relationships with third parties and to keep available the services of their
present officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Closing Date, the Company will not
(and will not permit any of its Subsidiaries to) take any action or omit to take
any action that would (i) make any of its representations and warranties
contained herein false to an extent that would cause the condition set forth in
Section 6.3(b) not to be satisfied or (ii) make the representation and warranty
set forth in Section 3.10 false.
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Furthermore, for the avoidance of doubt, from the date of this Agreement until
the Effective Time, the Company will not take any of the actions specified in
Section 3.10 (as modified by the schedules to this Agreement that are applicable
to the Company) without the prior consent of Parent. Unless it has already done
so prior to the date hereof, as soon as practicable after the execution of this
Agreement the Company shall terminate its exchange offer for its outstanding
High Yield Notes.
SECTION 5.2 CONDUCT OF THE BUSINESS OF PARENT. From the date hereof until
the Closing Date, Parent and its Subsidiaries shall conduct their businesses in
the ordinary course consistent with past practice and shall use all reasonable
efforts to preserve intact their business organizations and relationships with
third parties and keep available the services of their present officers and
employees. Without limiting the generality of the foregoing, from the date
hereof until the Closing Date, Parent will not (and will not permit any of its
Subsidiaries to) take any action or omit to take any action that would make any
of its representations and warranties contained herein false to an extent that
would cause the condition set forth in Section 6.2(b) not to be satisfied.
Furthermore, for the avoidance of doubt, from the date of this Agreement until
the Effective Time, Parent will not take any of the actions specified in Section
4.09 (as modified by the schedules to this Agreement that are applicable to
Parent) without the prior consent of the Company, which consent shall not be
unreasonably withheld or delayed.
SECTION 5.3 SHAREHOLDERS' MEETING; PROXY MATERIAL.
(a) Subject to the last sentence of this Section 5.3(a), the Company
shall, in accordance with applicable law and the Articles of Organization and
the by-laws of the Company, duly call, give notice of, convene and hold a
meeting of its stockholders (the "Special Meeting") as
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promptly as practicable after the effective date of the Form F-4 for the purpose
of considering and taking action upon this Agreement and the Merger. The
Company's Special meeting shall be scheduled and, if necessary, adjourned as
appropriate so that the vote of the Company's stockholders necessary to approve
this Agreement and the Merger occurs as nearly as may be practicable
concurrently with the vote by Parent's shareholders referred to in Section
5.14(a) hereof. The Board of Directors of the Company shall recommend approval
and adoption of this Agreement and the Merger by the Company's stockholders;
provided, however, that the Board of Directors of the Company may withdraw,
-------- -------
modify or change such recommendation if but only if prior to approval of the
Merger by the stockholders of the Company (i) the Board of Directors believes in
good faith that a Superior Proposal (as defined in Section 5.5 hereof) has been
made that was not solicited or encouraged in violation of this Agreement, (ii)
it has determined in good faith, after consultation with its outside counsel
(who may be its regularly engaged outside counsel), that the failure to
withdraw, modify or change such recommendation is likely to constitute a breach
of its fiduciary duties under applicable law and (iii) the Company gives Parent
three business days' prior written notice of its intention to do so. The Company
shall use its reasonable best efforts to solicit from its stockholders proxies
in favor of the approval of this Agreement and to take all other action
necessary or advisable to secure the vote or consent of stockholders required by
the Massachusetts BCL to obtain such approval, except to the extent that the
Board of Directors of the Company has changed its recommendation to the
stockholders of the Company with respect to the Merger and this Agreement in
accordance with this Section 5.3(a).
(b) The Proxy Statement shall include the recommendation of the Board
of Directors of the Company to the stockholders of the Company in favor of
approval of the Merger and this Agreement; provided, however, that the Board of
-------- -------
Directors of the Company may, prior to the Effective Time, withdraw,
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modify or change any such recommendation to the extent that the Board of
Directors of the Company has changed its recommendation to the shareholders of
the Company with respect to the Merger and this Agreement in accordance with
Section 5.3(a).
(c) Promptly following the date of this Agreement, the Company shall
prepare a proxy statement relating to the adoption of this Agreement and the
approval of the Merger by the Company's stockholders (the "Proxy Statement").
---------------
Parent shall also file the Parent Listing Prospectus with the COB with a view to
having the Parent Shares underlying the ADSs to be issued in the Merger listed
as promptly as practicable following the Closing Date. Parent and the Company
shall cooperate (and shall cause their respective Subsidiaries to cooperate)
with each other in connection with the preparation of the foregoing documents
and shall furnish all information concerning such party as the other party may
reasonably request in connection with the preparation of such documents. Parent
and the Company shall file the Proxy Statement, in preliminary form on a
confidential basis, if possible, with the SEC as promptly as reasonably
practicable and Parent shall file the Form F-4 with the SEC as soon as
reasonably practicable after any SEC comments with respect to the preliminary
Proxy Statement are resolved. If permitted by the rules and regulations of the
SEC, and if the Company shares issuable upon exercise of the Warrants are
currently registered or required to be registered, the Form F-4 will register
the Parent ADSs to be issued upon exercise of any Warrants after the Effective
Time or, if such rules and regulations do not so permit, Parent shall,
concurrently with filing the Form F-4 or as soon thereafter as is practicable,
file a separate registration statement with the SEC on Form F-1 or such other
form as may be available for this purpose to register such underlying Parent
ADSs. In the event that Parent is required to file such separate registration
statement, all the provisions of this Agreement that apply to the Form F-4
(including this Section 5.3(c)) shall also apply to the separate registration
statement to
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the greatest extent possible. Each of Parent and the Company shall use all
reasonable efforts to have the Form F-4 declared effective under the Securities
Act as promptly as practicable after such filing. The Company shall use all
reasonable efforts to cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable after the Form F-4 is declared effective
under the Securities Act. Parent shall use all reasonable efforts to obtain the
visa of the COB on the Parent Listing Prospectus as soon as practicable.
(d) Each of Parent and the Company shall as promptly as practicable notify
the other of (i) the effectiveness of the Form F-4, (ii) the filing of any
amendment or supplement thereto, (iii) the receipt of any comments from the SEC
relating to the Form F-4 or the Proxy Statement, (iv) any request by the SEC or
the COB for any amendment to the Form F-4 or for additional information, (v) the
issuance of any "stop order" or (vi) any suspension of the qualification of the
ADSs. All filings by Parent and the Company with the SEC in connection with the
transactions contemplated hereby, including the Proxy Statement, the Form F-4
and any amendment or supplement thereto, shall be subject to the prior review of
the other, and all mailings to the Company's stockholders in connection with the
transactions contemplated by this Agreement shall be subject to the prior review
of Parent, and no filing of, or amendment or supplement to, the Form F-4 or the
Company Proxy Statement shall be made by Parent or Merger Sub without providing
the Company with the opportunity to review and comment thereon.
(e) Each of Parent and the Company agree that if it should become aware
prior to the Effective Time of any information furnished by it that would cause
any of the statements in the Proxy Statement or the Form F-4 to be false or
misleading with respect to any material fact, or to omit to state any material
fact necessary to make the statements therein not false or misleading, to
promptly inform the other party thereof and to take the necessary steps to
correct the Proxy Statement or the Form F-4.
