EXHIBIT (c)(1)
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
AON CORPORATION,
SUBSIDIARY CORPORATION, INC.
AND
ALEXANDER & ALEXANDER SERVICES INC.
Dated as of December 11, 1996
TABLE OF CONTENTS
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Page
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ARTICLE I
THE OFFER
SECTION 1.1 The Offer............................................ 2
SECTION 1.2 Company Actions...................................... 3
SECTION 1.3 Xxxx Xxxxxxxxx Companies Limited..................... 5
SECTION 1.4 Alexander & Alexander Services UK plc................ 6
SECTION 1.5 MJDS................................................. 7
ARTICLE II
THE MERGER
SECTION 2.1 The Merger........................................... 7
SECTION 2.2 Closing.............................................. 7
SECTION 2.3 Effective Time....................................... 8
SECTION 2.4 Effects of the Merger................................ 8
SECTION 2.5 Charter and By-laws; Officers and Directors.......... 8
ARTICLE III
EFFECT OF THE MERGER ON THE STOCK OF THE
CONSTITUENT CORPORATIONS; SURRENDER OF CERTIFICATES
SECTION 3.1 Effect on Stock...................................... 9
SECTION 3.2 Surrender of Certificates............................ 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.1 Organization......................................... 13
SECTION 4.2 Subsidiaries......................................... 13
SECTION 4.3 Capital Structure.................................... 14
SECTION 4.4 Authority............................................ 15
SECTION 4.5 Consent and Approvals; No Violations................. 16
SECTION 4.6 SEC Documents and Other Reports...................... 18
SECTION 4.7 Absence of Material Adverse Change................... 18
SECTION 4.8 Information Supplied................................. 18
SECTION 4.9 Compliance with Laws................................. 19
SECTION 4.10 Licenses and Permits................................. 19
SECTION 4.11 Tax Matters.......................................... 19
SECTION 4.12 Liabilities.......................................... 20
SECTION 4.13 Opinion of Financial Advisor......................... 20
SECTION 4.14 State Takeover Statutes; Rights Agreement............ 20
SECTION 4.15 Brokers.............................................. 21
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
SECTION 5.1 Organization......................................... 21
SECTION 5.2 Authority............................................ 21
SECTION 5.3 Consents and Approvals; No Violations................ 22
SECTION 5.4 Information Supplied................................. 23
SECTION 5.5 Interim Operations of Sub............................ 23
SECTION 5.6 Brokers.............................................. 23
SECTION 5.7 Financing............................................ 23
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 6.1 Conduct of Business by the Company Pending
the Merger......................................... 24
SECTION 6.2 No Solicitation...................................... 27
SECTION 6.3 Third Party Standstill Agreements.................... 28
SECTION 6.4 Other Actions........................................ 28
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 Stockholder Approval; Preparation of
Proxy Statement.................................... 29
SECTION 7.2 Access to Information................................ 30
SECTION 7.3 Fees and Expenses.................................... 30
SECTION 7.4 Options.............................................. 31
SECTION 7.5 Public Announcements................................. 33
SECTION 7.6 Real Estate Transfer Tax............................. 33
SECTION 7.7 State Takeover Laws.................................. 33
SECTION 7.8 Indemnification; Directors and Officers
Insurance.......................................... 34
SECTION 7.9 Notification of Certain Matters...................... 35
SECTION 7.10 Board of Directors................................... 35
SECTION 7.11 Reasonable Best Efforts.............................. 36
SECTION 7.12 Certain Litigation................................... 37
SECTION 7.13 Employee Benefits.................................... 37
SECTION 7.14 Stapled Securities................................... 39
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.1 Conditions to Each Party's Obligation to
Effect the Merger.................................. 40
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ARTICLE IX
TERMINATION AND AMENDMENT
SECTION 9.1 Termination.......................................... 41
SECTION 9.2 Effect of Termination................................ 43
SECTION 9.3 Amendment............................................ 43
SECTION 9.4 Extension; Waiver.................................... 43
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 Non-Survival of Representations and
Warranties......................................... 44
SECTION 10.2 Notices.............................................. 44
SECTION 10.3 Interpretation....................................... 45
SECTION 10.4 Counterparts......................................... 45
SECTION 10.5 Entire Agreement; No Third-Party
Beneficiaries...................................... 46
SECTION 10.6 Governing Law........................................ 46
SECTION 10.7 Assignment........................................... 46
SECTION 10.8 Severability......................................... 46
SECTION 10.9 Enforcement of this Agreement........................ 46
SECTION 10.10 Obligations of Subsidiaries.......................... 47
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER, dated as of December 11, 1996 (this
"Agreement"), among AON CORPORATION, a Delaware corporation ("Parent"),
SUBSIDIARY CORPORATION, INC., a Maryland corporation and a wholly-owned
subsidiary of Parent ("Sub"), and ALEXANDER & ALEXANDER SERVICES INC., a
Maryland corporation (the "Company") (Sub and the Company being hereinafter
collectively referred to as the "Constituent Corporations").
W I T N E S S E T H:
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WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have unanimously approved the acquisition of the Company by Parent
pursuant to a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") by Sub for all of the outstanding shares of
Common Stock, par value $1.00 per share (the "Common Stock"), together with the
related Rights (as defined in Section 4.3), of the Company, at a price of $17.50
per share (the "Offer Price"), net to the seller in cash, without interest
thereon, followed by a merger (the "Merger") of Sub with and into the Company
upon the terms and subject to the conditions set forth herein (the shares of
Common Stock subject to the Offer are hereinafter referred to as the "Shares");
WHEREAS, the Board of Directors of the Company has (i) determined that
the consideration to be paid for each Share in the Offer is fair to and in the
best interests of the stockholders of the Company, (ii) approved and adopted
this Agreement and the transactions contemplated hereby and (iii) adopted
resolutions unanimously determining that the Offer and the Merger are advisable,
approving such transactions and recommending that the Company's stockholders
accept the Offer and approve the Merger;
WHEREAS, the Company has been advised that Parent and Sub are entering
into on the date hereof a Stock Purchase and Sale Agreement (the "Preferred
Stock Purchase Agreement") with American International Group, Inc., which,
together with certain of its subsidiaries, holds all of the outstanding shares
of the Company's 8% Series B Cumulative Convertible Preferred Stock, par value
$1.00 per share (the "Series B Preferred Stock"); and
WHEREAS, pursuant to the Merger, each issued and outstanding share of
Company Common Capital Stock (as hereinafter defined) not owned directly or
indirectly by Parent or the Company will be converted into the right to receive
the
consideration paid per share of the Common Stock pursuant to the Offer.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE OFFER
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SECTION 1.1 The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than five business
days after the date of the public announcement by Parent and the Company of this
Agreement, Sub shall, and Parent shall cause Sub to, commence the Offer. The
obligation of Sub to, and of Parent to cause Sub to, commence the Offer and
accept for payment, and pay for, any Shares tendered pursuant to the Offer shall
be subject only to the conditions set forth in Exhibit A (the "Offer
Conditions") (any of which may be waived in whole or in part by Sub in its sole
discretion, provided that, without the consent of the Company, Sub shall not
waive the Minimum Condition (as defined in Exhibit A)). Sub expressly reserves
the right to modify the terms of the Offer, except that, without the consent of
the Company, Sub shall not (i) reduce the number of Shares subject to the Offer,
(ii) reduce the Offer Price, (iii) impose any other conditions to the Offer
other than the Offer Conditions or modify the Offer Conditions (other than to
waive any Offer Conditions to the extent permitted by this Agreement), (iv)
except as provided in the next sentence, extend the Offer, (v) change the form
of consideration payable in the Offer or (vi) amend, waive or add any other term
of the Offer in any manner adverse to the Company or the holders of Shares.
