Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
among
ADIDAS-SALOMON AG,
RUBY MERGER CORPORATION
and
REEBOK INTERNATIONAL LTD.
Dated as of August 2, 2005
TABLE OF CONTENTS
i
ii
iii
INDEX OF PRINCIPAL TERMS
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Acquisition Proposal
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affiliate
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Agreement
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Antitrust Law
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Articles of Merger
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Articles of Organization
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beneficial owner
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beneficially owned
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Book-Entry Shares
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business day
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ByLaws
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Certificates
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Change in Company Recommendation
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Closing
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Closing Date
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Collective Bargaining Agreements
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Common Stock
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Company
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Company Board Recommendation
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Company Disclosure Schedule
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Company Employees
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Company ESPPs
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Company Material Adverse Effect
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Company Plan
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Company Representatives
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Company Requisite Vote
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Company Rights
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Company Rights Agreement
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Company SEC Reports
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Company Securities
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Company Stock Options
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Company Stock Plans
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Company’s Financial Advisor
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Confidentiality Agreement
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Continuing Employees
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Contract
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control
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controlled
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controlled by
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Controlled Group
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Convertible Debentures
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corresponding section
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Costs
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Deferred Share Awards
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Dissenting Shares
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DOJ
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ECMR
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Effective Time
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Environmental Laws
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Environmental Permits
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ERISA
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Exchange Act
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Exchange Agent
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Exchange Fund
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Exon-Florio
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Financing
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Foreign Antitrust Laws
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Foreign Benefit Plan
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FTC
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Government Plans
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Governmental Entity
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HSR Act
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Indebtedness
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Indemnified Parties
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Intellectual Property
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knowledge
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Law
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Leased Real Property
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Licenses
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Lien
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Material Contract
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Materials of Environmental Concern
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MBCA
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Merger
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Merger Consideration
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Merger Sub
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Notice Period
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NYSE
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Order
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Owned Real Property
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Parent
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Parent Disclosure Schedule
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Parent Material Adverse Effect
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Permitted Liens
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person
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Proxy Statement
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Real Property
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Restricted Shares
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Sarbanes-Oxley Act
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v
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SEC
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Securities Act
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Shares
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Significant Subsidiary
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Stockholders Agreement
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Stockholders Meeting
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subsidiary
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Subsidiary Securities
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Superior Proposal
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Surviving Corporation
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Takeover Statute
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Tax Return
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Taxes
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Termination Date
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Termination Fee
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U.S. generally accepted accounting
principles
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under common control with
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WARN
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vi
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated
as of August 2, 2005 (this “ Agreement ”),
among adidas-Salomon AG, a corporation organized under the laws of
the Federal Republic of Germany (“ Parent ”),
Ruby Merger Corporation, a Massachusetts corporation which is
wholly-owned by Parent or one or more wholly-owned subsidiaries of
Parent (“ Merger Sub ”), and Reebok
International Ltd., a Massachusetts corporation (the “
Company ”).
WHEREAS, the Board of Directors of
the Company has (i) approved and adopted this Agreement with
Parent and Merger Sub providing for the merger (the “
Merger ”) of Merger Sub with and into the Company in
accordance with the Massachusetts Business Corporation Act (the
“ MBCA ”), upon the terms and subject to the
conditions set forth herein, and (ii) resolved to recommend
approval of this Agreement by the stockholders of the
Company;
WHEREAS, each of the Executive and
Supervisory Boards of Parent and the Board of Directors of Merger
Sub have approved, and the Board of Directors of Merger Sub has
declared it advisable for Merger Sub to enter into, this Agreement
providing for the Merger in accordance with the MBCA, upon the
terms and conditions contained herein;
WHEREAS, concurrently with the
execution and delivery of this Agreement and as a condition and
inducement to the willingness of Parent and Merger Sub to enter
into this Agreement, certain stockholders of the Company are
entering into a stockholders agreement with Parent and Merger Sub
(the “ Stockholders Agreement ”) pursuant to
which such stockholders are agreeing, in their capacity as
stockholders of the Company, to vote to approve this Agreement and
take certain other actions in furtherance of the Merger, in each
case, upon the terms and conditions contained therein;
NOW, THEREFORE, in consideration of
the foregoing and the mutual covenants and agreements herein
contained, and intending to be legally bound hereby, Parent, Merger
Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger
. Upon the terms and subject to the conditions of this
Agreement and in accordance with the MBCA, at the Effective Time
(as defined below), Merger Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate
existence of Merger Sub shall cease and the Company shall continue
as the surviving corporation of the Merger (the “
Surviving Corporation ”).
SECTION 1.2 Closing; Effective
Time . Subject to the provisions of Article VII, the
closing of the Merger (the “ Closing ”) shall
take place at the offices of Simpson Thacher & Bartlett
LLP, 425 Lexington Avenue, New York, New York, as soon as
practicable, but in no event later than the fifth business day
after the satisfaction or waiver of the conditions set forth
in
Article VII (excluding conditions that, by
their terms, cannot be satisfied until the Closing, but the Closing
shall be subject to the satisfaction or waiver of those
conditions), or at such other place or on such other date as Parent
and the Company may mutually agree. The date on which the
Closing actually occurs is hereinafter referred to as the “
Closing Date ”. As soon as practicable following
the Closing, on the Closing Date, the parties hereto shall cause
articles of merger (the “ Articles of Merger ”)
to be filed with the Secretary of State of the Commonwealth of
Massachusetts, in such form as required by, and executed and
delivered in accordance with, the relevant provisions of the MBCA
(the date and time of the filing of the Articles of Merger with the
Secretary of State of the Commonwealth of Massachusetts, or such
later time as is specified in the Articles of Merger and as is
agreed to by the parties hereto, being the “ Effective
Time ”) and shall make all other filings or recordings
required under the MBCA in connection with the Merger.
SECTION 1.3 Effects of the
Merger . The Merger shall have the effects set forth in
the applicable provisions of the MBCA. Without limiting the
generality of the foregoing and subject thereto, at the Effective
Time, all the property, rights, privileges, immunities, powers and
franchises of the Company and Merger Sub shall vest in the
Surviving Corporation and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
SECTION 1.4 Articles of
Organization and Bylaws of the Surviving Corporation . At
the Effective Time, the articles of organization and bylaws of the
Company, each as in effect immediately prior to the Effective Time,
shall be the articles of organization and bylaws of the Surviving
Corporation until thereafter amended as provided therein or by
applicable Law.
SECTION 1.5 Directors and
Officers of the Surviving Corporation . The directors of
the Company immediately prior to the Effective Time shall submit
their resignations to be effective as of the Effective Time.
The directors of Merger Sub immediately prior to the Effective Time
shall be the initial directors of the Surviving Corporation, each
to hold office until the earlier of his or her resignation or
removal or until his or her successor is duly elected and
qualified, as the case may be, in accordance with the articles of
organization and bylaws of the Surviving Corporation and applicable
Law. The officers of the Company (other than those who Parent
determines shall not remain as officers of the Surviving
Corporation) immediately prior to the Effective Time shall be the
officers of the Surviving Corporation and shall hold office with
the Surviving Corporation, in each case until the earlier of his or
her resignation or removal or until his or her successor is duly
elected and qualified, as the case may be, in accordance with the
articles of organization and bylaws of the Surviving Corporation
and applicable Law.