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SECTION 5.4 ACCESS TO INFORMATION; CONFIDENTIALITY AGREEMENT. (a) Upon
reasonable advance notice, between the date hereof and the Closing Date, the
Company shall (i) give Parent, its respective counsel, financial advisors,
auditors and other authorized representatives (collectively, "Parent's
--------
Representatives") reasonable access during normal business hours to the offices,
---------------
properties, books and records of the Company and its Subsidiaries, (ii) furnish
to Parent's Representatives such financial and operating data and other
information relating to the Company, its Subsidiaries and their respective
operations as such Persons may reasonably request and (iii) instruct the
Company's employees, counsel and financial advisors to cooperate with Parent in
its investigation of the business of the Company and its Subsidiaries; provided
--------
that any information and documents received by Parent or Parent's
----
Representatives (whether furnished before or after the date of this Agreement)
shall be held in accordance with the Confidentiality Agreement dated May 5, 2000
between Parent and the Company (the "Confidentiality Agreement"), which shall
-------------------------
remain in full force and effect pursuant to the terms thereof, notwithstanding
the execution and delivery of this Agreement or the termination hereof, until
the Effective Time.
(b) Upon reasonable advance notice, between the date hereof and the Closing
Date, Parent shall (i) give Company, its respective counsel, financial advisors,
auditors and other authorized representatives (collectively, "Company's
---------
Representatives") reasonable access during normal business hours to the offices,
---------------
properties, books and records of Parent and its Subsidiaries, (ii) furnish to
Company's Representatives such financial and operating data and other
information relating to Parent, its Subsidiaries and their respective operations
as such Persons may reasonably request and (iii) instruct Parent's employees,
counsel and financial advisors to cooperate with the Company in its
investigation of the business of Parent and its Subsidiaries; provided that any
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information and documents received by the
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Company or the Company's Representatives (whether furnished before or after the
date of this Agreement) shall be held in accordance with the Confidentiality
Agreement, which shall remain in full force and effect pursuant to the terms
thereof, notwithstanding the execution and delivery of this Agreement or the
termination hereof, until the Effective Time.
SECTION 5.5 NO SOLICITATION. From the date hereof until the Effective Time
or, if earlier, the termination of this Agreement, the Company shall not
(whether directly or indirectly through advisors, agents or other
intermediaries), and the Company shall not authorize or permit any of its
respective officers, directors, advisors, representatives or other agents of the
Company to, directly or indirectly, (a) solicit, initiate, encourage or
facilitate any inquiry, offer or proposal that constitutes an Acquisition
Proposal (as defined below) or (b) engage in discussions or negotiations with,
or disclose any nonpublic information relating to the Company or its
Subsidiaries or afford access to the properties, books or records of the Company
or its Subsidiaries to, any Person that has made an Acquisition Proposal (or
inquires with respect thereto) or has advised the Company that it is interested
in making an Acquisition Proposal or (c) enter into any agreement, arrangement
or understanding requiring it to abandon, terminate or fail to consummate the
Merger or any other transactions contemplated by this Agreement; provided that,
-------------
the foregoing shall not prohibit the Company, prior to the approval of the
Merger by the Company's stockholders, (a) from complying with Rule 14e-2 and
Rule 14d-9 under the Exchange Act with regard to a bona fide tender offer or
exchange offer or (b) from providing information in response to an Acquisition
Proposal from any Person that did not arise or result from a breach of this
Section 5.5 by the Company and conducting negotiations regarding such
Acquisition Proposal, if and only if (i) the Company's Board of Directors
determines in good faith that such Acquisition Proposal is a Superior Proposal
(as defined hereafter) and (ii)
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the Company's Board of Directors determines in good faith that the failure to
engage in such negotiations or provide such information is likely to result in a
breach of its fiduciary duties under applicable law, provided further that the
---------------------
Company will not disclose any information to such Person without (i) first
entering into a confidentiality agreement on terms no less favorable to the
Company than the one entered into by Company and Parent on May 5, 2000, and (ii)
giving Parent twenty-four (24) hours prior notice of the Company's intention to
provide such information. The Company shall promptly (but in any event within
one calendar day) provide Parent with a copy of any written Acquisition Proposal
received and a written statement with respect to any nonwritten Acquisition
Proposal received, which statement shall include the identity of the parties
making the Acquisition Proposal and the terms thereof. The Company shall inform
Parent as promptly as practicable, and in any event within one calendar day,
regarding any change in the terms of any Acquisition Proposal with a third party
or any other material development regarding any Acquisition Proposal with a
third party. For purposes of this Agreement, (A) "Acquisition Proposal" means
--------------------
any offer or proposal for a merger, consolidation, recapitalization, liquidation
or other business combination involving the Company or the acquisition or
purchase of 25% or more of any class of equity securities of the Company, or any
tender offer (including a self- tender) or exchange offer that, if consummated,
would result in any Person beneficially owning 25% or more of any class of
equity securities of the Company, or 25% or more of the assets of, the Company
and its Subsidiaries taken as a whole, whether as a result of a single
transaction or a series of related transactions, or any solicitation in
opposition to approval by the Company's shareholders of this Agreement, other
than the transactions contemplated by this Agreement; and (B) "Superior Proposal
-----------------
shall mean an Acquisition Proposal which in the reasonable judgment of the
Company's Board of Directors, based on such matters as it deems relevant
including the advice of the Company Financial Advisor, (i) is
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reasonably likely to result in a transaction that is more favorable to the
Company's stockholders than those provided pursuant to this Agreement (including
any adjustment to the terms and conditions proposed by Parent and Merger Sub in
response to such Acquisition Proposal), and (ii) is reasonably capable of being
financed by the Person making such Proposal on a timely basis. Nothing contained
in this Section 5.5 shall prohibit the Company or the Company's Board of
Directors from making any disclosure required by applicable law. The Company
immediately shall cease and cause to be ceased all existing activities,
discussions and negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal and request the return of all confidential
information regarding the Company and its Subsidiaries provided to such party
prior to the date hereof. The Company agrees not to release any third party
from, or waive any provision of, any confidentiality or standstill agreement to
which it is a party unless such third party has made a Superior Proposal.
SECTION 5.6 DIRECTOR AND OFFICER LIABILITY.
(a) Parent and the Company agree that all rights to indemnification
and all limitations on liability existing in favor of any Indemnitee (as defined
hereafter) as provided under the Massachusetts BCL, in the Articles of
Organization and by-laws of the Company and in any agreement between an
Indemnitee and the Company or a Subsidiary of the Company as in effect as of the
date hereof shall survive the Merger and continue in full force and effect in
accordance with its terms.
(b) For three years after the Effective Time, Parent shall or shall
cause the Surviving Corporation to indemnify and hold harmless the individuals
who on or prior to the Effective Time were officers, directors, employees or
agents of the Company and any of its Subsidiaries (the "Indemnitees") to the
-----------
same extent as set forth in subsection (a) above. In the event any claim in
respect of which indemnification is available pursuant
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to the foregoing provisions is asserted or made within such three-year period
(whether or not service of process has been made on an Indemnitee within such
three year period, all rights to indemnification shall continue until such claim
is disposed of or all judgments, orders, decrees or other rulings in connection
with such claim are fully satisfied.