Notwithstanding the foregoing, Sub may, without the consent of the Company, (i)
extend the Offer, if at the scheduled or extended expiration date of the Offer
any of the Offer Conditions shall not be satisfied or waived, until such time as
such conditions are satisfied or waived, (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the Offer
and (iii) extend the Offer for any reason for one or more occasions for an
aggregate period of not more than 10 business days beyond the latest expiration
date that would otherwise be permitted under clause (i) or (ii) of this
sentence. So long as this Agreement is in effect and the Offer Conditions have
not been satisfied or waived, Sub shall, and Parent shall cause Sub to, cause
the Offer not to expire. Subject to the terms and conditions of the Offer and
this Agreement, Sub shall, and Parent shall cause Sub to, accept for and pay
for, all Shares validly tendered and not
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withdrawn pursuant to the Offer that Sub is permitted to accept for payment
under applicable law, and pay for, pursuant to the Offer as soon as practicable
after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-
1") with respect to the Offer, which shall contain an offer to purchase and a
related letter of transmittal and summary advertisement (such Schedule 14D-1 and
the documents included therein pursuant to which the Offer will be made,
together with any supplements or amendments thereto, the "Offer Documents").
Parent, Sub and the Company each agrees promptly to correct any information
provided by it for use in the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect, and
Parent and Sub further agree to take all steps necessary to cause the Schedule
14D-1 as so corrected to be filed with the SEC and the other Offer Documents as
so corrected to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. The Company and its
counsel shall be given reasonable opportunity to review and comment upon the
Offer Documents prior to their filing with the SEC or dissemination to the
stockholders of the Company. Parent and Sub agree to provide the Company and its
counsel any comments Parent, Sub or their counsel may receive from the SEC or
its staff with respect to the Offer Documents promptly after the receipt of such
comments.
(c) Prior to the expiration of the Offer, Parent shall provide or
cause to be provided to Sub all funds necessary to accept for payment, and pay
for, any Shares that Sub is permitted to accept for payment under applicable law
and pay for, pursuant to the Offer.
SECTION 1.2 Company Actions. (a) The Company hereby approves of and
consents to the Offer and represents that the Board of Directors of the Company,
at a meeting duly called and held, at which all directors were present, duly and
unanimously adopted resolutions approving this Agreement, the Offer and the
Merger, determining that the Offer and the Merger are advisable and that the
terms of the Offer and the Merger are fair to, and in the best interests of, the
Company's stockholders and recommending that holders of Shares accept the Offer
and that the Company's stockholders approve the Merger; provided, however, that
such approval, determination, recommendation or other action may be withdrawn,
modified or amended at any time or from time to time if a majority of the Board
of Directors of the Company determines, in its good faith judgment, based on the
opinion of independent outside legal counsel to the Company, that failing to
take such action would constitute a breach of such Board's duties
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under applicable law. The Company represents that its Board of Directors has
received the opinion of CS First Boston Corporation ("First Boston") that the
proposed consideration to be received by stockholders pursuant to the Offer and
the Merger is fair to the Company's stockholders from a financial point of view.
The Company has been authorized by First Boston to permit, subject to prior
review and consent by First Boston (such consent not to be unreasonably
withheld), the inclusion of such fairness opinion (or a reference thereto) in
the Offer Documents and in the Schedule 14D-9 referred to below. The Company
hereby consents to the inclusion in the Offer Documents of the recommendation of
the Company's Board of Directors described in this Section 1.2(a); provided,
however, that such recommendation may be withdrawn, modified or amended at any
time or from time to time if a majority of the Board of Directors of the Company
determines, in its good faith judgment, based on the opinion of independent
outside legal counsel to the Company, that failing to take such action would
constitute a breach of such Board's duties under applicable law. The Company
has been advised by each of its directors and executive officers that each such
person intends to tender all Shares owned by such person pursuant to the Offer.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendation described in
paragraph (a) (subject to the withdrawal, modification or amendment of such
recommendation at any time or from time to time if the Board of Directors of the
Company determines, in its good faith judgment, based on the opinion of
independent outside legal counsel to the Company, that failing to take such
action would constitute a breach of such Board's duties under applicable law)
and shall mail a copy of the Schedule 14D-9 to the stockholders of the Company.
Each of the Company, Parent and Sub agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that such
information shall have become false or misleading in any material respect, and
the Company further agrees to take all steps necessary to amend or supplement
the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented
to be filed with the SEC and disseminated to the Company's stockholders, in each
case as and to the extent required by applicable federal securities laws. Parent
and its counsel shall be given reasonable opportunity to review and comment upon
the Schedule 14D-9 prior to its filing with the SEC or dissemination to
stockholders of the Company. The Company agrees to provide Parent and its
counsel any comments the Company or counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 promptly after the receipt of such
comments.
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(c) In connection with the Offer and the Merger, the Company shall
cause its transfer agent to furnish Sub promptly with mailing labels containing
the names and addresses of the record holders of Shares as of a recent date and
of those persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings and computer
files and all other information in the Company's possession or control regarding
the beneficial owners of Shares, and shall furnish to Sub such information and
assistance (including updated lists of stockholders, security position listings
and computer files) as Parent or Sub may reasonably request in communicating the
Offer to the Company's stockholders. Subject to the requirements of applicable
law, and except for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the Merger, Parent and
Sub and their agents shall hold in confidence the information contained in any
such labels, listings and files, will use such information only in connection
with the Offer and the Merger and, if this Agreement shall be terminated, will,
upon request, deliver, and will use their reasonable best efforts to cause their
agents to deliver, to the Company all copies of such information then in their
possession or control.
SECTION 1.3 Xxxx Xxxxxxxxx Companies Limited. The Company shall cause
Xxxx Xxxxxxxxx Companies Limited, a corporation organized under the laws of
Canada and a Subsidiary of the Company ("RSC"), to transmit to each holder of
the Class 1 special shares of RSC (the "RSC Class 1 Shares"), contemporaneously
with the transmission of the Offer Documents to the holders of Common Stock: (i)
the Offer Documents; (ii) a letter stating that holders of RSC Class 1 Shares
who wish to participate in the Offer must request retraction of such RSC Class 1
Shares for shares of Common Stock pursuant to Section 5 of the Restated
Certificate of Incorporation of RSC; and (iii) a form of retraction request,
which retraction request shall provide that a holder of RSC Class 1 Shares
requests retraction thereof on the date Sub first accepts for payment Shares
pursuant to the Offer and contemporaneously therewith, and that the shares of
Common Stock received upon such retraction shall be deemed validly tendered
pursuant to the Offer. RSC shall retract such RSC Class 1 Shares in accordance
with such retraction request (and the Company represents and warrants that such
retraction can be effected in compliance with Section 36 of the Canada Business
Corporations Act) and the Company shall cause to be issued (for tender as so
requested) such number of shares of Common Stock as is necessary to satisfy the
redemption price in accordance with the Restated Articles of Incorporation of
RSC and the related Keepwell Agreement (the "Keepwell Agreement"), between the
Company and RSC. In addition, the Company shall cause (x) RSC to transmit to the
holders of RSC Class 1 Shares a recommendation of
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the Company and RSC that such holders retract such shares and tender the shares
of Common Stock received on such retraction pursuant to the Offer and (y) the
transfer agent for the RSC Class 1 Shares to furnish Sub promptly with mailing
labels containing the names and addresses of the record holders of RSC Class 1
Shares as of a recent date and of those persons becoming record holders
subsequent to such date, together with all copies of all lists of stockholders,
security position listings and computer files and all other information in the
Company's or RSC's possession or control regarding the beneficial owners of RSC
Class 1 Shares, and shall furnish to Sub such information and assistance
(including updated lists of stockholders, security position listings and
computer files) as Parent or Sub may reasonably request in communicating the
documentation referred to in the first sentence of this Section 1.3 to the
holders of RSC Class 1 Shares. Parent and Sub and their agents shall hold in
confidence the information contained in any such labels, listings and files,
will use such information only in connection with the Offer and the Merger and,
if this Agreement shall be terminated, will, upon request, deliver, and will use
their reasonable best efforts to cause their agents to deliver, to the Company
all copies of such information then in their possession or control.