2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
SECTION 2.1 Conversion of
Securities . At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the
Company or the holders of any shares of capital stock of Merger Sub
or any shares of capital stock of the Company:
(a)
Subject to
Section 2.1(c), each share of Common Stock, par value $0.01
per share, of the Company the “ Common Stock ”)
issued and outstanding immediately prior to the Effective Time
(other than any shares of Common Stock to be canceled pursuant to
Section 2.1(b) or that remain outstanding pursuant to
Section 2.1(c) and any Dissenting Shares (as defined in
Section 2.4(a)) (all such shares of Common Stock, the “
Shares ”) shall be automatically converted into the
right to receive Fifty-Nine Dollars ($59.00) in cash, without
interest (the “ Merger Consideration ”).
As of the Effective Time, all such Shares shall no longer be
outstanding and shall automatically be canceled and shall cease to
exist and, subject to Section 2.4(a), each holder of a
certificate representing any such Shares shall cease to have any
rights with respect thereto except the right to receive Merger
Consideration pursuant to this Section 2.1(a) upon the
surrender of such certificate in accordance with Section 2.2,
without interest.
(b)
Subject to
Section 2.1(c), each Share owned by Parent or Merger Sub
immediately prior to the Effective Time shall be canceled without
any conversion thereof and no consideration shall be paid with
respect thereto.
(c)
Each Share owned
by any direct or indirect wholly-owned subsidiary of the Company
shall remain outstanding and continue to exist as shares of common
stock, par value $0.01 per share, of the Surviving
Corporation.
(d)
Each share of
common stock of Merger Sub issued and outstanding immediately prior
to the Effective Time shall be converted into and become one
validly issued, fully paid and non-assessable share of common
stock, par value $0.01 per share, of the Surviving
Corporation.
(e)
Notwithstanding
anything in this Agreement to the contrary, if, between the date of
this Agreement and the Effective Time, the issued and outstanding
Shares shall have been changed into a different number of shares or
a different class by reason of any stock split or combination,
recapitalization , stock dividend, reclassification,
redenomination, adjustment of par value, exchange of shares or
other similar transaction, the Merger Consideration and any other
dependent items, as the case may be, shall be appropriately
adjusted to provide to the holders of the Common Stock the same
economic effect as contemplated by this Agreement prior to such
action and as so adjusted shall, from and after the date of such
event, be the Merger Consideration or other dependent item, as
applicable, subject to any further adjustment in accordance with
this sentence.
3
SECTION 2.2 Surrender of
Shares .
(a)
Following the
date of this Agreement and prior to the Effective Time, Parent
shall select a bank or trust company reasonably acceptable to the
Company to act as exchange agent in connection with the Merger (the
“ Exchange Agent ”) for the purpose of
exchanging certificates representing Shares (“
Certificates ”) or Shares represented by book-entry
(“ Book-Entry Shares ”), as the case may be, for
Merger Consideration. At the Effective Time, Parent shall
deposit, or cause to be deposited, with the Exchange Agent, cash
sufficient to pay the aggregate Merger Consideration required to be
paid pursuant to Section 2.1(a). Such funds delivered to
the Exchange Agent are herein referred to as the “
Exchange Fund ”. The Exchange Agent shall invest
the Exchange Fund as directed by Parent; provided that no
such investment or losses thereon shall affect the Merger
Consideration payable to holders of Shares entitled to receive such
consideration. Any interest or income provided by such
investments shall be payable to the Surviving Corporation or
Parent, as directed by Parent.
(b)
Promptly after
the Effective Time (but in any event within five (5) days
after the Effective Time), the Surviving Corporation shall cause
the Exchange Agent to mail to each record holder, as of the
Effective Time, of Shares, (i) a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates held by such holder representing
such Shares shall pass, only upon proper delivery of the
Certificates to the Exchange Agent or, in the case of Book-Entry
Shares, upon adherence to the procedures set forth in the letter of
transmittal) and (ii) instructions for use in effecting the
surrender of the Certificates or, in the case of Book-Entry Shares,
the surrender of such Shares, for payment of the Merger
Consideration therefor. Each stockholder, upon
surrender by such holder to the Exchange Agent of its Certificate
or Book-Entry Shares, as applicable, together with the 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, shall be entitled to
receive in exchange therefor the amount of cash (in U.S. dollars)
that such stockholder has the right to receive pursuant to this
Article II, after giving effect to any required withholdings
pursuant to Section 2.2(f). No interest shall be paid or
accrue for the benefit of holders of the Certificates or Book-Entry
Shares on the Merger Consideration payable in respect of the
Certificates or Book-Entry Shares. If payment or issuance of
the Merger Consideration is to be made to a person other than the
person in whose name the surrendered Certificate is registered, it
shall be a condition of payment or issuance that the Certificate so
surrendered shall be properly endorsed, with signatures guaranteed,
and shall be otherwise in proper form for transfer and that the
person requesting such payment or issuance shall have paid to the
Exchange Agent any transfer and other taxes required by reason of
the payment or issuance of the Merger Consideration to a person
other than the registered holder of the Certificate surrendered or
shall have established to the satisfaction of the Exchange Agent
that such tax either has been paid or is not applicable.
Until so surrendered, each Certificate or Book-Entry Share shall,
after the Effective Time, represent for all purposes only the right
to receive upon such surrender the applicable Merger Consideration
as contemplated by this Article II.
(c)
From and after
the Effective Time, the Shares shall no longer be outstanding and,
subject to Section 2.4(a), no holder of Shares shall have any
rights with respect thereto except the right to receive Merger
Consideration in respect of such Shares pursuant to this
Article II, without interest, and only upon compliance with
the applicable provisions of this
4
Article II. At the Effective Time,
the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of
Shares that were outstanding prior to the Effective Time.
After the Effective Time, Certificates or Book-Entry Shares
presented to the Surviving Corporation for transfer shall be
canceled and exchanged for the consideration provided for, and in
accordance with the procedures set forth, in this
Article II.
(d)
At any time
following the date that is twelve (12) months after the Effective
Time, Parent shall be entitled to require the Exchange Agent to
deliver to it any funds (including any interest or income received
with respect thereto) remaining in the Exchange Fund. To the
extent permitted by applicable Law, none of Parent, Merger Sub, the
Company, the Surviving Corporation or the Exchange Agent shall be
liable to any holder of shares of Common Stock for any amount
properly paid from the Exchange Fund or otherwise delivered to a
public official pursuant to any applicable abandoned property,
escheat or similar Law.
(e)
In the event that
any Certificate shall have been lost, stolen or destroyed, upon the
holder’s compliance with the replacement requirements
established by the Exchange Agent, including, if necessary, the
posting by the holder of a bond in customary amount as indemnity
against any claim that may be made against it with respect to the
Certificate, the Exchange Agent shall deliver in exchange for the
lost, stolen or destroyed Certificate the Merger Consideration
payable in respect of the Shares represented by the Certificate
pursuant to this Article II.