(c) For three years after the Effective Time, the Surviving
Corporation shall provide officers' and directors' liability insurance in
respect of acts or omissions occurring prior to the Effective Time covering each
such Person currently covered by the Company's officers' and directors'
liability insurance policy on terms with respect to coverage and amount no less
favorable than those of such policy in effect on the date hereof; provided,
--------
however, that in no event shall the Surviving Corporation be required to expend
-------
more than an amount per year equal to 150% of current annual premiums paid by
the Company for such insurance (the "Maximum Amount") to maintain or procure
--------------
insurance coverage pursuant hereto; provided, further, that if the amount of the
-------- -------
annual premiums necessary to maintain or procure such insurance coverage exceeds
the Maximum Amount, the Surviving Corporation shall maintain or procure, for
such three-year period, the most advantageous policies of directors' and
officers' insurance obtainable for an annual premium equal to the Maximum
Amount.
(d) The obligations of Parent and the Surviving Corporation under this
Section 5.6 shall not be terminated or modified in such a manner as to adversely
affect any Indemnitee to whom this Section 5.6 applies without the consent of
such affected Indemnitee (it being expressly agreed that the Indemnitees to whom
this Section 5.6 applies shall be third party beneficiaries of this Section
5.6).
SECTION 5.7 COMMERCIALLY REASONABLE EFFORTS. Upon the terms and subject
to the conditions of this Agreement, each party hereto shall use all reasonable
efforts to take, or cause to be taken, all actions and to do, or
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cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate the transactions contemplated by this
Agreement.
SECTION 5.8 CERTAIN FILINGS.
(a) The Company and Parent shall cooperate with one another (i) in
connection with the preparation of the Proxy Statement and the Form F-4
Registration Statement, (ii) in determining whether any action by or in respect
of, or filing with, any Governmental Entity 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 Proxy Statement and the Form F-4
Registration Statement and seeking timely to obtain any such actions, consents,
approvals or waivers. Without limiting the provisions of this Section 5.8, each
party hereto shall file with the Department of Justice and the Federal Trade
Commission a Pre-Merger Notification and Report Form pursuant to the HSR Act in
respect of the transactions contemplated hereby within ten (10) days of the date
of this Agreement, and each party will use all reasonable efforts to take or
cause to be taken all actions necessary, including to promptly and fully comply
with any requests for information from regulatory Governmental Entities, to
obtain any clearance, waiver, approval or authorization relating to the HSR Act
that is necessary to enable the parties to consummate the transactions
contemplated by this Agreement. Without limiting the provisions of this Section
5.8, each party hereto shall use all reasonable efforts to promptly make the
filings required to be made by it with all foreign Governmental Entities in any
jurisdiction in which the parties believe it is necessary or advisable.
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(b) The Company and Parent shall each use all reasonable efforts to
resolve such objections, if any, as may be asserted with respect to the Merger
or any other transaction contemplated by this Agreement under any Antitrust Law
(as defined below). Notwithstanding anything to the contrary in this Agreement,
none of Parent, any of its Subsidiaries or the Surviving Corporation, shall be
required (and the Company shall not, without the prior written consent of
Parent, agree, but shall, if so directed by Parent, agree) to hold separate or
divest any of their respective assets or operations or enter into any consent
decree or licensing or other arrangement with respect to any of their assets or
operations.
(c) Each of the Company and Parent shall promptly inform the other
party of any material communication received by such party from the Federal
Trade Commission, the Antitrust Division of the Department of Justice, the
Commission of the European Community or any other governmental or regulatory
authority regarding any of the transactions contemplated hereby.
(d) "Antitrust Law" means the Sherman Act, as amended, the Clayton
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Act, as amended, EC Merger Regulations and all other federal, state and foreign
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to prohibit, restrict or
regulate competition or actions having the purpose or effect of monopolization
or restraint of trade.
SECTION 5.9 PUBLIC ANNOUNCEMENTS. Neither the Company, Parent nor any of
their respective affiliates shall issue or cause the publication of any press
release or other public announcement with respect to the Merger, this Agreement
or the other transactions contemplated hereby without the prior consent of the
other party, except that public disclosure may be made as may be required by law
or by any listing agreement with, or the policies of, a national securities
exchange following prior consultation with the other
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party. The Company shall consult with Parent prior to making publicly available
its financial results for any period ending after the date of this Agreement and
prior to filing any Company SEC Documents after the date of this Agreement.
Parent shall consult with Company prior to making publicly available its
financial results for any period ending after the date of this Agreement and
prior to filing any Parent Public Documents after the date of this Agreement.
SECTION 5.10 CERTAIN CONSENTS. The Company shall obtain the consent of
any third party whose consent is required in connection with the Merger in order
to avoid the termination, cancellation or acceleration of any contract, license,
lease, agreement or similar instrument or obligation, except where the failure
to obtain such consent would not have a Company Material Adverse Effect.
SECTION 5.11 EMPLOYEE MATTERS.
(a) For a period of one year immediately following the date of the Closing,
Parent agrees to cause the Surviving Corporation to provide to all active
employees of the Company who continue to be employed by the Company as of the
Effective Time ("Continuing Employees") coverage by benefit plans or
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arrangements that are, in the aggregate, substantially equivalent to (including,
with respect to eligibility requirements, exclusions and the employee portion of
the cost of such benefit plans or arrangements) those generally provided to the
employees of the U.S. Subsidiaries of Parent immediately prior to the date of
the Closing. Parent shall take (or shall cause the Surviving Corporation to
take) all steps necessary to ensure (to the extent permitted by law and by the
terms of such plans and arrangements) that Continuing Employees shall receive
credit, for all purposes under all such plans and arrangements, for their
service with the Company and, in the case of health and dental benefit plans,
for claims and expenses incurred by
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them prior to the Closing Date that are properly taken into account under
similar existing Company plans.
(b) Parent shall, and shall cause the Surviving Corporation and its
Subsidiaries to, honor in accordance with their terms all agreements, contracts,
arrangements, commitments and understandings described in Schedule 3.12(a) to
this Agreement, except as such agreements, contracts, arrangements, commitments
and understandings may be amended or waived with the consent of the applicable
employee.
(c) The holders of Options have been or will be given by the Company,
or shall have properly waived, any required notice prior to the Merger and all
such rights to notice will be terminated at or prior to the Effective Time.
From the date hereof until the Closing Date, the Company shall not (except
pursuant to binding agreements entered into in good faith prior to July 27,
2000) accelerate the vesting of any unvested options.
SECTION 5.12 TAX-FREE REORGANIZATION TREATMENT. Each of Parent and the
Company shall take all reasonable actions necessary to cause the Merger to
qualify as a reorganization under the provisions of section 368(a) of the Code,
the Parent and the Company each to be a party to the reorganization within the
meaning of Section 368(b) of the Code, and the exchange of shares of Common
Stock pursuant to the Merger to meet the requirements of Treasury Regulation
Section 1.367(a)-3(c)(1) and to obtain the opinion of counsel referred to in
Section 6.2(d) hereof, and neither party will take any action inconsistent
therewith. For the purposes of the tax opinion described in Section 6.2(d)
hereof, Parent and the Company shall provide representation letters
substantially in the form of Exhibits C and D, respectively, each dated and
executed on or about the date that is two business days prior to the date the
Proxy Statement is mailed to the stockholders of the Company and dated and
executed on the Closing Date. Each of Parent and the Company and each of their
respective affiliates shall not take any action, shall not fail
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to take any action, cause any action to be taken or not taken, or suffer to
exist any condition, which action or failure to take action or condition 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 5.13 SUPPLEMENTAL WARRANT AGREEMENT. On or before the Closing
Date, Parent and Merger Sub shall (as provided in Section 5.1(b) of the Warrant
Agreement) enter into an agreement supplemental to the Warrant Agreement,
complying with the requirements of Section 5.01(b) of the Warrant Agreement in
connection with the Merger.