SECTION 1.4 Alexander & Alexander Services UK plc. The Company shall,
and shall cause Alexander & Alexander Services UK plc, a corporation organized
under the laws of Scotland and a Subsidiary of the Company ("AAUK"), to,
transmit to each holder of any share of Class C Common Stock (as defined in
Section 3.1) and any related Dividend Share of AAUK (the "Dividend Shares"),
contemporaneously with the transmission of the Offer Documents to the holders of
Common Stock: (i) the Offer Documents; (ii) a letter stating that holders of
shares of Class C Common Stock and the related Dividend Shares who wish to
participate in the Offer must request the conversion of the shares of Class C
Common Stock into shares of Common Stock pursuant to Subsection E of Article
SIXTH of the Charter of the Company; and (iii) a form of conversion request,
which conversion request shall provide that a holder of shares of Class C Common
Stock requests conversion thereof on the date Sub first accepts for payment
Shares pursuant to the Offer and contemporaneously therewith, and that the
shares of Common Stock received upon such conversion shall be deemed validly
tendered pursuant to the Offer. The Company shall cause the cancellation of such
shares of Class C Common Stock in accordance with such conversion request and
the Company shall issue (for tender as so requested) such number of shares of
Common Stock as is necessary to satisfy such conversion request in accordance
with the Charter of the Company. In addition, the Company shall (x) transmit to
the holders of the shares of Class C Common Stock a recommendation of the
Company and AAUK that such holders convert such shares and tender the shares of
Common Stock
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received on such conversion pursuant to the Offer and (y) the transfer agent for
the Class C Common Stock to furnish Sub promptly with mailing labels containing
the names and addresses of the record holders of shares of Class C Common Stock
as of a recent date and of those persons becoming record holders subsequent to
such date, together with all copies of all lists of stockholders, security
position listings and computer files and all other information in the Company's
or AAUK's possession or control regarding the beneficial owners of shares of
Class C Common Stock, and shall furnish to Sub such information and assistance
(including updated lists of stockholders, security position listings and
computer files) as Parent or Sub may reasonably request in communicating the
documentation referred to in the first sentence of this Section 1.4 to the
holders of shares of Class C Common Stock. Parent and Sub and their agents
shall hold in confidence the information contained in any such labels, listings
and files, will use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, will, upon request, deliver,
and will use their reasonable best efforts to cause their agents to deliver, to
the Company all copies of such information then in their possession or control.
SECTION 1.5 MJDS. Each of the parties shall comply with the provisions
of National Policy No. 45 adopted by the Canadian Securities Administrators in
connection with the making of the Offer to residents of Canada, unless the Offer
is an exempt takeover bid for the purposes of section 93(1)(e) of the Securities
Act (Ontario) and the comparable provisions of the securities legislation of the
other provinces of Canada.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the General Corporation Law of the State of
Maryland (the "MGCL"), Sub shall be merged with and into the Company at the
Effective Time (as defined in Section 2.3). Following the Merger, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Sub in accordance with the MGCL.
SECTION 2.2 Closing. The closing of the Merger will take place at
10:00 a.m. on a date to be specified by Parent or Sub, which shall be no later
than the second business day after satisfaction or waiver of the conditions set
forth in
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Article VIII (the "Closing Date"), at the offices of Sidley & Austin, Xxx Xxxxx
Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, unless another date, time or place is
agreed to in writing by the parties hereto.
SECTION 2.3 Effective Time. The Merger shall become effective when
Articles of Merger (the "Articles of Merger"), executed in accordance with the
relevant provisions of the MGCL, are accepted for record by the State Department
of Assessments and Taxation of Maryland (the "SDAT"); provided, however, that,
upon mutual consent of the Constituent Corporations, the Articles of Merger may
provide for a later date of effectiveness of the Merger not more than 30 days
after the date the Articles of Merger are accepted for record. When used in
this Agreement, the term "Effective Time" shall mean the later of the date and
time at which the Articles of Merger are accepted for record by the SDAT or such
later time established by the Articles of Merger. The filing of the Articles of
Merger shall be made as soon as practicable after the satisfaction or waiver of
the conditions to the Merger set forth herein.
SECTION 2.4 Effects of the Merger. The Merger shall have the effects
set forth in Section 3-114 of the MGCL.
SECTION 2.5 Charter and By-laws; Officers and Directors. (a) The
Charter (as defined in the MGCL) of the Company, as in effect immediately prior
to the Effective Time, shall be the Charter of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
(b) The By-Laws of the Company, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by the Charter of the
Surviving Corporation or by applicable law.
(c) The directors of Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation, until the next annual
meeting of stockholders (or the earlier of their resignation or removal) and
until their respective successors are duly elected and qualified, as the case
may be.
(d) The officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation, for a term of one year
(or until the earlier of their resignation or removal) and until their
respective successors are duly elected and qualified, as the case may be.
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ARTICLE III
EFFECT OF THE MERGER ON THE STOCK OF THE
CONSTITUENT CORPORATIONS; SURRENDER OF CERTIFICATES
SECTION 3.1 Effect on Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
stock of Sub or rights to acquire any such stock:
(a) Capital Stock of Sub. Each issued and outstanding share of stock
of Sub shall be converted into and become 600,000 fully paid and
nonassessable shares of Common Stock, par value $1.00 per share, of the
Surviving Corporation.
(b) Parent Owned Stock. Each share of stock of the Company
(including, without limitation, the Shares purchased pursuant to the Offer
and the shares of the Series B Preferred Stock purchased pursuant to the
Preferred Stock Purchase Agreement) owned by any Subsidiary of the Company,
Parent, Sub or any other Subsidiary of Parent (other than the shares into
which the outstanding shares of stock of Sub were converted pursuant to
Section 3.1(a)) shall automatically be canceled and retired and shall cease
to exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion of Shares. Subject to Section 3.1(d), each holder of a
share of (i) the Common Stock, together with the related Right, (ii) the
Class A Common Stock, par value $.00001 per share, of the Company (the
"Class A Common Stock"), together with the related RSC Class 1 Share and
related Right, or (iii) the Class C Common Stock, par value $1.00 per
share, of the Company (the "Class C Common Stock"), together with the
related Dividend Share and related Right (the Common Stock, Class A Common
Stock and Class C Common Stock are hereinafter collectively referred to as
the "Company Common Capital Stock"), in each case, that is issued and
outstanding (other than shares to be cancelled in accordance with Section
3.1(b)), shall be paid by the Surviving Corporation as consideration for
the conversion of each share in cash, without interest and without any
further action by such holder, the price paid per share of Common Stock in
the Offer (the "Merger Consideration"). The Merger Consideration shall be
allocated, in the case of clause (i), U.S. $.01 to the Right and the
balance of the Merger Consideration to the share of Common Stock, in the
case of clause (ii), the U.S. dollar equivalent of Cdn. $.00001 to the
share of Class A Common
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Stock, U.S. $.01 to the Right and the balance of the Merger Consideration
to the RSC Class 1 Share, and, in the case of clause (iii), the U.S. dollar
equivalent of 2 xxxxx to the Dividend Share, U.S. $.01 to the Right and the
balance of the Merger Consideration to the share of Class C Common Stock.
As of the Effective Time, all such shares shall be converted in accordance
with this paragraph, and when so converted, shall no longer be outstanding
and shall automatically be cancelled and retired and shall cease to exist,
and each holder of a certificate representing any such shares shall cease
to have any rights with respect thereto, except the right to receive the
aforesaid amount, without interest.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in
this Agreement to the contrary, any issued and outstanding shares of Class
A Common Stock, Class C Common Stock or (if the holders of shares of Common
Stock are entitled to dissenters' rights under the MGCL) Common Stock held
by a person (a "Dissenting Stockholder") who objects to the Merger and
complies with all the provisions of the MGCL concerning the right of
holders of shares to dissent from the Merger and require appraisal of their
shares ("Dissenting Shares") shall not be converted as described in Section
3.1(c), but shall become the right to receive such consideration as may be
determined to be due to such Dissenting Stockholder pursuant to the MGCL.
If, after the Effective Time, such Dissenting Stockholder withdraws his
demand for appraisal or fails to perfect or otherwise loses his right of
appraisal, in any case pursuant to the MGCL, his shares of Class A Common
Stock, Class C Common Stock or Common Stock shall be deemed to be converted
as of the Effective Time into the right to receive the Merger Consideration
allocated as provided in Section 3.1(c). The Company shall give Parent (i)
prompt notice of any demands for appraisal of shares received by the
Company and (ii) the opportunity to participate in and direct all
negotiations and proceedings with respect to any such demands. The Company
shall not, without the prior written consent of Parent, make any payment
with respect to, or settle, offer to settle or otherwise negotiate, any
such demands.
(e) Shares of Series A Convertible Preferred Stock. The holder of each
share of Series A Convertible Preferred Stock (as defined in Section 4.3)
shall have the right to convert such share only into cash in the amount of
$52.54.