(f)
Notwithstanding
anything in this Agreement to the contrary, each of Parent, the
Surviving Corporation and the Exchange Agent shall be entitled to
deduct and withhold from the consideration otherwise payable to any
former holder of Shares pursuant to this Agreement any amounts as
may be required to be deducted and withheld with respect to the
making of this payment under the Code, or under any provision of
state, local or foreign Tax Law. To the extent that amounts
are so withheld and paid over to the appropriate Taxing authority
by or on behalf of Parent or the Surviving Corporation, Parent or
the Surviving Corporation, as the case may be, shall be treated as
though it withheld an appropriate amount of consideration otherwise
payable pursuant to this Agreement to any former holder of Shares
and paid these cash proceeds to the appropriate Taxing
authority. Such withheld amounts will be treated for all
purposes of this Agreement as having been paid to the holder of
Shares in respect of which such deduction and withholding was made
by Parent or Merger Sub.
SECTION 2.3 Options; Restricted
Stock; Company ESPPs .
(a)
The Company shall
provide that, as of the Effective Time, each option to purchase
Common Stock (“ Company Stock Options ”) granted
under any stock option plans or other equity-related plans of the
Company (the “ Company Stock Plans ”), which, in
each case, is outstanding immediately prior to the Effective Time
(whether vested or unvested, exercisable or not exercisable), shall
be canceled by the Company, and the holder thereof shall be
entitled to receive promptly following the Effective Time from the
Surviving Corporation, in consideration for such cancellation, an
amount (less applicable withholdings and without interest) equal to
the product of (i) the excess, if any, of (A) the Merger
Consideration per share of Common Stock over (B) the exercise
price per share of Common Stock subject to such Company Stock
Option, multiplied by (ii) the total number of shares of
Common Stock subject to such Company Stock
5
Option. In the event that the exercise
price of any Company Stock Option is equal to or greater than the
Merger Consideration, such Company Stock Option shall be cancelled
without payment therefor and have no further force or
effect.
(b)
Each share of
Common Stock granted subject to vesting or other lapse restrictions
pursuant to any Company Stock Plan (collectively, “
Restricted Shares ”) which is outstanding immediately
prior to the Effective Time shall vest and become free of such
restrictions as of the Effective Time to the extent provided by the
terms thereof (as such plans may be amended prior to the Effective
Time in accordance with the terms hereof) and, at the Effective
Time, the holder thereof shall, subject to this Article II, be
entitled to receive the Merger Consideration with respect to each
such Restricted Share in accordance with Section 2.1, less
applicable withholdings and without interest.
(c)
The Company shall
provide that, as of the Effective Time, any award of deferred
shares of Common Stock granted under any Company Stock Plan (the
“ Deferred Share Awards ”) which is outstanding
immediately prior to the Effective Time (whether vested or
unvested) shall be canceled by the Company and the holder thereof
shall be entitled to receive promptly following the Effective Time
from the Surviving Corporation, in consideration for such
cancellation, an amount (less applicable withholdings, if any, and
without interest) equal to the product of (i) the Merger
Consideration per share of Common Stock, multiplied by
(ii) the total number of shares of Common Stock subject to
such Deferred Share Award.
(d)
The foregoing
provisions of this Section 2.3 shall not apply to the
Company’s 1987 Employee Stock Purchase Plan, 1992 Employee
Stock Purchase Plan or any other plan, program or arrangement
intending to qualify as a stock purchase plan under
Section 423 of the Code (the “ Company ESPPs
”). The Company shall, prior to the Effective Time,
take all actions necessary to terminate the Company ESPPs effective
as of the Effective Time and all outstanding rights thereunder at
the Effective Time, and ensure that no new offering periods
thereunder commence during the period from the date of this
Agreement through the Effective Time. The offering periods
currently in effect as of the date of this Agreement shall end in
accordance with the terms of the applicable Company ESPP;
provided that there will be no increase in the amount of
payroll deductions permitted to be made by the participants therein
during such period; and provided further that, on the last
day of the current offering periods, each participant in the
applicable Company ESPP will be credited with the number of
share(s) of Common Stock purchased for his or her account(s) under
the applicable Company ESPP in respect of the applicable offering
period in accordance with the terms of the applicable Company
ESPP.
(e)
Prior to the
Effective Time, the Company shall take all actions necessary in
order to effectuate the provisions of this
Section 2.3.
SECTION 2.4 Dissenting Shares
.
(a)
Shares of Common
Stock that are issued and outstanding immediately prior to the
Effective Time and which are held by holders who have perfected
their rights to dissent from the Merger under the MBCA and who have
not effectively withdrawn or lost such right to dissent under the
MBCA as of the Effective Time (the “ Dissenting Shares
”) shall not be
6
converted into, or represent the right to
receive, Merger Consideration, and the holders thereof shall be
entitled to only such rights as are granted by the applicable
provisions of the MBCA; provided , however , that if
any such stockholder of the Company shall fail to perfect or shall
effectively withdraw or lose such right to dissent under the
applicable provisions of the MBCA, such stockholder’s shares
of Common Stock in respect of which the stockholder would otherwise
be entitled to receive fair value under the applicable provisions
of the MBCA shall thereupon be deemed to have been canceled, at the
Effective Time, and the holder thereof shall be entitled to receive
the Merger Consideration less applicable withholdings and without
interest as compensation for such cancellation.
(b)
The Company shall
give Parent (i) prompt notice of any notice received by the
Company of intent to demand the fair value of any shares of Common
Stock, withdrawals of such notices and any other instruments or
notices served under the applicable provisions of the MBCA relating
to dissenters’ rights and (ii) the opportunity to direct
all negotiations and proceedings with respect to the exercise of
dissenters’ rights under the applicable provisions of the
MBCA. The Company shall not, except with the prior written
consent of Parent or as otherwise required by an order, decree,
ruling or injunction of a court of competent jurisdiction, make any
payment or other commitment with respect to any such exercise of
dissenters’ rights or offer to settle or settle any such
rights.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and
warrants to Parent and Merger Sub that, except as set forth on the
corresponding section of the Disclosure
Schedule delivered by the Company to the Parent and Merger Sub
concurrently with the execution of this Agreement (the “
Company Disclosure Schedule ”):
SECTION 3.1 Organization and
Qualification; Subsidiaries . Each of the Company and its
subsidiaries is duly organized, validly existing and in good
standing (with respect to jurisdictions that recognize the concept
of good standing) under the Laws of the jurisdiction of its
organization and has all requisite corporate or similar power and
authority to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where any such
failure to be in good standing or to have such power or authority,
individually or in the aggregate, would not reasonably be expected
to have a Company Material Adverse Effect (as defined below).