SECTION 5.14 PARENT SHAREHOLDERS' MEETING.
(a) Subject to the last sentence of this Section 5.14(a), Parent
shall, in accordance with applicable law and the bylaws (statuts) of Parent,
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duly call, give notice of, convene and hold an extraordinary general meeting of
its shareholders (the "EGM") for the purpose of approving the issuance of the
shares of Parent Common Stock to be issued in connection with the Merger as
promptly as practicable after the effective date of the Form F-4. The Board of
Directors of Parent shall recommend approval of such issuance by the Parent's
shareholders; provided, however, that the Board of Directors of Parent may
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withdraw, modify or change such recommendation if but only if the Parent's Board
of Directors believes in good faith, based on such matters as it deems relevant,
that it is more likely than not that the Company will fail to satisfy one of the
conditions to the Parent's obligations set forth in Section 6.1 or 6.3 of this
Agreement. Parent shall use all reasonable efforts to obtain the vote or
consent of its shareholders in favor of the approval of such issuance and to
take all other action necessary or advisable to secure the vote or consent of
shareholders required under French law and its constituent instruments to obtain
such approval, except to the extent
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that the Board of Directors of Parent has changed its recommendation to the
shareholders of Parent in accordance with this Section 5.14(a).
(b) Promptly following the date of this Agreement, Parent shall prepare a
report of its Board of Directors to be submitted to the EGM. Parent and the
Company shall cooperate with each other in connection with the preparation of
such report and shall furnish all information concerning such party as the other
party may reasonably request in connection with the preparation thereof. Parent
shall use all reasonable efforts to cause such report to be made available to
its shareholders within the periods required by the French Commercial Code.
SECTION 5.15 LISTING. Parent shall use all reasonable efforts to (i)
obtain approval for listing and trading of Parent's ADSs on the Nasdaq Stock
Market (subject to approval of issuance of the underlying Parent Shares by the
shareholders of Parent as provided in Section 5.14 hereof and subject to notice
of official issuance thereof) simultaneously with the Form F-4 being declared
effective by the SEC, (ii) cause the ADSs to be issued in the Merger to be
listed on the Nasdaq Stock Market, subject to notice of official issuance
thereof, prior to the Closing Date, and (iii) cause the underlying Parent Shares
to be listed on the Nouveau Marche as soon as practicable after the Closing
Date. In connection with the establishment of its ADS program and the issuance
of Parent's ADRs as provided herein, Parent shall enter into a depositary
agreement providing for a "Level III" depositary program (not involving a
concurrent offering of equity securities for cash consideration) with an ADR
depositary who shall be reasonably acceptable to the Company, it being
understood that any of Bank of New York, Morgan Guaranty Trust Company of New
York and Citibank, N.A. are acceptable to the Company for this purpose.
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SECTION 5.16 STATE TAKEOVER LAWS. If any "fair price," "business
combination" or "control share acquisition" statute or other similar statute or
regulation is or may become applicable to the Merger, the Company and Parent
shall each use all reasonable efforts to permit the transactions contemplated by
this Agreement to be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate or minimize the effects of
any such statute or regulation on the Merger.
SECTION 5.17 CERTAIN NOTIFICATIONS. Between the date hereof and the
Effective Time, each party shall promptly notify the other party hereto in
writing after becoming aware of the occurrence of any event which will, or is
reasonably likely to, result in the failure to satisfy any of the conditions
specified in Article VI.
SECTION 5.18 POOLING. From and after the date of this Agreement and until
the Effective Time, neither Parent nor the Company, nor any of their respective
Subsidiaries or other affiliates, shall knowingly take any action, or knowingly
fail to take any action, that is reasonably likely to jeopardize the treatment
of the Merger as a "pooling of interests" for either French or U.S. accounting
purposes. Between the date of this Agreement and the Effective Time, Parent and
the Company each shall use their reasonable efforts to cause the
characterization of the Merger as a "pooling of interests" for both French and
U.S. accounting purposes if such a characterization were jeopardized by action
taken by Parent or the Company, respectively, prior to the Effective Time;
provided, however, that in connection therewith, neither Parent nor the Company
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shall be obligated to pay any consideration to, or assume any liability of, any
third party as to whom such efforts may be addressed.
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SECTION 5.19 AFFILIATE AGREEMENTS. At least 45 days prior to the date of
the Special Meeting, (i) the Company shall deliver to Parent a list setting
forth the names and addresses of each Person who, in the Company's reasonable
judgment, is or is reasonably likely to be deemed, at the time of the Special
Meeting, to be an "affiliate" of the Company (each, a "Company Affiliate"), as
that term is used in Rule 145 under the Securities Act or SEC Accounting Series
Releases 130 and 135; and (ii) Parent shall deliver to the Company a list
setting forth the names and addresses of each Person who, in Parent's reasonable
judgment, is or is reasonably likely to be deemed, at the time of the Special
Meeting, to be an "affiliate" of Parent (each, a "Parent Affiliate"), as that
term is used in Rule 145 under the Securities Act or SEC Accounting Series
Releases 130 and 135. The Company and Parent each shall furnish such information
and documents as the other may reasonable request for the purpose of reviewing
such list. Each of the Company and Parent shall use its respective reasonable
best efforts to cause each person who is identified as a Company Affiliate or a
Parent Affiliate, as the case may be, on each of their respective lists to
execute and deliver to the Company and Parent a written agreement in form and
substance reasonably satisfactory to the Company and Parent (collectively, the
"Affiliate Agreements") on or before the date of mailing of the Proxy Statement.
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SECTION 5.20 LETTERS OF ACCOUNTANTS.
(a) Parent shall use all reasonable efforts to cause to be delivered
to the Company "comfort" letters of Ernst & Young Audit ("E&Y"), Parent's
independent public accountants, dated and delivered the date on which the Form
F-4 shall become effective and as of the Effective Time, and addressed to the
Company, 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.
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(b) The Company shall use all reasonable efforts to cause to be
delivered to Parent "comfort" letters of KPMG LLP ("KPMG"), the Company's
independent public accountants, dated and delivered the date on which the Form
F-4 shall become effective and as of the Effective Time, and addressed to
Parent, 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.
Section 5.21 VOTING AGREEMENTS. Promptly following the date of this
Agreement, the Company, at the request of Parent and to the extent it may
lawfully do so, will solicit each director and executive officer of the Company
and each of its Material Stockholders (as defined hereafter) who is not
concurrently entering into a Voting Agreement to execute and deliver to the
Parent a Voting Agreement in the form of Exhibit E hereto with respect to all
shares of Common Stock which such person currently owns or has the right or
power to vote; provided, however, that the Company shall not be required to
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undertake any such solicitation, if such solicitation would require the making
of any filings with the SEC prior to the date that the Form F-4 which is filed
with the SEC with respect to the Merger is declared effective by the SEC. For
purposes of this Agreement, "Material Stockholder" means (a) John Hassett and
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each other Person or "group" of Persons (within the meaning of Section 13(d)(3)
of the Exchange Act) who owns beneficially (as defined in Rule 13d-3 under the
Exchange Act) five percent (5%) or more of the outstanding Common Stock of the
Company and who has filed a report on Schedule 13D or Schedule 13G with the SEC
with respect thereto.