SECTION 3.2 Surrender of Certificates. (a) Paying Agent. Prior to
the Effective Time, Parent shall designate a bank or trust company to act as
paying agent in the Merger (the
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"Paying Agent"), and prior to the Effective Time, Parent shall make available,
or cause the Surviving Corporation to make available, to the Paying Agent cash
in amounts necessary for the payment of the Merger Consideration as provided in
Section 3.1 upon surrender of certificates representing shares of Company Common
Capital Stock as part of the Merger (it being understood that any and all
interest earned on funds made available to the Paying Agent pursuant to this
Agreement shall be turned over to Parent). If the amount of cash deposited with
the Paying Agent pursuant to this Section 3.2 is insufficient to pay all of the
amounts required to be paid pursuant to Section 3.1, Parent from time to time
after the Effective Time shall take all steps necessary to enable or cause the
Surviving Corporation to deposit with the Paying Agent additional cash in an
amount sufficient to make all such payments.
(b) Payment Procedure. (i) Concurrently with or immediately prior to
the Effective Time, Parent or Sub shall deposit in trust with the Paying Agent
cash in United States dollars in an aggregate amount equal to the product of (A)
the number of shares of Company Common Capital Stock outstanding immediately
prior to the Effective Time (other than shares which are owned by any Subsidiary
of the Company, Parent or any Subsidiary of Parent (including Sub) or a person
known at the time of such deposit to be a Dissenting Stockholder) and (B) the
Merger Consideration (such amount being hereinafter referred to as the "Payment
Fund"). The Payment Fund shall be invested by the Paying Agent as directed by
Parent in direct obligations of the United States, obligations for which the
full faith and credit of the United States is pledged to provide for the payment
of principal and interest, commercial paper rated of the highest quality by
Xxxxx'x Investors Services, Inc. or Standard & Poor's Ratings Group or
certificates of deposit, bank repurchase agreements or bankers' acceptance a
commercial bank having at least $100,000,000 in assets (collectively, "Permitted
Investments") or in money market funds which are invested in Permitted
Investments, and any net earnings with respect thereto shall be paid to Parent
as and when requested by Parent. The Paying Agent shall, pursuant to
irrevocable instructions of Parent or Sub, make the payments referred to in this
Section 3.2 out of the Payment Fund. The Payment Fund shall not be used for any
other purpose except as otherwise agreed to by Parent.
(ii) As soon as reasonably practicable after the Effective Time, the
Paying Agent shall mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time represented shares of
Company Common Capital Stock (the "Certificates"), (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of
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the Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration as provided in Section 3.1. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor the
amount of cash into which the shares of Company Common Capital Stock theretofore
represented by such Certificate shall have been converted pursuant to Section
3.1, and the Certificate so surrendered shall forthwith be cancelled. In the
event of a transfer of ownership of shares of Company Common Capital Stock that
is not registered in the transfer records of the Company, payment may be made to
a person other than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of such Certificate or establish to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 3.2, each Certificate (other
than Certificates representing Dissenting Shares) shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the shares of stock
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.1. No interest will be paid or will accrue on the cash payable
upon the surrender of any Certificate.
(c) No Further Ownership Rights in Shares. All cash paid upon the
surrender of Certificates in accordance with the terms of this Article III shall
be deemed to have been paid in full satisfaction of all rights pertaining to the
shares of stock theretofore represented by such Certificates. At the Effective
Time, the stock transfer books of the Company shall be closed, and there shall
be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of stock that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Paying Agent for any reason, they
shall be cancelled and exchanged as provided in this Article III.
(d) No Liability. None of Parent, Sub, the Company or the Paying
Agent shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable
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abandoned property, escheat or similar law. If any Certificates shall not have
been surrendered prior to two years after the Effective Time (or immediately
prior to such earlier date on which any payment pursuant to this Article III
would otherwise escheat to or become the property of any Governmental Entity (as
defined in Section 4.5)), the cash payment in respect of such Certificate shall,
to the extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interests of any person previously
entitled thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to Parent and Sub as follows:
SECTION 4.1 Organization. The Company and each of its Significant
Subsidiaries (as defined in Section 10.3) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to carry on
its business as now being conducted, except where the failure to be so
organized, validly existing or in good standing would not have a Material
Adverse Effect (as defined in Section 10.3) on the Company. The Company has
delivered to Parent complete and correct copies of its Charter and By-laws and
the Charter and By-laws (or similar organizational documents) of its Significant
Subsidiaries.
SECTION 4.2 Subsidiaries. Except as set forth in item 4.2 of the
letter from the Company to Parent dated the date hereof, which letter relates to
this Agreement and is designated therein as the Company Letter (the "Company
Letter"), Exhibit 21 of the Company's Annual Report on Form 10-K for the year
ended December 31, 1995 lists each Subsidiary of the Company existing as of the
date hereof (other than Subsidiaries that are immaterial) and accurately
reflects thereon the ownership interests in such Subsidiaries of the Company and
its Subsidiaries. The authorized capital stock of RSC consists of four classes
of capital stock, each unlimited in amount. As of the date of this Agreement,
1,805,616.112 RSC Class 1 Shares were issued, outstanding and (excluding 42,910
shares owned by a Subsidiary of the Company) owned by persons other than the
Company or any of its Subsidiaries, all of which shares were validly issued,
fully paid and nonassessable and free of preemptive rights, and (ii) all other
shares of capital stock of RSC were owned by the Company. The authorized
capital stock of
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AAUK consists of 46,000,000 Deferred Shares of 25 xxxxx (Type 1), 12,927,195
Dividend Shares of 2 xxxxx (Type 2), 37,960,000 Ordinary Non-Voting Shares 1
xxxxx (Type 3) and 100,000,000 Ordinary Shares of (Pounds)1.00 (Type 4). As of
the date of this Agreement, (i) 372,748 Dividend Shares were issued, outstanding
and owned by persons other than the Company or any of its Subsidiaries, all of
which shares were validly issued, fully paid and nonassessable and free of
preemptive rights, and (ii) and all other shares of capital stock of AAUK were
owned by the Company and its wholly-owned Subsidiaries.
SECTION 4.3 Capital Structure. The authorized capital stock of the
Company consists of 200,000,000 shares of Common Stock, 26,000,000 shares of
Class A Common Stock, 11,000,000 shares of Class C Common Stock, 40,000,000
shares of Class D Common Stock, and 15,000,000 shares of Preferred Stock, par
value $1.00 per share (the "Company Preferred Stock"), of which 2,300,000 shares
have been designated as "Series A Convertible Preferred Stock" (the "Series A
Convertible Preferred Stock"), 500,000 shares have been designated as "Series A
Junior Participating Preferred Stock" (the "Series A Junior Preferred Stock")
and 6,200,000 shares have been designated as "8% Series B Cumulative Convertible
Preferred Stock". At the close of business on December 6, 1996, (i) 42,812,129
shares of Common Stock were issued and outstanding, all of which were validly
issued, fully paid and nonassessable and free of preemptive rights, (ii)
1,848,526.112 shares of Class A Common Stock were issued and outstanding, all of
which were validly issued, fully paid and nonassessable and free of preemptive
rights, (iii) 348,690 shares of Class C Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable and
free of preemptive rights, (iv) no shares of Class D Common Stock were
outstanding, (v) 2,300,000 shares of Series A Convertible Preferred Stock were
outstanding, all of which were validly issued, fully paid and nonassessable and
free of preemptive rights, (vi) no shares of Series A Junior Participating
Preferred Stock of the Company were outstanding and (vii) 4,751,208.9707 shares
of Series B Preferred Stock were outstanding, all of which were validly issued,
fully paid and nonassessable and free of preemptive rights. As of the date of
this Agreement, except as provided in the Company's Charter with respect to
Class A Common Stock, Class C Common Stock, Class D Common Stock, Series A
Convertible Preferred Stock and Series B Preferred Stock, except for the rights
to purchase shares of the Series A Junior Preferred Stock (the "Rights") issued
pursuant to the Rights Agreement dated as of June 11, 1987, as amended and
restated as of March 22, 1990, and as amended as of April 21, 1992, June 6,
1994, July 15, 1994 and November 16, 1995 (as so amended, the "Rights
Agreement"), between the Company and First Chicago Trust Company of New York, as
Rights Agent, and except
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for stock options covering not in excess of 6,100,000 shares of Common Stock and
rights to acquire not in excess of 600,000 shares under the Company's Employee
Discount Stock Purchase Plan, Bonus Equity Plan and Worldwide Savings Related
Stock Purchase Plan (collectively, the "Company Stock Options"), there are no
options, warrants, calls, rights or agreements to which the Company or any of
its Subsidiaries is a party or by which any of them is bound obligating the
Company or any of its Subsidiaries to issue or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of the Company or any
Subsidiary or obligating the Company or any of its Subsidiaries to grant, extend
or enter into any such option, warrant, call, right or agreement. At such time
as the amount of outstanding RSC Class 1 Shares and shares of Class C Common
Stock shall in the aggregate be less than 1,500,000, RSC shall be entitled to
cause the mandatory redemption of all outstanding RSC Class 1 Shares for shares
of Common Stock (on a share-for-share basis) in compliance with the provisions
of Section 36 of the Canada Business Corporations Act and simultaneously
therewith the Company shall be entitled to repurchase at Cdn.$0.00001 per share
all outstanding shares of Class A Common Stock. At such time as the shares of
Class A Common Stock and Class C Common Stock shall in the aggregate be less
than 1,500,000, the Company shall be entitled to cause the mandatory conversion
of all outstanding shares of Class C Common Stock into shares of Common Stock on
a share-for-share basis and simultaneously therewith AAUK shall be entitled to
mandatorily redeem at 2 xxxxx per share all outstanding Dividend Shares.