Each of the Company and its subsidiaries is duly qualified or
licensed to do business, and is in good standing (with respect to
jurisdictions that recognize the concept of good standing) in each
jurisdiction where the character of its properties owned, leased or
operated by it or the conduct of its business or the nature of its
activities makes such qualification or licensing necessary, except
for any such failure to be so qualified or licensed or in good
standing which, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse
Effect. “ Company Material Adverse Effect
” means any change, event, circumstance or effect that, taken
as a whole, is or would be materially adverse to the business,
assets, properties, liabilities, financial condition or results of
operations of the
7
Company and its subsidiaries taken as a whole,
other than any change, event, circumstance or effect resulting from
(i) changes after the date of this Agreement in general U.S.
or global economic conditions (except to the extent that those
changes have a disproportionate effect on the Company or its
subsidiaries relative to other participants in the industry in
which the Company and its subsidiaries operate), (ii) general
changes after the date of this Agreement in the industry in which
the Company and its subsidiaries operate (except to the extent that
those changes have a disproportionate effect on the Company or its
subsidiaries relative to other participants in such industry), or
(iii) the announcement of this Agreement or of the
transactions contemplated hereby, including without limitation
terminations or other negative impacts on relationships with
customers, suppliers or other persons who have business relations
with the Company and its subsidiaries that result from such
announcement. Exhibit 21 to the Company’s Annual
Report on Form 10-K for the fiscal year ended
December 31, 2004 includes all of the significant subsidiaries
(as defined in Rule 1-02 of Regulation S-X promulgated by the
United States Securities and Exchange Commission (the “
SEC ”)) of the Company as of the end of such fiscal
year (each such significant subsidiary, a “ Significant
Subsidiary ”). Other than subsidiaries that are
wholly-owned by the Company or by another Company subsidiary, and
other than as set forth in Section 3.1 of the Company
Disclosure Schedule, the Company does not own, directly or
indirectly, any capital stock or other equity interests in any
other person, except for passive investments in any other person
which do not exceed 1% of such other person’s outstanding
equity interests.
SECTION 3.2 Articles of
Organization and Bylaws . The Company has heretofore
furnished or otherwise made available to Parent a true, complete
and correct copy of the restated articles of organization (the
“ Articles of Organization ”) and the bylaws
(the “ Bylaws ”) of the Company, in each case as
currently in effect. The Articles of Organization and Bylaws
of the Company, as so made available, are in full force and effect
and no other organizational documents are applicable to or binding
upon the Company. The Company is not in violation of any
provisions of its Articles of Organization or Bylaws in any
material respect.
SECTION 3.3 Capitalization
.
(a)
The authorized
capital stock of the Company consists of 250,000,000 shares of
Common Stock and no shares of preferred stock. As of
July 29, 2005, (i) 59,777,962 shares of Common Stock (not
including 36,716,225 shares of Common Stock owned by RBK Holdings
plc) were issued and outstanding, all of which were duly
authorized, validly issued, fully paid and nonassessable and were
issued free of preemptive rights, (ii) 7,078,626 shares of
Common Stock were reserved for issuance upon or otherwise
deliverable in connection with the exercise or payment of
outstanding Company Stock Options or Deferred Share Awards issued
or granted pursuant to the Company Stock Plans,
(iii) 124,000,000 shares of Common Stock were reserved for
issuance upon the exercise of the rights (the “ Company
Rights ”) issued pursuant to the Company’s Common
Stock Rights Agreement, dated June 14, 1990, between the
Company and American Stock Transfer and Trust Company, as rights
agent, as amended (the “ Company Rights Agreement
”), and (iv) no other shares of Common Stock are
reserved for issuance by the Company. From July 29, 2005
through the date of this Agreement, the only shares of Common Stock
issued have been pursuant to the Company Stock Options listed in
Section 3.3(a)(i) of the Company Disclosure
Schedule. Section 3.3(a)(i) of the Company
Disclosure Schedule sets forth, as of the date of this
Agreement, all outstanding Company Stock Options, grouped by grant
date
8
and exercise price, and Deferred Share Awards,
in the aggregate. Section 3.3(a)(ii) of the Company
Disclosure Schedule sets forth the number of warrants issued
by the Company to National Football League Properties, Inc.,
the number of shares issuable or deliverable upon exercise thereof,
the vesting schedule (if applicable), the expiration date and
the exercise price relating thereto. Except as set forth in
Section 3.3(a)(i) and Section 3.3(a)(ii) of the
Company Disclosure Schedule and except for the Company Rights
and the Company’s 2.00% Convertible Debentures due
May 1, 2024, the terms of which are governed by the Indenture,
dated as of April 30, 2004, between the Company and U.S. Bank
National Association, as trustee, and the Company’s
Series B 2.00% Convertible Debentures due May 1, 2024,
the terms of which are governed by the Indenture, dated as of
November 29, 2004, between the Company and U.S. Bank National
Association, as trustee (collectively, the “ Convertible
Debentures ”), (A) there are no outstanding options,
warrants, calls, convertible securities, preemptive rights or other
rights of any kind which obligate the Company or any of its
subsidiaries to issue or deliver, or giving any person a right to
subscribe for or acquire from the Company or its subsidiaries, any
shares of capital stock, voting securities or other equity or
ownership interests of the Company or any securities or obligations
convertible or exchangeable into or exercisable for any shares of
capital stock, voting securities or other equity or ownership
interests of the Company (“ Company Securities
”), (B) there are no outstanding obligations of the
Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any Company Securities and (C) there are no
voting agreements, proxies, shareholder agreements or similar
arrangements relating to the voting of any issued or unissued
Company Securities to which the Company or any of its subsidiaries
is a party. RBK Holdings plc owns 36,716,225 shares of Common
Stock, and no other subsidiary of the Company owns any Company
Securities.
(b)
There are no
outstanding stock appreciation rights or similar rights issued by
the Company pursuant to any of the Company Stock Plans or
otherwise. Except for the Convertible Debentures, none of the
Company or any of its subsidiaries has outstanding any bonds,
debentures, notes or other similar obligations the holders of which
have the right to vote (or which are convertible, exchangeable or
exercisable for or into securities having the right to vote) with
the stockholders of the Company or any of its subsidiaries on any
matter.
(c)
Each of the
outstanding shares of capital stock, other ownership interests and
other voting securities of each of the Company’s subsidiaries
is duly authorized, validly issued, fully paid and nonassessable
and all such shares, other ownership interests and voting
securities are owned by the Company or another wholly-owned
subsidiary of the Company, in each case, free and clear of all
security interests, liens, claims, pledges, agreements, limitations
in voting, dividend or transfer rights, charges or other
encumbrances of any nature whatsoever (each a “ Lien
”). Except as set forth in Section 3.3(c) of
the Company Disclosure Schedule, (A) there are no outstanding
options, warrants, calls, convertible securities, preemptive rights
or other rights of any kind which obligate the Company or any of
its subsidiaries to issue or deliver, or giving any person a right
to subscribe for or acquire from the Company or its subsidiaries,
any shares of capital stock, voting securities or other equity or
ownership interests of any subsidiary of the Company or any
securities or obligations convertible or exchangeable into or
exercisable for any shares of capital stock, voting securities or
other equity or ownership interests of any subsidiary of the
Company (“ Subsidiary Securities ”),
(B) there are no outstanding obligations of the Company or any
of its subsidiaries to repurchase, redeem or otherwise acquire any
Subsidiary Securities and (C) there are no voting agreements,
proxies, shareholder agreements or
9
similar arrangements relating to the voting of
any issued or unissued Subsidiary Securities to which the Company
or any of its subsidiaries is a party.
(d)
Except for the
Company Rights Agreement and except as set forth in
Section 3.3(d) of the Company Disclosure Schedule or
as filed as an exhibit to any of the Company SEC Reports filed
prior to the date of this Agreement, there are no outstanding
obligations of the Company or any of its subsidiaries pursuant to
which the Company or any of its subsidiaries is or could be
required to register shares of Common Stock or any other securities
under the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the “
Securities Act ”).