SECTION 5.22 SUPPLEMENTAL INFORMATION. Except where prohibited by
applicable statutes and regulations, each party shall promptly provide the other
(or its counsel) with copies of all filings, material notices or
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material communications made by such party with any Governmental Entity
(including the SEC, COB and Nasdaq Stock Market) in connection with this
Agreement or the transactions contemplated hereby.
SECTION 5.23 PARENT BOARD OF DIRECTORS. As soon as practicable after the
Effective Time, Parent shall propose for election, by its ordinary general
shareholders meeting, as a director of Parent one individual
designated by the Company who shall be reasonably acceptable to Parent,
provided, however, that the individual so designated shall not be an officer or
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other member of management of the Company. The Company shall designate the
individual referred to in the preceding sentence by notice to Parent not later
than five business days prior to the Special Meeting.
SECTION 5.24 POST-CLOSING FINANCIAL STATEMENTS. Within 45 days after the
end of the first full fiscal quarter of Parent following the Effective Time,
Parent shall file or publicly disclose the results of at least 30 days of
combined operations of Parent and the Surviving Corporation in form and
substance sufficient to enable Patriot Affiliates to sell Parent ADSs within the
requirements of Accounting Series Releases 130 and 135 and Staff Accounting
Bulletin 65.
SECTION 5.25 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 Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions 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.
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ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or, to the extent permitted by applicable law, the
waiver on or prior to the Effective Time of each of the following conditions:
(a) This Agreement shall have been adopted, and the Merger approved,
by the shareholders of the Company in accordance with applicable law;
(b) Any applicable waiting periods under the HSR Act and the EC Merger
Regulation relating to the Merger shall have expired or been terminated;
(c) No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger or the
other transactions contemplated by this Agreement;
(d) The Form F-4 shall have become effective under the Securities Act
and shall not be the subject of any stop order or proceedings seeking a stop
order, and any material "blue sky," other state, federal and foreign securities
laws applicable to the registration and qualification of the ADSs and the Parent
Shares shall have been complied with (including visas of the COB);
(e) The accountants' "cold comfort" letters referred to in Section
5.20 shall have been received by the respective addressees thereof;
(f) The EGM of Parent shall have approved the issuance of the Parent
Shares to be issued in the Merger in accordance with applicable law and the by-
laws (statuts) of Parent; and
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(g) The ADSs issuable in accordance with the Merger shall have been
approved for listing on the Nasdaq Stock Market, subject to official notice of
issuance.
SECTION 6.2 CONDITIONS TO THE COMPANY'S OBLIGATION TO CONSUMMATE THE
MERGER. The obligation of the Company to consummate the Merger shall be further
subject to the satisfaction or, to the extent permitted by applicable law, the
waiver on or prior to the Effective Time of each of the following conditions:
(a) Each of Parent and Merger Sub shall have performed in all material
aspects its respective agreements and covenants contained in or contemplated by
his Agreement that are required to be performed by it at or prior to the
Effective Time pursuant to the terms hereof;
(b) The representations and warranties of Parent and Merger Sub
contained in Article IV hereof (without giving effect to any materiality
qualifications or limitations therein or any references therein to Parent
Material Adverse Effect) shall be true and correct in all respects as of the
Effective Time (or, to the extent such representations and warranties speak as
of an earlier date, they shall be true in all respects as of such earlier date),
except (i) as otherwise contemplated by this Agreement and (ii) for such
failures to be true and correct which individually or in the aggregate would not
reasonably be expected to have a Parent Material Adverse Effect;
(c) The Company shall have received a certificate signed by the
president or any senior executive vice president of Parent, dated the Closing
Date, to the effect that, to such officer's knowledge, the conditions set forth
in Sections 6.2(a) and 6.2(b) hereof have been satisfied or waived; and
(d) The Company shall have received an opinion dated the Closing Date
of Cadwalader, Wickersham & Taft, tax counsel to the Company, or such other
counsel as may be reasonably satisfactory to the Company, in form and substance
reasonably satisfactory to it, to the effect that (i) the Merger
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will constitute a reorganization for United States federal income tax purposes
within the meaning of Section 368(a) of the Code and (ii) Parent and the Company
will each be parties to a reorganization, and such opinion shall not have been
withdrawn prior to the Effective Time; it being understood that, in rendering
such opinion, such tax counsel shall be entitled to rely upon representations
provided by the parties in accordance with Section 5.12;
(e) (i) Parent shall have arranged for financing to the Company to
enable the Company to repay or defease the High-Yield Notes concurrently with
the closing of the Merger, in accordance with the requirements of the Company
Indenture, at a price of 105% of their principal amount, plus accrued interest,
so that there will be no violation of Section 5.01(a) of the Company Indenture
due to the Merger; or (ii) if the Closing of the Merger would not cause a
violation of such Section 5.01(a) because the Company is able to incur $1.00 of
additional Indebtedness (as defined in the Company Indenture) at such time, in
lieu of the financing referenced in the preceding clause (i), Parent shall have
delivered to the Company at or prior to the Effective Time a written commitment
of one or more banks or other financial institutions sufficient to enable the
Company to purchase the High-Yield Notes from the holders thereof pursuant to
the change-of-control covenant in the Company Indenture not more than 60 days
following the Effective Time;
(f) Parent shall have arranged financing to enable the Company to repay and
terminate its obligations under the Coast Business Credit Agreement concurrently
with the Closing of Merger in accordance with the requirements of the Coast
Business Credit Agreement, or Coast Business Credit shall have consented to the
Company's entering into this Agreement, the Merger and the other transactions
contemplated hereby and such consent shall not be conditioned upon any fact,
matter, payment or forbearance which shall be unacceptable to Parent in its sole
discretion (it being understood that Parent shall have no obligation to seek or
obtain such consent); and
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(g) The Company shall have received the opinion of (i) Marie Capela
Laborde, Group Legal Counsel of Parent, dated the Closing Date and substantially
in the form of Exhibit F-1 hereto, and (ii) Cleary, Gottlieb, Steen and
Hamilton, dated the Closing Date and substantially in the form of Exhibit F-2 to
this Agreement.