Following the actions contemplated in Section 7.14(c), there shall be
outstanding no shares of Class A Stock, shares of Class C Stock, RSC Class 1
Shares or Dividend Shares. Following the consummation of the Merger, each share
of Series A Convertible Preferred Stock shall cease to be convertible at the
option of a holder into shares of Common Stock but will, at the option of a
holder, be convertible solely into cash of $52.54 per share of Series A
Convertible Preferred Stock (assuming the purchase of Shares pursuant to the
Offer prior to March 22, 1997).
Except as set forth in the Company Filed SEC Documents (as defined in
Section 4.7), as of the date of this Agreement, there are no outstanding
contractual obligations of the Company or any of its Subsidiaries (i) to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or (ii) to vote or to dispose of any shares of the capital stock of any
of the Company's Subsidiaries.
SECTION 4.4 Authority. The Board of Directors of the Company has
declared the Merger advisable, and the Company has all requisite power and
authority to enter into this Agreement and, subject to approval by the
stockholders of the Company of
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the Merger (if required), 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 authorized by all necessary corporate action on the part of the Company,
subject to approval by the stockholders of the Company of the Merger (if
required). This Agreement has been duly executed and delivered by the Company
and (assuming the valid authorization, execution and delivery of this Agreement
by Parent and Sub) constitutes the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity. The only
stockholder action required in order to effect the Merger under the MGCL is
approval of the Merger by the holders of a majority of the shares of the Company
Common Capital Stock outstanding as of the record date for the Stockholders
Meeting (as defined in Section 7.1(a)(i)), all holders of the Company Common
Capital Stock voting together as a single class; provided, however, that if
Parent purchases an amount of Shares pursuant to the Offer sufficient to permit
the Merger to be effected in accordance with Section 3-106 of the MGCL, no
stockholder approval will be required.
SECTION 4.5 Consent and Approvals; No Violations. Except as set forth
in item 4.5 of the Company Letter, the execution and delivery by the Company of
this Agreement do not, and the consummation by the Company of the transactions
contemplated hereby and thereby and compliance by the Company with the
provisions hereof will not, result in any (a) material violation of, or material
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
the loss of a material benefit under, or result in the creation of any pledge,
claim, lien, charge, encumbrance or security interest of any kind or nature
whatsoever (collectively, "Liens") upon any of the material properties or
material assets of the Company or any of its Subsidiaries under, any provision
of the Charter or Bylaws of the Company or (b) violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or the loss of a
material benefit under, or result in the creation of any Lien upon any of the
material properties or material assets of the Company or any of its Subsidiaries
under, (i) any provision of the Charter, Bylaws or comparable organization
documents of any of the Significant Subsidiaries of the Company, (ii) any loan
or credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument,
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permit, concession, franchise or license applicable to the Company or any of its
Significant Subsidiaries or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
Significant Subsidiaries or any of their respective properties or assets, other
than, in the case of clause (i), (ii) or (iii), any such violations, defaults,
rights, losses or Liens, that, individually or in the aggregate, would not have
a Material Adverse Effect on the Company. No filing or registration with, or
authorization, consent or approval of, any domestic (federal and state), foreign
or supranational court, commission, governmental body, regulatory agency,
authority or tribunal (a "Governmental Entity") is required by or with respect
to the Company or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or is necessary for the consummation
of the Offer, the Merger and the other transactions contemplated by this
Agreement, except for (i) in connection, or in compliance, with the provisions
of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and the Securities Exchange Act of 1934, as amended (together with
the rules and regulations promulgated thereunder, the "Exchange Act"), (ii) the
filing of Articles of Merger with the SDAT and appropriate documents with the
relevant authorities of other states in which the Company or any of its
Subsidiaries is qualified to do business, (iii) such filings and consents as may
be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered by the
Offer, the Merger or the other transactions contemplated by this Agreement, (iv)
such filings, authorizations, orders and approvals as may be required by state
takeover laws (the "State Takeover Approvals"), (v) such filings as may be
required in connection with the taxes described in Section 7.6, (vi) such
filings and consents as may be required by insurance or insurance brokerage laws
or regulations, (vii) in connection, or in compliance, with the provisions of
the Competition Act (Canada) (the "Competition Act"), (viii) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under the laws of any foreign country in which the
Company or any of its Subsidiaries conducts any business or owns any property or
assets and (ix) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Item 4.5 of the Company Letter sets forth the estimated amount which would be
payable to each of the top twenty highest paid officers of the Company in the
United States under (i) any employment, severance, continuity or similar
agreement or (ii) any cancellation and cash-out of Company Stock Options, in
each case assuming the purchase of Shares pursuant to
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the Offer, the consummation of the Merger and the termination without cause of
such person's employment.
SECTION 4.6 SEC Documents and Other Reports. The Company has filed all
required documents with the SEC since January 1, 1993 (the "Company SEC
Documents"). As of their respective dates, the Company SEC Documents complied in
all material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and as
of their respective dates none of the Company SEC Documents contained any untrue
statement of a material fact or omitted to state a 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. The financial
statements of the Company included in the Company SEC Documents comply as of
their respective dates as to form in all material respects with the then
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of the unaudited statements,
as permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly present the consolidated financial position of the Company and its
consolidated Subsidiaries as at the dates thereof and the consolidated results
of their operations and their consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein). The Company has
not, since December 31, 1995, made any change in the accounting policies applied
in the preparation of financial statements other than as described in the
Company Filed SEC Documents (as hereinafter defined).
SECTION 4.7 Absence of Material Adverse Change. Except as disclosed in
the Company SEC Documents filed and publicly available prior to the date of this
Agreement (the "Company Filed SEC Documents"), since September 30, 1996, there
has been no event other than ordinary business operating results and general
insurance brokerage industry conditions and contingencies disclosed to Parent
prior to the date hereof causing a Material Adverse Change (as defined in
Section 10.3) with respect to the Company.
SECTION 4.8 Information Supplied. None of the information supplied or
to be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
information to be filed by the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act
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(the "Information Statement") or (iv) the proxy statement (together with any
amendments or supplements thereto, the "Proxy Statement") relating to the
Stockholders Meeting, will, in the case of the Offer Documents, the Schedule
14D-9 and the Information Statement, at the respective times the Offer
Documents, the Schedule 14D-9 and the Information Statement are filed with the
SEC or first published, sent or given to the Company's stockholders, or, in the
case of the Proxy Statement, at the time the Proxy Statement is first mailed to
the Company's stockholders or at the time of the Stockholders Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Schedule 14D-9, the Information Statement and the Proxy
Statement will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Sub specifically for inclusion or incorporation by reference therein.
SECTION 4.9 Compliance with Laws. Except as disclosed in the Company
Filed SEC Documents, the Company and its Subsidiaries are in compliance with all
applicable laws, regulations, orders, judgments and decrees except where the
failure to so comply would not have a Material Adverse Effect on the Company.