SECTION 3.4 Authority .
The Company has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action and no other corporate
proceedings by or on the part of the Company are necessary to
authorize this Agreement, to perform its obligations hereunder or
to consummate the transactions contemplated hereby (other than
(i) approval of this Agreement by the vote of the holders of
two-thirds of the outstanding shares of Common Stock (the “
Company Requisite Vote ”), and (ii) the filing
with the Secretary of State of the Commonwealth of Massachusetts of
the Articles of Merger as required by the MBCA). This
Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes a legal, valid and
binding obligation of the Company enforceable against the Company
in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar Laws relating to or affecting creditors’ rights
generally and general equitable principles (whether considered in a
proceeding in equity or at Law). The Board of Directors of
the Company, acting unanimously by resolutions duly adopted at a
meeting duly called and held, has (A) approved and adopted
this Agreement in accordance with the MBCA, and (B) subject to
the provisions of Section 6.4, resolved to submit this
Agreement and the Merger to the holders of Common Stock at the
Stockholders Meeting and recommend that such holders vote in favor
of the approval of this Agreement at the Stockholders
Meeting. A complete and correct copy of the resolutions
referred to in the preceding sentence has been delivered to Parent
on or prior to the date of this Agreement. The only
vote of the stockholders of the Company required to approve this
Agreement and approve the transactions contemplated hereby is the
Company Requisite Vote.
SECTION 3.5 No Conflict; Required
Filings and Consents .
(a)
The execution,
delivery and performance of this Agreement by the Company, and the
consummation of the transactions contemplated hereby by the
Company, do not and will not: (i) conflict with or violate the
Articles of Organization or Bylaws of the Company;
(ii) conflict with or violate the certificate of
incorporation, by-laws or comparable constituent documents of any
of the subsidiaries of the Company; (iii) except as would not,
individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect or prevent, materially delay or
materially impede the ability of the Company to timely consummate
the Merger or the other transactions contemplated by this
Agreement, assuming that
10
all consents, approvals, authorizations,
declarations and permits contemplated by clauses (i) through
(ix) of subsection (b) below have been obtained, and
all filings described in such clauses have been made, conflict
with, or violate, any law, decree, statute, rule, ordinance, code
or regulation, including common law (any of the foregoing, a
“ Law ”), or order, stay, decree, writ,
settlement, award, stipulation, ruling, injunction or judgment
(whether temporary, preliminary or permanent) (any of the
foregoing, an “ Order ”), applicable to the
Company or any of its subsidiaries or by which its or any of their
respective properties are bound; or (iv) other than as set
forth in Section 3.5(a) of the Company Disclosure
Schedule, or as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect or
prevent, materially delay or materially impede the ability of the
Company to timely consummate the Merger or the other transactions
contemplated by this Agreement, (A) result in any breach or
violation of or constitute a default (or an event which with notice
or lapse of time or both would become a default) or result in the
loss of a benefit under, require any consent or approval under,
(B) give rise to any right of termination, cancellation,
amendment, acceleration or other alteration in the rights under, or
(C) result in the creation of any Lien on any of the
properties, assets or rights of the Company or any of its
subsidiaries under, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit or other instrument or obligation
(each a “ Contract ”) to which the Company or
any of its subsidiaries is a party or by which the Company or any
of its subsidiaries or its or any of their respective properties
are bound.
(b)
The execution,
delivery and performance of this Agreement by the Company, and the
consummation of the transactions contemplated hereby by the
Company, do not and will not require any consent, approval,
authorization, declaration or permit of, action by, filing with or
notification to, any governmental or regulatory (including stock
exchange) authority, agency, court, commission, tribunal or other
governmental body (each, a “ Governmental Entity
”), except for: (i) the applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the “ Exchange Act
”); (ii) the applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the “ HSR Act ”), and the rules and
regulations promulgated thereunder; (iii) the applicable
requirements of the New York Stock Exchange, Inc. (the “
NYSE ”); (iv) the filing with the Secretary of
State of the Commonwealth of Massachusetts of the Articles of
Merger as required by the MBCA; (v) the filing with the
European Commission of a merger notification in accordance with
Council Regulation (EC) 139/2004, the E.C. Merger Regulation (the
“ ECMR ”); (vi) the applicable requirements
of the competent authority of any member state of the European
Union to which any of the transactions contemplated by this
Agreement is referred pursuant to Article 9 of the ECMR;
(vii) the applicable requirements of antitrust, competition or
other similar Laws, rules, regulations or judicial doctrines of
jurisdictions other than the United States and the European Union
or its member states or of investment Laws relating to foreign
ownership (collectively, “ Foreign Antitrust Laws
”); (viii) the applicable requirements under
Section 721 of Title VIII of the Defense Production Act of
1950, 50 U.S.C. app. § 2170, as amended, and the
rules and regulations promulgated thereunder (“
Exon-Florio ”); and (ix) any such consent,
approval, authorization, declaration, permit, action, filing or
notification the failure of which to make or obtain, individually
or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect or prevent, materially delay or
materially impede the ability of the Company to timely consummate
the Merger or the other transactions contemplated by this
Agreement.
11
SECTION 3.6 Compliance
. Except as disclosed in the Company SEC Reports filed prior
to the date of this Agreement, neither the Company nor any of its
subsidiaries is in violation of any Law or Order to which the
Company or any of its subsidiaries is subject or by which its or
any of their respective properties are bound, except for any such
violation which, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse
Effect. Except as disclosed in the Company SEC Reports filed
prior to the date of this Agreement, the Company and its
subsidiaries have all permits, licenses, exemptions, orders,
consents, approvals, franchises and other authorizations (“
Licenses ”) from Governmental Entities required to
conduct their respective businesses as now being conducted and all
such Licenses are valid and in full force and effect, except for
any such Licenses the failure of which to have or to be in full
force and effect, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse
Effect.
SECTION 3.7 SEC Filings;
Financial Statements .
(a)
The Company has
filed all forms, reports, statements, certifications and other
documents (including all exhibits, amendments and supplements
thereto) required to be filed by it with the SEC since
January 1, 2003 (all forms, reports, statements, certificates
and other documents, including any financial statements, filed by
the Company with the SEC since January 1, 2003, whether or not
required to be filed, collectively, the “ Company SEC
Reports ”). None of the Company’s
subsidiaries is required to file periodic reports with the SEC
under the Exchange Act. Each of the Company SEC Reports
complied in all material respects with the applicable requirements
of the Securities Act and the Exchange Act on the date it was filed
or, if amended prior to the date of this Agreement, on the date of
such amendment. None of the Company SEC Reports, when filed
or, if amended prior to the date of this Agreement, on the date of
such amendment, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. No securities issued by any
subsidiary of the Company (i) are registered or required to be
registered with the SEC under the Exchange Act or (ii) were
issued under a registration statement filed with the SEC under the
Securities Act which registration statement became effective after
January 1, 2004.