SECTION 6.3 CONDITIONS TO PARENT'S AND MERGER SUB'S OBLIGATIONS TO
CONSUMMATE THE MERGER. The obligations of Parent and Merger Sub to effect the
Merger shall be further subject to the satisfaction, or to the extent permitted
by applicable law, the waiver on or prior to the Effective Time of each of the
following conditions:
(a) The Company shall have performed in all material respects each of
its agreements and covenants contained in or contemplated by this Agreement that
are required to be performed by it at or prior to the Effective Time pursuant to
the terms hereof;
(b) The representations and warranties of the Company contained in
Article III hereof (without giving effect to any materiality qualifications or
limitations therein or any references therein to Company Material Adverse
Effect) shall be true and correct in all respects as of the Effective Time (or,
to the extent such representations and warranties speak as of an earlier date,
they shall be true in all respects as of such earlier date), except (i) as
otherwise contemplated by this Agreement and (ii) for such failures to be true
and correct which individually or in the aggregate would not reasonably be
expected to have a Company Material Adverse Effect;
(c) Parent shall have received a certificate signed by the president
and chief executive officer of the Company, dated the Closing Date, to the
effect that, to such officer's knowledge, the conditions set forth in Sections
6.3(a) and 6.3(b) hereof have been satisfied or waived;
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(d) All foreign laws regulating competition, antitrust, investment or
exchange control shall have been complied with, and all approvals required under
such foreign laws shall have been received;
(e) Concurrently with the execution and delivery of this Agreement,
each of the individuals listed on Schedule 6.3(e) hereof shall have executed an
employment agreement with the Company in the form previously furnished to Parent
and such employment agreement shall be in full force and effect at the Effective
Time; and
(f) The Parent shall have received the opinion of Cadwalader,
Wickersham & Taft, dated the Closing Date and substantially in the form of
Exhibit F-3 hereto.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION. Notwithstanding anything herein to the contrary,
this Agreement may be terminated and the transactions contemplated by this
Agreement may be abandoned at any time prior to the Closing Date, whether before
or after the Company has obtained shareholder approval:
(a) by the mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if the Merger has not been
consummated on or before May 15, 2001 (the "Termination Date") provided, that
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the right to terminate this Agreement pursuant to this Section 7.1(b) shall not
be available to the party whose failure to fulfill any of its obligations under
this Agreement has been the cause of or resulted in the failure of the Merger to
occur on or before such date;
(c) by either the Company or Parent, if (i) there shall be any law or
regulation that makes consummation of the transactions contemplated by this
Agreement illegal or (ii) any judgment, injunction, ruling, order or decree
permanently restraining, enjoining or otherwise prohibiting Parent,
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Merger Sub or the Company from consummating the transactions contemplated by
this Agreement is entered and such judgment, injunction, ruling, order or decree
shall have become final and nonappealable;
(d) by Parent, if (i) the Board of Directors of the Company shall have
withheld, withdrawn or modified or amended in any respect adverse to Parent or
Merger Sub its approval or recommendation of the Merger or shall have resolved
to do so, (ii) the Board of Directors of the Company shall have entered into any
letter of intent or similar document or any agreement, contract or commitment
accepting any Acquisition Proposal, shall have recommended to the shareholders
of the Company any Acquisition Proposal or shall have resolved or announced an
intention to do so, or (iii) a tender offer or exchange offer for 25% or more of
the outstanding shares of the Company Common Stock is announced or commenced and
either (A) the Board of Directors of the Company recommends acceptance of such
tender offer or exchange offer by its shareholders or (B) within (1) ten (10)
business days of such commencement or (2) in any event, at least three (3)
business days prior to the shareholder meeting, the Board of Directors of the
Company shall have failed to recommend against acceptance of such tender offer
or exchange offer by its shareholders (including by taking no position with
respect to the acceptance of such tender offer or exchange offer by its
stockholders), (iv) the Company shall have failed to include in the Proxy
Statement the recommendation of the Company's Board of Directors in favor of the
approval of the Merger or this Agreement, (v) if requested in writing by Parent
to reaffirm such recommendation, the Company's Board of Directors shall have
failed to reaffirm its recommendation in favor of the approval of the Merger and
this Agreement within ten business days after the announcement of an Acquisition
Proposal (unless such announcement shall have occurred less than ten business
days prior to the Special Meeting, in which case such reaffirmation shall occur
as soon as practicable, and if so practicable, in
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advance of the Special Meeting), or (vi) the Company shall have breached its
obligations under Section 5.5 in any respect;
(e) by either the Company or Parent, if (i) the approval of the
stockholders of the Company of the Merger and the adoption of this Agreement
shall not have been obtained at a duly held meeting of stockholders of the
Company or any adjournment thereof or (ii) the shareholders of Parent shall have
refused to approve the issuance of the Parent Shares to be issued in the Merger
at the EGM or at any adjournment thereof;
(f) by Parent, if the Company breaches any representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement, or
if any representation or warranty of the Company shall have become untrue,
incomplete or incorrect, in either case such that the conditions set forth in
Section 6.3(a) or (b) would not be satisfied (a "Terminating Company Breach");
--------------------------
provided, however, that if such Terminating Company Breach is curable by the
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Company through the exercise of commercially reasonable efforts by the Closing
Date, or with respect to any breach that is reasonably capable of being remedied
within 30 days and as long as the Company continues to exercise such reasonable
efforts during the 30-day period, Parent may not terminate this Agreement under
this Section 7.1(f); and provided, further, that the preceding proviso shall not
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in any event be deemed to extend the Termination Date as set forth in paragraph
(b) of this Section 7.1;
(g) by the Company, if Parent or Merger Sub breaches any
representation, warranty, covenant or agreement on the part of Parent or Merger
Sub set forth in this Agreement, or if any representation or warranty of Parent
shall have become untrue, incomplete or incorrect, in either case such that the
conditions set forth in Section 6.2(a) or (b) would not be satisfied (a
"Terminating Parent Breach"); provided, however, that if such Terminating Parent
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Breach is curable by Parent through the exercise of commercially reasonable
efforts by the Closing Date, or with respect to any
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breach that is reasonably capable of being remedied within 30 days and as long
as Parent continues to exercise such reasonable efforts during the 30-day
period, the Company may not terminate this Agreement under this Section 7.1(g);
and provided, further, that the preceding proviso shall not in any event be
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deemed to extend the Termination Date set forth in paragraph (b) of this Section
7.1;
(h) by the Company, (i) if the Form F-4 is not filed with, or
submitted in preliminary form on a confidential basis, to the staff of the SEC
on or before November 30, 2000 for any reason other than the failure of the
Company to comply with any of its agreements or obligations contained in this
Agreement, or (ii) if the Form F-4 is not declared effective by the SEC on or
prior to April 1, 2001;
(i) by the Company, prior to receipt of approval of the Company's
stockholders of the Merger, if the Company's Board of Directors approves a
Superior Proposal; provided, however, that (i) the Company shall have complied
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with Section 5.5 and (ii) the Board of Directors of the Company shall have
concluded in good faith, on the basis of the advice of its outside legal counsel
and financial advisors, that such proposal is a Superior Proposal; provided,
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however, that this Agreement may not be terminated pursuant to this Section
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7.1(i) unless (A) concurrently with, and as a condition to the effectiveness of,
such termination, the Company pays to Parent the Termination Fee (as defined in
Section 7.3), (B) concurrently with such termination the Company enters into a
definitive agreement with respect to, or consummates, such Superior Proposal,
(C) the Company shall have given Parent three business days' prior written
notice of the terms and identity of the party proposing such Superior Proposal
and of such proposed termination, and (D) during such three business day period,
the Company shall have negotiated in good faith with Parent to permit Parent to
make an equivalent proposal; or
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(j) by the Company, by notice to Parent not later than 12:00 noon, New York
City time, on the second trading day prior to the date of the Special Meeting,
specifically referring to this Section 7.1(j), if the Effective Time Parent
Share Price shall be less than $33.6356, in which event this Agreement shall be
terminated effective at 10:00 a.m., New York City time, on the trading day
following Parent's receipt of such notice unless Parent, prior to such time,
shall deliver a notice to the Company to the effect that the Exchange Ratio
shall be an amount determined by dividing $11.2723 by the Effective Time Parent
Share Price multiplied by one over the fraction representing the number of
Parent Shares per ADS, in which event this Agreement shall be deemed amended by
such notice and shall not terminate.