SECTION 4.10 Licenses and Permits. The Company and its Significant
Subsidiaries have such certificates, permits, licenses, franchises, consents,
approvals, orders, authorizations and clearances from appropriate Governmental
Entities (the "Company Licenses") as are necessary to conduct their businesses
in the manner described in the Company SEC Documents and as currently conducted,
and all such Company Licenses are valid and in full force and effect, except
such licenses which the failure to have or to be in full force and effect,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. The Company and its Significant Subsidiaries are in compliance in
all material respects with their respective obligations under the Company
Licenses, with such exceptions as, individually or in the aggregate, would not
have a Material Adverse Effect on the Company.
SECTION 4.11 Tax Matters. The Company has filed all material tax
returns and has paid all taxes shown to be due on such tax returns except for
those taxes being contested by the Company in good faith.
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SECTION 4.12 Liabilities. Except as reflected or reserved against in
the financial statements included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1995, or disclosed in the footnotes thereto, as
of December 31, 1995, the Company and its Subsidiaries had no liabilities
(including, without limitation, tax liabilities), absolute or contingent, that
were material, either individually or in the aggregate, to the Company and its
Subsidiaries taken as a whole or not incurred in the ordinary course of
business. Except as so reflected, reserved or disclosed, as of such date, the
Company and its Subsidiaries had no commitments which were materially adverse,
either individually or in the aggregate, to the Company and its Subsidiaries
taken as a whole.
SECTION 4.13 Opinion of Financial Advisor. The Company has received
the opinion of First Boston, dated the date hereof, to the effect that, as of
the date hereof, the consideration to be received in the Offer and the Merger
by the Company's stockholders is fair to the Company's stockholders from a
financial point of view.
SECTION 4.14 State Takeover Statutes; Rights Agreement. The Board of
Directors of the Company has duly adopted a resolution that is a valid action of
such Board, is binding on the Company and constitutes a valid and irrevocable
exemption from Section 3-602 of the MGCL as to the transactions contemplated by
this Agreement and the Preferred Stock Purchase Agreement. By reason of Section
4 of Article IX of the Company's By-Laws, the transactions contemplated by this
Agreement and the Preferred Stock Purchase Agreement are approved for purposes
of, and exempt from the provisions of, Subtitle 7 of Title 3 of the MGCL. The
Company has heretofore provided Parent with a complete and correct copy of the
Rights Agreement, including all amendments (including the amendment referred to
in the immediately following sentence) and exhibits thereto. The Board of
Directors of the Company has amended the Rights Agreement to provide that a
Distribution Date, a Section 11(a)(ii) Event or a Section 13 Transaction (as
such terms are defined in the Rights Agreement) shall not occur or be deemed to
occur, the Rights shall not separate (to the extent the Rights Agreement
otherwise provides for such separation) or become exercisable, and neither
Parent nor Sub shall become an Acquiring Person (as defined in the Rights
Agreement) as a result of the execution, delivery or performance of this
Agreement or the Preferred Stock Purchase Agreement, the announcement, making or
consummation of the Offer, the acquisition of shares of capital stock pursuant
to the Offer, the Merger or the Preferred Stock Purchase Agreement, the
consummation of the Merger or any other transactions contemplated by this
Agreement or the Preferred Stock Purchase Agreement. No other action is required
to prevent the holders of Rights from
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having any right under the Rights Agreement as a result of the Offer, the Merger
or any other transaction contemplated by this Agreement or the Preferred Stock
Purchase Agreement.
SECTION 4.15 Brokers. No broker, investment banker, financial advisor
or other person, other than First Boston, the fees and expenses of which will be
paid by the Company (and are reflected in an agreement between First Boston and
the Company, a copy of which has been furnished to Parent), is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
OF PARENT AND SUB
-----------------
Parent and Sub represent and warrant to the Company as follows:
SECTION 5.1 Organization. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now being conducted, except where the
failure to be so organized, validly existing or in good standing would not have
a Material Adverse Effect on Parent or Sub or prevent or materially delay the
consummation of the Offer or the Merger.
SECTION 5.2 Authority. Parent and Sub have requisite corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Parent and Sub and the consummation by Parent and Sub of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub, as the case may be, and (assuming the
valid authorization, execution and delivery of this Agreement by the Company)
constitutes a valid and binding obligation of each of Parent and Sub enforceable
against them in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and (ii)
is subject to general principles of equity.
-21-
SECTION 5.3 Consents and Approvals; No Violations. The execution and
delivery by Parent and Sub of this Agreement do not, and the consummation by
Parent and Sub of the transactions contemplated hereby and compliance with the
provisions hereof will not, result in any (a) material violation of, or material
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
the loss of a material benefit under, or result in the creation of any Lien upon
any of the material properties or material assets of Parent or any of its
Subsidiaries under, any provision of the Certificate of Incorporation or Bylaws
of Parent or Sub or (b) violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or the loss of a material benefit
under, or result in the creation of any Lien upon any of the material properties
or material assets of Parent or any of its Subsidiaries under, (i) any provision
of the Certificate of Incorporation, Bylaws or comparable organization documents
of any of Significant Subsidiaries of Parent, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Parent or any of its Significant
Subsidiaries or (iii) any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Parent or any of its Significant Subsidiaries or any
of their respective properties or assets, other than, in the case of clause (i),
(ii) or (iii), any such violations, defaults, rights, losses or Liens, that,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent. No filing or registration with, or authorization, consent or approval
of, any Governmental Entity is required by or with respect to Parent or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by Parent or Sub or is necessary for the consummation of the Offer, the Merger
and the other transactions contemplated by this Agreement, except for (i) in
connection, or in compliance, with the provisions of the HSR Act and the
Exchange Act, (ii) the filing of Articles of Merger and appropriate documents
with the relevant authorities of other states in which Parent or any of its
Subsidiaries is qualified to do business, (iii) such filings and consents as may
be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered by the
Offer, the Merger or the other transactions contemplated by this Agreement, (iv)
such filings, authorizations, orders and approvals as may be required to obtain
the State Takeover Approvals, (v) such filings as may be required in connection
with the taxes described in Section 7.6, (vi) such filings and consents as may
be required by insurance or insurance brokerage laws or regulations, (vii) in
connection, or in compliance, with the provisions of the Competition Act, (viii)
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such consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under the laws of any foreign country in which
Parent or any of its Subsidiaries conducts any business or owns any property or
assets and (ix) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
SECTION 5.4 Information Supplied. None of the information supplied or
to be supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC or first published, sent or given to the Company's
stockholders, or, in the case of the Proxy Statement, at the time the Proxy
Statement is first mailed to the Company's stockholders or at the time of the
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Offer Documents will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by Parent or Sub
with respect to statements made or incorporated by reference therein based on
information supplied by the Company specifically for inclusion or incorporation
by reference therein.
SECTION 5.5 Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
SECTION 5.6 Brokers. No broker, investment banker, financial advisor
or other person, other than Lazard Freres & Co., LLC, the fees and expenses of
which will be paid by Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent or Sub.
SECTION 5.7 Financing. Parent will have, and shall provide Sub with,
the funds necessary to consummate the Offer and the Merger and the transactions
contemplated hereby in accordance with the terms hereof.
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ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
SECTION 6.1 Conduct of Business by the Company Pending the Merger.