(b)
Each of the
consolidated financial statements of the Company and its
subsidiaries (including the related notes and schedules) included
in the Company SEC Reports has been prepared in accordance with
U.S. generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as may be
indicated in the notes thereto). Each of the consolidated
balance sheets of the Company and its subsidiaries included in the
Company SEC Reports (including the related notes and schedules)
fairly presents, in all material respects, the consolidated
financial position of the Company and its subsidiaries at the
respective dates thereof and each of the related consolidated
statements of income, cash flows and stockholders’ equity
included in the Company SEC Reports (including any related notes
and schedules) fairly presents, in all material respects, the
results of operations, cash flows and stockholders equity of the
Company and its subsidiaries for the periods indicated (subject, in
the case of unaudited statements, to normal period-end adjustments
that will not be material in amount or effect) in each case in
conformity with U.S. generally accepted accounting
principles
12
consistently applied on a consistent basis
throughout the periods involved (except as may be indicated in the
notes thereto).
(c)
Since
December 31, 2004, neither the Company nor any of its
subsidiaries has incurred any liabilities of a nature required by
U.S. generally accepted accounting principles to be reflected on a
consolidated balance sheet or in the notes thereto except:
(i) as and to the extent (A) set forth on the unaudited
balance sheet of the Company and its subsidiaries as of
March 31, 2005 or in the notes thereto contained in its
quarterly report filed with the SEC on Form 10-Q for the
quarter then ended or (B) described in any Company SEC Reports
filed with the SEC after March 31, 2005 and prior to the date
of this Agreement; (ii) as incurred pursuant to the
transactions contemplated by this Agreement; or (iii) as
incurred after March 31, 2005 in the ordinary course of
business consistent with past practice which, individually or in
the aggregate, has not had, and would not reasonably be expected to
have, a Company Material Adverse Effect.
(d)
The Company has
(i) designed and maintains (A) disclosure controls and
procedures (as defined in Rule 13a-15(e) and
Rule 15d-15(e) of the Exchange Act) to ensure that
material information relating to the Company, including its
consolidated subsidiaries, is made known on a timely basis to the
management of the Company (including those members of management
who are responsible for the preparation of the Company’s
filings with the SEC and other public disclosure documents) by
others within those entities and (B) internal controls over
financial reporting (as defined in Rule 13a-15(f) and
Rule 15d-15(f) of the Exchange Act) to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with U.S. generally accepted accounting principles, and
(ii) disclosed, based on its most recent evaluation, to the
Company’s outside auditors and the audit committee of the
Board of Directors of the Company (A) any significant
deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably
likely to adversely affect the Company’s ability to record,
process, summarize and report financial data and (B) any
fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s
internal control over financial reporting.
(e)
Except as
permitted by the Exchange Act, including Sections 13(k)(2) and
(3), since the enactment of the Sarbanes-Oxley Act of 2002 and the
related rules and regulations promulgated under such Act (the
“ Sarbanes-Oxley Act ”), neither the Company nor
any of its affiliates has directly or indirectly extended or
maintained credit, arranged for the extension of credit, renewed an
extension of credit or materially modified an extension of credit
in the form of personal loans to any executive officer or director
(or equivalent thereof) of the Company or any of its
subsidiaries.
SECTION 3.8 Absence of Certain
Changes or Events .
(a)
Except as
disclosed in the Company SEC Reports filed after December 31,
2004 and prior to the date of this Agreement, from
December 31, 2004 to the date of this Agreement, the Company
and its subsidiaries have conducted their businesses, in all
material respects, only in, and have not engaged in any material
transaction other than in accordance with, the ordinary course of
these businesses consistent with past practice.
13
(b)
Except as set
forth in Section 3.8 of the Company Disclosure Schedule, since
December 31, 2004, there has not been any change, event,
circumstance or effect that has had, or would reasonably be
expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
SECTION 3.9 Absence of
Litigation . Except (i) as set forth in
Section 3.9 of the Company Disclosure Schedule, (ii) as
disclosed in the Company SEC Reports filed prior to the date of
this Agreement or (iii) as would not, individually or in the
aggregate, reasonably be expected to have Company Material Adverse
Effect or prevent, materially delay or materially impede the
ability of the Company to timely consummate the Merger or the other
transactions contemplated by this Agreement, there are no actions,
suits, claims, hearings, proceedings, arbitrations, mediations or
investigations (whether civil, criminal, administrative or
otherwise) pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries or any of the
directors or officers of the Company or any of its
subsidiaries. Except (i) as set forth in
Section 3.9 of the Company Disclosure Schedule or
(ii) as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect or
prevent, materially delay or materially impede the ability of the
Company to timely consummate the Merger or the other transactions
contemplated by this Agreement, neither the Company nor any of its
subsidiaries nor any of their respective properties is or are
subject to any Order, including any Order that prohibits or
restricts the Company or any of its subsidiaries (or, following the
Effective Time, Parent, the Surviving Corporation or any of their
respective subsidiaries) from operating their respective business
in a manner that is consistent with past practice. No officer
or director of the Company is a defendant in any action, suit,
claim, hearing, proceeding, arbitration or mediation or, to the
knowledge of the Company, the subject of any investigation (whether
civil, criminal, administrative or otherwise) by any Governmental
Entity in connection with his or her status as an officer or
director of the Company. To the knowledge of the Company,
there are no formal or informal inquiries or investigations by any
Governmental Entity pending or threatened, in each case, regarding
any accounting, internal control or disclosure practices of the
Company or any of its subsidiaries or compliance by the Company or
any of its subsidiaries with securities Laws.
SECTION 3.10 Employee Benefit
Plans .
(a)
Section 3.10(a) of
the Company Disclosure Schedule contains a true and complete
list of each material Company Plan. For purposes of this
Agreement, the term “ Company Plan ” shall mean
any “employee benefit plan” (within the meaning of
Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended (“ ERISA ”)), including
“multiemployer plans” within the meaning of
Section 3(37) of ERISA, and any stock purchase, stock option,
severance, employment, change-in-control, fringe benefit, bonus,
incentive, deferred compensation and all other employee benefit
plans, agreements, programs, policies or other arrangements,
whether or not subject to ERISA (including any funding mechanism
therefor now in effect or required in the future as a result of the
transactions contemplated by this Agreement), whether formal or
informal, oral or written, whether contained in any collective
bargaining agreement or otherwise, (i) under which
(A) any current or former employee, or director, independent
contractor or consultant, of the Company or any of its subsidiaries
(collectively, the “ Company Employees ”) has
any present or future right (determined as of the date of this
Agreement) to benefits and which are contributed to, sponsored by
or maintained by
14
the Company or any of its subsidiaries or
(B) the Company or any of its subsidiaries is reasonably
expected to have any present or future liability (determined as of
the date of this Agreement) (other than such benefits as may be
provided by Law or otherwise required by Law to be provided by the
Company or any of its subsidiaries (“ Government Plans
”)), and (ii) which is maintained within the
jurisdiction of the United States or covers any Company Employee
who resides or works for the Company or any of its subsidiaries in
the United States. Except as set forth in
Section 3.10(a)-1 of the Company Disclosure Schedule, neither
the Company nor any of its subsidiaries is a party to any
employment, severance or change-in-control agreement with any
executive officer of the Company.