The party desiring to terminate this Agreement pursuant to any of
paragraphs (a) to (j), inclusive, shall give written notice of such termination
to the other party.
SECTION 7.2 EFFECT OF TERMINATION. Except for any willful breach of this
Agreement by any party hereto (which willful breach and liability therefor shall
not be affected by the termination of this Agreement or the payment of any
Termination Fee (as defined in Section 7.3(a) hereof)), if this Agreement is
terminated pursuant to Section 7.1 hereof, then this Agreement shall become void
and of no effect with no liability on the part of any party hereto; provided,
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however, that notwithstanding such termination, the agreements contained in
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Sections 7.2, 7.3 and 8.7 hereof and in the provisos to Sections 5.4(a) and
5.4(b) hereof shall survive the termination hereof.
SECTION 7.3 FEES.
(a) The Company agrees to pay Parent in immediately available funds
by wire transfer to a bank account designated by Parent an amount equal to $5.25
million (the "Termination Fee") if:
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(i) (A) Parent shall terminate this Agreement pursuant to Section
7.1(d) hereof and at the time of such termination pursuant to Section 7.1(d)
there shall exist an Acquisition Proposal with respect to the Company that has
not been publicly and irrevocably withdrawn (a "Pending Acquisition Proposal")
----------------------------
and the Company's Board of Directors shall have withdrawn, modified or amended
its approval or recommendation of the Merger, or shall have resolved to do so or
(B) the Company terminates this Agreement to enter into an agreement with
respect to an Acquisition Proposal; or
(ii) (A) Either Parent or the Company shall terminate this Agreement
pursuant to Section 7.1(b) hereof (other than a termination by the Company
pursuant to Section 7.1(b) either (1) after the occurrence of a Parent Material
Adverse Effect or (2) in the event a Terminating Parent Breach has occurred and
has not been cured in accordance with the terms of Section 7.1(g) by the
Termination Date or (3) pursuant to Section 7.1(e)(ii)) or pursuant to Section
7.1(e)(i) hereof, (B) at the time of such termination pursuant to Section 7.1(b)
or Section 7.1(e)(i), as the case may be, there shall exist a Pending
Acquisition Proposal and (C) within twelve (12) months after any such
termination, the Company shall enter into a definitive agreement with respect to
any sale of substantially all of its assets or any merger, consolidation,
recapitalization, liquidation, tender offer, exchange offer or other business
combination involving the acquisition, purchase or change of control of 50% or
more of any class of equity securities of the Company (a "Competing Company
-----------------
Transaction") or any Competing Company Transaction shall be consummated.
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(b) The Company shall pay the Termination Fee required to be paid
pursuant to Section 7.3(a) hereof (if all conditions thereto have been
satisfied) (i) not later than one (1) business day after the termination of this
Agreement by Parent pursuant to Section 7.3(a)(i), if the Company has not then
entered into a definitive agreement with respect to a Competing Company
Transaction, or (ii) in any other case provided for in Section
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7.3(a), at the earlier of (A) twelve (12) months from the occurrence of the
earliest event giving rise to a party's right to terminate this Agreement and
(B) the date of consummation of a Competing Company Transaction described in
Section 7.3(a)(ii)(C) or termination of the definitive agreement relating to
such Competing Company Transaction.
(c) Notwithstanding the requirement of Section 7.3(a) that any
Termination Fee be paid in immediately available funds, unless a Competing
Company Transaction has been consummated by the Company, the Company at its
election may satisfy its obligation to pay a Termination Fee in whole or in part
by delivering to Parent shares of Common Stock having a Deemed Value (as
hereafter defined) equal to the portion of such Termination Fee not being paid
in immediately available funds, provided that in connection therewith it
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complies with all its obligations under this Section 7.3(c). If the Company
wishes to elect to satisfy its obligation to pay a Termination Fee in whole or
in part by delivering shares of Common Stock, it shall give notice of such
election (the "Company Notice") as soon as may be practicable, but in no event
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later than the business day prior to the date that payment in full in cash
otherwise would be required pursuant to Section 7.3(b). The Company Notice
shall also refer to the provisions of this Agreement permitting such election
and specify (i) the portion of the Transaction Fee to be paid in immediately
available funds and the portion to be paid by delivery of shares, (ii) the
period or periods relevant to the calculation of the Deemed Value of the shares
of Common Stock to be delivered and (iii) the date on which the required shares
shall be delivered to Parent (the "Delivery Date"), which shall be the fifth
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business day in New York City following the last day of the Relevant Period as
defined below. For purposes of this Agreement, (i) the "Deemed Value" of a
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share of Common Stock shall be equal to the average of the Current Market Value
(as hereafter defined) of such shares for the ten trading days for the Common
Stock (the "Relevant Period") commencing as follows:
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(A) except as set forth in paragraph (B) below, if Parent has
terminated the Agreement in one of the circumstances described in Section
7.3(a)(i), on the third trading day after the payment obligation arises;
(B) if Parent has terminated the Agreement pursuant to Section
7.3(a)(i) after the Company enters into a definitive agreement with respect
to a Competing Company Transaction and such definitive agreement is
thereafter terminated, on the third trading day following the date of such
termination; and
(C) if the Agreement has been terminated in one of the circumstances
described in Section 7.3(a)(ii), on the third trading day following the
expiration of twelve (12) months after the date of the Special Meeting or
the date specified in Section 7.1(b), as the case may be; and
(ii) the "Current Market Value" of a share of Common Stock shall mean (A) if the
--------------------
Common Stock is then traded on the AmEx, the closing price, regular way, of such
shares at the close of regular trading on such exchange on the relevant date;
(B) if the Common Stock is not then traded on the AmEx but has been traded on
another national securities exchange in the United States or on the Nasdaq
National Market for at least ten business days, the closing price, regular way,
of such shares at the close of regular trading on the principal exchange on
which such shares are then trading; (C) if the Common Stock is not so listed or
traded but has been quoted on a national over-the-counter market for at least
ten business days, the closing bid price of the Common Stock in such market; or
(D) otherwise, the value of the Common Stock as most recently determined as of a
date within the six months preceding the date of determination by the Board of
Directors of the Company, acting in good faith.
On the date specified in the Company Notice as the Delivery Date, the
Company shall (i) deliver to Parent, free and clear of all Liens, a
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certificate or certificates, registered in the name of Parent (or such other
name or names as Parent may theretofore have specified by notice to the
Company), representing in the aggregate the number of shares of Common Stock
having a Deemed Value equal to the amount of the Termination Fee that the
Company has elected to pay by delivery of shares and (ii) enter into and deliver
to Parent a registration rights agreement with respect to such shares in
customary form undertaking to register such shares for public sale under the
Securities Act at the earliest practicable date. The Company shall make such
delivery at a location in New York City specified by Parent or, if none is
specified, at the offices of Parent's counsel specified in Section 8.1.