During the period from the date of this Agreement until such time as Parent's
designees shall constitute a majority of the Board of Directors of the Company,
the Company shall, and shall cause each of its Subsidiaries to, in all material
respects carry on its business in the ordinary course of its business as
currently conducted and, to the extent consistent therewith, use reasonable best
efforts to preserve intact its current business organizations, keep available
the services of its current officers and key employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business shall not be materially
impaired. Without limiting the generality of the foregoing, and except as
otherwise expressly contemplated by this Agreement, during such period, the
Company shall not, and shall not permit any of its Subsidiaries to, without the
prior written consent of Parent (which consent shall not be unreasonably
withheld):
(a) (w) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its capital
stock, or otherwise make any payments to its stockholders in their capacity as
such (other than regular quarterly dividends of not more than $.90625 per share
on the Series A Convertible Preferred Stock and of not more than $.025 per share
on the Common Stock, a regular quarterly payment-in-kind dividend in respect of
the Series B Preferred Stock on December 15, 1996 and thereafter cash dividends
of not more than $1.00 per share on the Series B Preferred Stock, in each case
declared and paid in on dates consistent with past practice), (x) split, combine
or reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock or (y) except as required under existing employee benefit plans,
agreements, policies, awards or arrangements in effect on the date of this
Agreement, or pursuant to the Company's Employee Stock Option Exchange Program
communicated to the Company Options Recipients on November 26, 1996, purchase,
redeem or otherwise acquire any shares of its capital stock or those of any
Subsidiary or any other securities thereof or any rights, warrants or options to
acquire any such shares or other securities;
(b) except as required under existing employee benefit plans,
agreements, policies, awards or arrangements in effect on
-24-
the date of this Agreement, or pursuant to the Company's Employee Stock Option
Exchange Program communicated to the Company Options Recipients on November 26,
1996, issue, deliver, sell, pledge, dispose of or otherwise encumber any shares
of its capital stock, any other voting securities or equity equivalent or any
securities convertible into, or any rights, warrants or options to acquire any
such shares, voting securities, equity equivalent or convertible securities
(other than the issuance of shares of Common Stock upon the exercise of Company
Stock Options outstanding on the date of this Agreement in accordance with their
current terms, the issuance of shares of Common Stock upon the retraction,
redemption or conversion of RSC Class 1 Shares, or shares of Class C Common
Stock, Series A Convertible Preferred Stock or Series B Preferred Stock, in each
case in accordance with the terms thereof, and the issuance on December 15, 1996
of shares of Series B Preferred Stock as a regular quarterly payment-in-kind
dividend in accordance with the terms thereof);
(c) amend its Charter or Bylaws or other similar organizational
documents;
(d) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of or equity in, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire or agree to
acquire any assets, other than (A) transactions that are in the ordinary course
of business consistent with past practice and not material to the Company and
its Subsidiaries taken as a whole and (B) acquisitions of one or more insurance
brokerage businesses with respect to which the aggregate amount of consideration
paid or payable by the Company and its Subsidiaries (valuing any non-cash
consideration at its fair market value and any contingent payments at the
maximum amount payable and treating any liabilities assumed as consideration
paid) does not exceed $15,000,000;
(e) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets, other than transactions that are in the
ordinary course of business consistent with past practice and which involve
assets having an aggregate fair market value or book value not in excess of
$10,000,000;
(f) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or guarantee any debt
securities of others, except for borrowings or guarantees incurred in the
ordinary course of business consistent with past practice, or make any loans,
advances or capital contributions to, or other investments in,
-25-
any other person, other than to or in the Company or any wholly-owned Subsidiary
of the Company;
(g) alter (through merger, liquidation, reorganization, restructuring
or in any other fashion) the corporate structure or ownership of the Company or
any Subsidiary, except as contemplated by this Agreement or as set forth in item
6.1(g) of the Company Letter;
(h) enter into or adopt, or amend any existing, severance plan,
agreement or arrangement or enter into or amend any Company Plan (as defined in
Section 7.13) or employment or consulting agreement, other than as required by
law or as contemplated by Sections 7.4 and 7.13;
(i) except as otherwise provided in Section 7.4 or as required under
existing plans, agreements, policies, awards or arrangements in effect on the
date of this Agreement, or pursuant to the Company's Employee Stock Option
Exchange Program communicated to the Company Options Recipients on November 26,
1996, increase the compensation payable or to become payable to its officers or
employees, except, in the case of employees who are not officers, for increases
in the ordinary course of business consistent with past practice, or grant any
severance or termination pay to, or enter into any employment or severance
agreement, or establish, adopt, enter into, or amend in any material respect or
take action to enhance in any material respect or accelerate any rights or
benefits under, any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any director, officer or
employee, except, in each case, as may be required to comply with applicable law
or regulation;
(j) violate or fail to perform any material obligation or duty
imposed upon it by any applicable federal, state or local law, rule, regulation,
guideline or ordinance which would be reasonably expected to have a Material
Adverse Effect on the Company;
(k) redeem the Rights or, other than as contemplated by Section 4.14,
amend the Rights Agreement;
(l) amend the Stock Purchase and Sale Agreement, dated as of June 6,
1994, between the Company and American International Group, Inc.;
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(m) make any material change in its method of accounting;
(n) take any of the actions prohibited in item 6.1(n) of the Company
Letter; or
(o) authorize, recommend, propose or announce an intention to do any
of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
The Company shall promptly advise Parent orally and in writing of any
change or event having, or which could reasonably be expected to have, a
Material Adverse Effect on the Company or which could prevent or materially
delay the consummation of the Offer or the Merger.
SECTION 6.2 No Solicitation. From and after the date hereof, the
Company will not, and will not permit any of its or its Subsidiaries' officers,
directors or employees to, and the Company will use its reasonable best efforts
to cause all of its and its Subsidiaries' attorneys, financial advisors, agents
and other representatives not to, directly or indirectly, solicit, initiate or
knowingly encourage (including by way of furnishing information) any Takeover
Proposal, or engage in or continue discussions or negotiations relating thereto;
provided, however, that the Company may engage in discussions or negotiations
with, or furnish information concerning the Company and its business, properties
or assets to, any third party which makes a Takeover Proposal (as hereinafter
defined) if the Board of Directors of the Company determines, in its good faith
judgement, based on the opinion of independent outside legal counsel to the
Company, that failing to take such action would constitute a breach of such
Board's duties under applicable law; provided, further, that nothing in this
Section 6.2 shall prevent the Company or the Board from taking, and disclosing
to the Company's stockholders, a position contemplated by Rules 14d-9 and 14e-2
promulgated under the Exchange Act with regard to any tender offer or from
making such disclosure to the Company's stockholders which, as advised in an
opinion of the Company's independent outside legal counsel, is required under
applicable law; provided, further, that the Board shall not recommend that the
stockholders of the Company tender their shares in connection with any such
tender offer unless the Board determines, in its good faith judgment, based on
the opinion of independent outside legal counsel to the Company, that failing to
take such action would constitute a breach of the Board's duties under
applicable law. The Company will promptly notify Parent of any Takeover
Proposal, including the material terms and conditions thereof and the identity
of the person or group making such Takeover Proposal, and will promptly notify
Parent of any determination by the Company's Board of
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Directors that a Superior Proposal has been made. As used in this Agreement,
(i) "Takeover Proposal" shall mean any proposal or offer, other than a proposal
or offer by Parent or any of its Subsidiaries for a tender or exchange offer, a
merger, consolidation or other business combination involving the Company or any
of its Subsidiaries or any proposal to acquire in any manner a substantial
equity interest in, or a substantial portion of the assets of, the Company or
any of its Subsidiaries and (ii) "Superior Proposal" shall mean a bona fide
proposal or offer made by a third party to acquire the Company pursuant to a
tender or exchange offer, a merger, consolidation or other business combination
or a sale of all or substantially all of the assets of the Company and its
Subsidiaries on terms which a majority of the members of the Board of Directors
of the Company, having received the advice of an independent financial advisor,
determines in their good faith reasonable judgment to be more favorable to the
Company's stockholders than the transactions contemplated hereby and for which
any required financing is committed or which a majority of such members, having
received the advice of an independent financial advisor, determines in their
good faith reasonable judgment is reasonably capable of being obtained by such
third party.
SECTION 6.3 Third Party Standstill Agreements. During the period
from the date of this Agreement through the Effective Time, the Company shall
not terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which the Company or any of its Subsidiaries is a party
(other than any involving Parent).
SECTION 6.4 Other Actions. Except as expressly contemplated or
permitted by this Agreement or except as set forth in the Company Letter, the
Company shall not, and shall not permit any of its Subsidiaries to, take any
action that would, or that could reasonably be expected to, result in (i) any of
the representations and warranties of the Company set forth in this Agreement
that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect, or (iii) any of the Offer Conditions not being satisfied
(subject to the Company's right to take actions specifically permitted by
Section 6.2).
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ARTICLE VII
ADDITIONAL AGREEMENTS
---------------------
SECTION 7.1 Stockholder Approval; Preparation of Proxy Statement.