(b)
With respect to
each Company Plan, the Company has provided or made available to
Parent a current, accurate and complete copy (or, to the extent no
such copy exists, an accurate description) thereof and, to the
extent applicable: (i) any related trust agreement or other
funding instrument; (ii) the most recent determination letter;
(iii) any summary plan description and other written
communications (or a description of any oral communications) by the
Company or its subsidiaries to the Company Employees concerning the
extent of the benefits provided under a Company Plan; and
(iv) for the most recent year available (A) the
Form 5500 and attached schedules, (B) audited financial
statements and (C) actuarial valuation reports, where
applicable.
(c)
Except as,
individually or in the aggregate, would not reasonably be expected
to have a Company Material Adverse Effect: (i) each Company
Plan has been established and administered in accordance with its
terms, and in compliance with the applicable provisions of ERISA,
the Code and other applicable Laws; (ii) no event has occurred
and no condition exists that would subject the Company or its
subsidiaries, either directly or by reason of their affiliation
with any member of their “ Controlled Group ”
(defined as any organization which is a member of a controlled
group of organizations within the meaning of Sections 414(b),
(c), (m) or (o) of the Code) to any Tax, fine, Lien, penalty or
other liability imposed by ERISA, the Code or other applicable
Laws; and (iii) no “reportable event” (as such
term is defined in Section 4043 of the Code), no nonexempt
“prohibited transaction” (as such term is defined in
Section 406 of ERISA and Section 4975 of the Code) or
“accumulated funding deficiency” (as such term is
defined in Section 302 of ERISA and Section 412 of the
Code (whether or not waived)) has occurred with respect to any
Company Plan. Each Company Plan which is intended to be
qualified within the meaning of Section 401(a) of the
Code has received a favorable determination letter as to its
qualification, and nothing has occurred, whether by action or
failure to act, that could reasonably be expected to cause the loss
of such qualification. Neither the Company nor any of its
subsidiaries has incurred, or is expected to incur, any current or
projected liability in respect of post-employment or
post-retirement health, medical or life insurance benefits for
current, former or retired employees of Company or any of its
subsidiaries, and no Company Plan provides for any such benefits,
except as required to avoid an excise Tax under Section 4980B
of the Code or as otherwise required by any other applicable
Law.
(d)
No Company Plan
is subject to Title IV of ERISA and neither the Company, any of its
subsidiaries nor any member of their Controlled Group has within
the preceding six years sponsored or contributed to, or has or had
any liability or obligation in respect of, any such
plan.
15
(e)
With respect to
any Company Plan or Foreign Benefit Plan, (i) there is no
action, suit or claim (other than routine claims for benefits in
the ordinary course) pending or, to the knowledge
of the Company, threatened, and there exist no facts or
circumstances that could reasonably be expected to give rise to any
such action, suit or claim; and (ii) except as described in
Section 3.10(e) of the Company Disclosure Schedule, there
is no administrative investigation, audit or other
administrative proceeding by the Department of Labor, the Internal
Revenue Service or other Governmental Entity pending or in progress
or, to the knowledge of the Company, threatened, in either case,
that could give rise, individually or in the aggregate, to a
Company Material Adverse Effect.
(f)
Except as set
forth in Section 3.10(f) of the Company Disclosure
Schedule or by reason of the transactions contemplated in
Section 2.3 or Section 6.5 of this Agreement, no material
Company Plan exists that, as a result of the execution of this
Agreement, shareholder approval of this Agreement, or the
consummation of the transactions contemplated by this Agreement
(whether alone or in connection with any termination of employment
occurring on the Closing Date), will: (i) result in severance
pay or any increase in severance pay upon any termination of
employment after the date of this Agreement under any Company Plan;
or (ii) accelerate the time of payment or vesting or result in
any payment or funding (through a grantor trust or otherwise) of
compensation or benefits under, increase the amount payable or
result in any other material obligation pursuant to, any of the
Company Plans. Except as set forth in
Section 3.10(f) of the Company Disclosure Schedule, no
Company Plan exists that contains terms which could result in
payments under any of the Company Plans which would not be fully
deductible by operation of Section 280G of the Code or
Section 162(m) of the Code.
(g)
With respect to
any plan, program or arrangement that would be a Company Plan but
for the fact that it is maintained outside the jurisdiction of the
United States or covers any Company Employee residing or working
outside the United States (any such Company Plan, a “
Foreign Benefit Plan ”), except as would not,
individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect, (i) all Foreign Benefit Plans
have been established, maintained and administered in compliance
with their terms and all applicable Laws and Orders of any
controlling Governmental Entity or instrumentality; (ii) all
Foreign Benefit Plans that are required to be funded are fully
funded to the extent so required by Law or Order and, with respect
to all other Foreign Benefit Plans, adequate reserves therefore
have been established on the accounting statements of the Company
or its applicable subsidiary in accordance with local generally
accepted accounting principles; and (iii) no liability or
obligation of the Company or its subsidiaries exists with respect
to such Foreign Benefit Plans (other than any such Foreign Benefit
Plan that is a Government Plan) that has not been disclosed on
Section 3.10(g)(iii) of the Company Disclosure
Schedule.
(h)
Each Company Plan
subject to Section 409A of the Code has been operated in
material compliance with, and no circumstances exist that would
reasonably be expected to result in any participant in any such
Company Plan incurring any tax under, Section 409A of the Code
and for which the Company is reasonably expected to have material
liability and the applicable guidance thereunder.
16
SECTION 3.11 Labor and Employment
Matters .
(a)
Except as,
individually or in the aggregate, would not reasonably be expected
to have a Company Material Adverse Effect, (i) each of the
Company and its subsidiaries is in compliance with all applicable
Laws respecting employment, employment practices, labor, terms and
conditions of employment and wages and hours, including but not
limited to the Worker Adjustment and Retraining Notification Act,
as amended (“ WARN ”), and all Laws of a similar
nature, in each case, with respect to Company Employees,
(ii) none of the Company or any of its subsidiaries is liable
for any payment to any trust or other fund or to any Governmental
Entity with respect to unemployment compensation benefits, social
security or other benefits for Company Employees, (iii) there
are no strikes, work stoppages, slowdowns or lockouts pending or,
to the knowledge of the Company, threatened against or involving
the Company or any of its subsidiaries, and (iv) none of the
Company or any of its subsidiaries is engaged in any unfair labor
practices.
(b)
Except as set
forth on Section 3.11(b) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a
party to any collective bargaining agreement or other contract or
agreement with any labor organization or other representative of
any of their employees (the “ Collective Bargaining
Agreements ”), nor is any such Collective Bargaining
Agreement presently being negotiated. Except as set forth in
Section 3.11(b) of the Company Disclosure Schedule, no
labor organization or group of employees of the Company or any of
its subsidiaries has made a pending demand for recognition or
certification, and there are no representation or certification
proceedings or petitions seeking a representation proceeding
presently pending or, to the knowledge of the Company, threatened
in writing to be brought or filed, with the National Labor
Relations Board or any other U.S. or non-U.S. labor relations
tribunal or authority and no such demand or proceeding has been
made or brought within the past three years.
(c)
A copy of the
Company’s Human Rights Production Standards policies and
procedures has been made available to Parent prior to the date of
this Agreement. To the knowledge of the Company, except as
disclosed in the Company SEC Reports filed prior to the date of
this Agreement, and except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect, the Company and each of the Company’s
subsidiaries, manufacturers, suppliers and agents (including
independent contractors) has complied with such policies and
procedures.