Notwithstanding the foregoing, if the Company elects to satisfy its
obligation to pay a Termination Fee in part but not in whole by delivery of
shares of Common Stock, it shall pay the portion of the Termination Fee payable
in immediately available funds on the date required by Section 7.3(b).
(d) Except as provided otherwise in this Section 7.3, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement to any
party hereunder shall be in writing and deemed given upon (a) personal delivery,
(b) transmitter's confirmation of a receipt of a facsimile transmission, (c)
confirmed delivery by a standard overnight carrier or when delivered by hand or
(d) five (5) days after mailing in the United States or France by certified or
registered mail, postage prepaid, addressed at the
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following addresses (or at such other address for a party as shall be specified
by notice given hereunder):
If to the Company, to:
Vialog Corporation
32 Crosby Drive
Bedford, MA 01730
Fax: (781) 761-6300
Attention: President
with a copy to:
Mirick, O'Connell, DeMallie and Lougee
100 Front Street
Worcester, Massachusetts 06108-1477
Fax: (508) 791-8502
Attention: David Lougee, Esq.
and
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Fax: (212) 504-6666
Attention: Lawrence A. Larose, Esq.
If to Parent or Merger Sub, to:
Genesys SA
Le Regent-4 rue Jules Ferry
BP 1145
34008 Montpellier Cedex 1
FRANCE
Fax: 33(0)4-67062750
Attention: Francois Legros
with a copy to:
Breslow & Walker, LLP
767 Third Avenue
New York, NY 10017
UNITED STATES
Fax: (212) 888-4955
Attention: Joel M. Walker, Esq.
SECTION 8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time. All
other covenants and agreements contained herein which by their terms are
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to be performed in whole or in part, or which prohibit actions, subsequent to
the Effective Time, shall survive the Merger in accordance with their terms.
SECTION 8.3 INTERPRETATION. References herein to the "knowledge of the
Company" or the "knowledge of Parent" shall mean the actual knowledge of any of
the executive officers of the Company or Parent, as the case may be. Whenever
the words "include," "includes" or "including" are used in this Agreement they
shall be deemed to be followed by the words "without limitation." The phrase
"made available" when used in this Agreement shall mean that the information
referred to has been made available if requested by the party to whom such
information is to be made available. As used in this Agreement, the term
"affiliate" shall have the meaning set forth in Rule 12b-2 promulgated under the
Exchange Act.
The article and section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties hereto and shall not in any way affect the meaning or interpretation of
this Agreement. Any matter disclosed pursuant to any Schedule to this Agreement
shall not be deemed to be an admission or representation as to the materiality
of the item so disclosed.
Disclosure of a fact in a schedule to this Agreement referred to in
Article III shall provide an exception to, or otherwise qualify, the
representations or warranties of the Company, and disclosure of a fact in a
schedule to this Agreement referred to in Article IV shall provide an exception
to, or otherwise qualify, the representations or warranties of Parent or Merger
Sub, as the case may be, in either case specifically referred to in such
disclosure and such other representations and warranties to the extent that such
disclosure shall reasonably appear to be applicable to such representations and
warranties.
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SECTION 8.4 AMENDMENTS, MODIFICATION AND WAIVER.
(a) Except as may otherwise be provided herein, any provision of this
Agreement may be amended, modified or waived by the parties hereto, by action
taken by or authorized by their respective Board of Directors, prior to the
Closing Date 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
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after the adoption of this Agreement by the shareholders of the Company, no such
amendment shall be made except as allowed under applicable law.
(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 8.5 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that neither the Company nor Parent
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may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the consent of the other parties hereto.
SECTION 8.6 SPECIFIC PERFORMANCE. The parties acknowledge and agree that
any breach of the terms of this Agreement would give rise to irreparable harm
for which money damages would not be an adequate remedy and accordingly the
parties agree that, in addition to any other remedies, each shall be entitled to
enforce the terms of this Agreement by a decree of specific
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performance without the necessity of proving the inadequacy of money damages as
a remedy.
SECTION 8.7 GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) Except for the
approval, validity and effect of the Articles of Merger and the Merger provided
for herein, which shall be governed by and construed and enforced in accordance
with the laws of the Commonwealth of Massachusetts, this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of New York (regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws of the State of New York) as to all matters,
including, but not limited to, matters of validity, construction, effect,
performance and remedies.
(b) Each of the parties hereto irrevocably agrees that any legal
action or proceeding relating to this Agreement or for recognition and
enforcement of any judgment in respect hereof brought by the other party hereto
or its successors or assigns shall be subject to the exclusive jurisdiction of
the United States District Court for the Southern District of New York or any
New York State court sitting in New York City (and of the appropriate appellate
courts of each such court), and each of the parties hereto hereby irrevocably
submits with regard to any such action or proceeding for itself and in respect
to its property, generally and unconditionally, to the exclusive jurisdiction of
the aforesaid courts. Each of the parties hereby irrevocably waives, and agrees
not to assert as a defense, counterclaim or otherwise, in any proceeding
relating to this Agreement (a) any claim that is not personally subject to the
jurisdiction of the aforesaid courts for any reason other than the failure to
lawfully serve process subject to this Section 8.7, (b) that it or its property
is exempt or immune from jurisdiction of any such court or from any legal
process commenced in such courts (whether through service of notice, attachment
prior to judgment, attachment in aid of execution of judgment, execution of
judgment or otherwise), and (c) to the
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fullest extent permitted by applicable law, that (i) the suit, action or
proceeding in any such court is brought in an inconvenient forum, (ii) the venue
of such suit, action or proceeding is improper and (iii) this Agreement, or the
subject matter hereof, may not be enforced in or by such courts. Process in any
suit, action or proceeding may be served within or without the jurisdiction of
any of the aforesaid courts. Without limiting the foregoing, each party agrees
that service of process on it by notice as provided in Section 8.1 shall be
deemed effective service of process.
SECTION 8.8 SEVERABILITY. If any term or other provision of this
Agreement is held to be invalid, illegal or incapable of being enforced by a
court of competent jurisdiction, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated herein are not
affected in any manner materially adverse to any party hereto. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner.
SECTION 8.9 THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the Company and its successors and permitted assigns, with respect to
the obligations of Parent and Merger Sub under this Agreement, and for the
benefit of Parent and Merger Sub, and their respective successors and permitted
assigns, with respect to the obligations of the Company under this Agreement,
and this Agreement shall not, except to the extent necessary to enforce the
provisions of Article I and Section 5.6 hereof, be deemed to confer upon or give
to any other third party any remedy, claim, liability, reimbursement, cause of
action or other right.
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SECTION 8.10 ENTIRE AGREEMENT. This Agreement, including any exhibits or
schedules hereto and the Confidentiality Agreement, constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes all other prior agreements or understandings, both written and oral,
between the parties or any of them with respect to the subject matter hereof.
SECTION 8.11 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be deemed 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.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
GENESYS SA
/s/ Francois Legros
By:________________________________
Name: Francois Legros
Title: Chief Executive Officer and
Chairman of the Board
ABCD MERGER CORP.
/s/ Francois Legros
By:________________________________
Name: Francois Legros
Title: President and Chief Executive Officer
VIALOG CORPORATION
/s/ Kim Mayyasi
By:________________________________
Name: Kim Mayyasi
Title: President and Chief Executive
Officer
[Signature page to Agreement and Plan of Merger and Reorganization]
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