SECTION 3.12 Insurance
. Except as described in Section 3.12(a) of the
Company Disclosure Schedule or as would not, individually or
in the aggregate, reasonably be expected to have a Company Material
Adverse Effect, all insurance policies of the Company and its
subsidiaries are in full force and effect and provide insurance in
such amounts and against such risks as the management of the
Company reasonably has determined to be prudent and in accordance
with industry practices or as is required by Law.
SECTION 3.13 Properties
. Except as described in Section 3.13(a) of the
Company Disclosure Schedule or as would not, individually or
in the aggregate, reasonably be expected to have a Company Material
Adverse Effect, each of the Company and its subsidiaries holds good
and valid leasehold interests in the real property leased by any of
them (the “ Leased Real Property ”), and has
good and marketable title to all of the real property owned by any
of them (the “ Owned Real Property ” and,
together with the Leased Real Property, the “
Real
17
Property ”), free and clear of all Liens, other
than Permitted Liens. Except as would not, individually or in
the aggregate, reasonably be expected to have a Company Material
Adverse Effect, no monetary or other default exists under any lease
or sublease under which the Leased Real Property is held and, to
the knowledge of the Company, no event has occurred that with
notice, lapse of time or both, individually or in the aggregate,
would reasonably be likely to result in such a default. As
used in this Agreement, “ Permitted Liens ”
means: (A) zoning restrictions, easements, rights-of-way or
other restrictions on the use of the Real Property (
provided that such liens and restrictions were incurred
prior to the date of this Agreement and do not, individually or in
the aggregate, materially interfere with the use of such Real
Property or the Company’s or its subsidiaries’
operation of their respective businesses as currently operated);
(B) Liens imposed by Law, including carriers’,
warehousemen’s, landlords’ and mechanics’ liens,
in each case incurred in the ordinary course of business consistent
with past practice for sums not yet due or being contested in good
faith by appropriate proceedings ( provided appropriate
reserves required pursuant to U.S. generally accepted accounting
principles have been made in respect thereof); (C) Liens for
Taxes, assessments or other governmental charges not yet subject to
penalties for non-payment or which are being contested in good
faith by appropriate proceedings ( provided appropriate
reserves required pursuant to U.S. generally accepted accounting
principles have been made in respect thereof); and (D) Liens
set forth on Section 3.13(a) of the Company Disclosure
Schedule with respect to the Indebtedness of the Company or
its subsidiaries in existence as of the date of this Agreement, in
each case as security for such Indebtedness and so long as there is
no default under such Indebtedness.
SECTION 3.14 Tax Matters
. Except as set forth in Section 3.14 of the Company
Disclosure Schedule:
(a)
Except as would
not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect: (i) each of the
Company and its subsidiaries has timely filed, or will timely file,
with the appropriate taxing authorities all Tax Returns (as defined
below) required to be filed by it on or prior to the Closing Date
in the manner provided by Law and (ii) such Tax Returns were,
and, in the case of Tax Returns to be filed, will be, complete and
accurate in all respects.
(b)
Except as would
not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect, all Taxes (as defined
below) due and payable (without regard to whether those Taxes are
shown as due and payable on any Tax Return) by the Company or any
of its subsidiaries have been paid or adequate reserves have been
established in accordance with U.S. generally accepted accounting
principles for the satisfaction of those Taxes.
(c)
As of the date of
this Agreement, there are no outstanding agreements or waivers
extending the statutory period of limitations applicable to any
material amount of federal, state, local or foreign income or other
Taxes (other than pursuant to an extension of time to file Tax
Returns obtained in the ordinary course).
(d)
Neither the
Company nor any of its current subsidiaries (i) is a party to
any Tax sharing or similar agreement that would reasonably be
expected to give rise to a material payment obligation (other than
agreements among the Company and its subsidiaries and
other
18
than customary Tax indemnifications contained in
credit, lease or other commercial agreements the primary purpose of
which does not relate to Taxes), or (ii) is or has ever been a
member of an affiliated group filing a U.S. federal consolidated
return (other than a group the common parent of which was the
Company).
(e)
No deficiency for
a material amount of Taxes has been proposed or threatened in
writing, or asserted or assessed in writing, against the Company or
any of its subsidiaries, except for deficiencies which have been
satisfied by payment, settled or been withdrawn or which are being
contested in good faith and for which adequate reserves in
accordance with U.S. generally accepted accounting principles have
been established.
(f)
All material
Taxes due with respect to completed and settled examinations or
concluded litigation relating to the Company or any of its
subsidiaries have been paid in full or adequate reserves have been
established for the payment thereof.
(g)
As of the date of
this Agreement, to the knowledge of the Company, no material audit
or examination or refund litigation with respect to any Tax Return
is pending or has been threatened in writing.
(h)
Neither the
Company nor any subsidiary of the Company has constituted either a
“distributing corporation” or a “controlled
corporation” within the meaning of
Section 355(a)(1)(A) of the Code within the past five
years.
(i)
Neither the
Company nor any subsidiary of the Company has engaged in any
“listed transactions” within the meaning of Treasury
Regulation § 1.6011-4(b)(2).
(j)
Each of the
Company and its subsidiaries has withheld and paid over all
material Taxes required to have been withheld and paid over, and
complied in all material respects with all information reporting
requirements, in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third
party.
(k)
There are no
material Liens for material Taxes upon the assets of the Company or
any of its subsidiaries, except for Liens for Taxes not yet due and
payable or Liens for Taxes being contested in good faith through
appropriate proceedings and for which adequate reserves have been
maintained in accordance with U.S. generally accepted accounting
principles.
For purposes of this Agreement,
“ Taxes ” shall mean any taxes of any kind,
including those on or measured by or referred to as income, gross
receipts, capital, sales, use, ad valorem , franchise,
profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or
windfall profits taxes, customs, duties or similar taxes of any
kind whatsoever, together with any interest and any penalties and
additions to tax imposed by any Governmental Entity or other Taxing
authority. For purposes of this Agreement, “ Tax
Return ” means any return, report or statement required
to be filed with any Governmental Entity with respect to Taxes,
including any schedule or attachment thereto or amendment
thereof.
SECTION 3.15 Opinion of Financial
Advisor . Credit Suisse First Boston LLC (the “
Company’s Financial Advisor ”) has delivered to
the Board of Directors of the Company an
19
opinion to the effect that, as of the date of
such opinion, the Merger Consideration is fair, from a financial
point of view, to the holders of the Shares. A true and
complete copy of the written opinion of the Company’s
Financial Advisor will be delivered to Parent solely for
informational purposes after receipt thereof by the
Company.
SECTION 3.16 Brokers .
No broker, finder or investment banker is or will become entitled
to any brokerage, finder’s or other fees or commissions, that
together with all other such fees and commissions to which any
other broker, finder or investment banker is or will become
entitled, would exceed 0.55% of the Aggregate Consideration (as
defined in Section 3.16 of the Company Disclosure Schedule) in
connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of the Company or any
of its subsidiaries. The Company will provide to Parent true
and correct copies of all Contracts relating to the engagement of
any such broker, finder or investment banker or pursuant to which
any such broker, finder or investment banker is or will become
entitled t
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