(a) If approval of the Merger by stockholders of the Company (the "Company
Stockholder Approval") is required by law, the Company shall, at Parent's
request, as soon as practicable following the expiration of the Offer, duly
call, give notice of, convene and hold a meeting of its stockholders (the
"Stockholders Meeting") for the purpose of obtaining the Company Stockholder
Approval. The Stockholders Meeting shall be held as soon as practicable
following the purchase of Shares pursuant to the Offer. The Company shall,
through its Board of Directors, but subject to the duties of its Board of
Directors under applicable law as determined by the Board of Directors in good
faith on the basis of the opinion of the Company's outside independent legal
counsel, recommend to its stockholders that the Company Stockholder Approval be
given. Notwithstanding the foregoing, if Sub or any other Subsidiary of Parent
shall acquire shares entitled to cast 90% or more of all the votes entitled to
be cast on the Merger, the parties shall, at the request of Parent, take all
necessary and appropriate action to cause the Merger to become effective as soon
as reasonably practicable after the expiration of the Offer without a
Stockholders Meeting in accordance with Section 3-106 of the MGCL.
(b) If the Company Stockholder Approval is required by law, the
Company shall, at Parent's request, as soon as practicable following the
expiration of the Offer, prepare and file a preliminary Proxy Statement with the
SEC and shall use its reasonable best efforts to respond to any comments of the
SEC or its staff and to cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable after responding to all such comments to
the satisfaction of the staff. The Company shall notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement or the
Merger. If at any time prior to the Stockholders Meeting there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company shall promptly prepare and mail to its stockholders such
an amendment or supplement. The Company shall not mail any Proxy Statement, or
any amendment or supplement thereto, to which Parent reasonably objects. Parent
shall cooperate with the Company in the
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preparation of the Proxy Statement or any amendment or supplement thereto.
(c) Parent agrees to cause all shares of the Common Stock purchased
pursuant to the Offer and all other shares of capital stock of the Company
entitled to vote on the Merger owned by Parent or any Subsidiary of Parent to be
voted in favor of the Company Stockholder Approval.
SECTION 7.2 Access to Information. Subject to currently existing
contractual and legal restrictions applicable to the Company, the Company shall,
and shall cause each of its Subsidiaries to, upon reasonable notice, afford to
Parent and to the officers, employees, accountants, counsel, actuaries,
financial advisors and other representatives of Parent reasonable access to, and
permit them to make such inspections as they may reasonably require of, during
normal business hours (to the extent feasible without undue interference with or
disruption to the operation of the Company, or any of its business units) during
the period from the date of this Agreement through the Effective Time, all their
respective properties, books, contracts, commitments and records (including,
without limitation, the work papers of independent accountants and actuaries)
and, during such period, the Company shall, and shall cause each of its
Subsidiaries to, furnish promptly to Parent (i) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of federal or state securities laws and (ii) all
other information concerning its business, properties and personnel as Parent
may reasonably request. All information obtained by Parent pursuant to this
Section 7.2 shall be kept confidential in accordance with the Confidentiality
Agreement dated November 29, 1996, between Parent and the Company.
SECTION 7.3 Fees and Expenses. (a) Except as provided in this
Section 7.3 and Section 7.6, whether or not the Merger is consummated, all costs
and expenses incurred by a party hereto in connection with this Agreement and
the transactions contemplated hereby, including, without limitation, the fees
and disbursements of counsel, financial advisors and accountants, shall be paid
by the party incurring such costs and expenses, provided that all printing
expenses and filing fees shall be divided equally between Parent and the
Company.
(b) The Company shall pay, or cause to be paid, in same day funds to
Parent $35 million (the "Termination Fee") upon demand if: (i) Parent or Sub
terminates this Agreement under Section 9.1(d) following the occurrence of any
event set forth in clause (i) or (ii) of paragraph (c) of Exhibit A and within
six months following such termination a Third Party Acquisition Event
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occurs; (ii) the Company terminates this Agreement pursuant to Section 9.1(e);
or (iii) this Agreement is terminated and prior thereto a Third Party
Acquisition Event (as defined below) occurred.
(c) Parent shall pay, or cause to be paid, in same day funds to the
Company $35 million (the "Parent Minimum Damages") upon demand if the Company
shall have terminated this Agreement pursuant to Section 9.1(f), including,
without limitation, based upon a breach by Parent or Sub or its obligations
under Section 7.11; provided, however, that the Parent Minimum Damages shall be
repaid to Parent if, within six months following such termination, a Third Party
Acquisition Event shall occur having a value per share of Common Stock of not
less than the Offer Price.
A "Third Party Acquisition Event" means any of the following events:
(A) any person, corporation, partnership or other entity or group (such person,
corporation, partnership or other entity or group being referred to hereinafter,
singularly or collectively, as a "Person"), other than Parent or its
Subsidiaries, acquires or becomes the beneficial owner of 30% or more of the
outstanding shares of the Company Common Capital Stock; (B) any new group is
formed which, at the time of formation, beneficially owns 30% or more of the
outstanding shares of the Company Common Capital Stock (other than a group which
includes or may reasonably be deemed to include Parent or any of its
Subsidiaries); (C) the Company enters into an agreement providing for a merger
or other business combination involving the Company or the acquisition of a
substantial interest in, or a substantial portion of the assets, business or
operations of, the Company and its subsidiaries (other than the transactions
contemplated by this Agreement); or (D) any Person (other than Parent or its
Subsidiaries) is granted any option or right, conditional or otherwise, to
acquire or otherwise become the beneficial owner of shares of the Company Common
Capital Stock that results or would result in such Person being the beneficial
owner of 30% or more of the outstanding shares of the Company Common Capital
Stock. For purposes of this Section 7.3(b), the terms "group" and "beneficial
owner" shall be defined by reference to Section 13(d) of the Exchange Act.
SECTION 7.4 Options. (a) Prior to the commencement of the Offer, the
Board of Directors of the Company or the Compensation Committee of the Board of
Directors of the Company (the "Committee") shall adopt procedures pursuant to
which each outstanding Company Stock Option, stock appreciation right, limited
stock appreciation right and other stock based award (an "Option") which is
exercisable immediately prior to the consummation of the Offer in accordance
with the terms of the applicable plan (collectively, the "Stock Option Plans"),
may be
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exercised by the holder thereof by the delivery to the Company of a notice of
exercise prior to the consummation of the Offer. Upon the consummation of the
Offer, each Option so exercised shall be canceled and promptly thereafter the
Company shall deliver to the holder thereof cash in an amount equal to (i) the
product of (x) the number of shares of Common Stock subject or related to such
Option and (y) the excess, if any, of the Merger Consideration over the exercise
or purchase price per share of Common Stock subject or related to such Option,
minus (ii) all applicable federal, state and local taxes required to be withheld
by the Company.
(b) Prior to the commencement of the Offer, the Board of Directors of
the Company or the Committee shall take action in accordance with the terms of
the Stock Option Plans to cause each Option outstanding immediately following
the consummation of the Offer, whether or not then exercisable, to become fully
exercisable. The Board of Directors of the Company or the Committee shall also
adopt procedures pursuant to which each such Option may be exercised by the
holder thereof by the delivery to the Company of a notice of exercise prior to
the Effective Time. At the Effective Time, each such Option so exercised shall
be canceled and promptly thereafter the Company shall deliver to the holder
thereof cash in an amount equal to (i) the product of (x) the number of shares
of Common Stock subject or related to such Option and (y) the excess, if any, of
the Merger Consideration over the exercise or purchase price per share of Common
Stock subject or related to such Option minus (ii) all applicable federal, state
and local taxes required to be withheld by the Company.
(c) The Company will use its reasonable best efforts to ensure that
immediately following the Effective Time, each outstanding Option which has not
theretofore been exercised by the holder thereof shall be canceled (whether or
not such holder has delivered the acknowledgment referred to in the proviso to
this sentence), and promptly thereafter Parent shall deliver to the holder
thereof cash in an amount equal to (i) the product of (x) the number of shares
of Common Stock subject or related to such Option and (y) the excess, if any, of
the Merger Consideration over the exercise or purchase price per share of Common
Stock subject or related to such Option, minus (ii) all applicable federal,
state and local taxes required to be withheld by the Company; provided, however,
that any such payment to a holder of an Option so canceled shall be conditioned
upon the delivery to Parent by such holder of a receipt in writing acknowledging
the receipt by such holder of such payment in exchange for the cancellation of
all Options held by such holder. For purposes of this subsection (c), options
offered under the Company's Employee Discount Stock Purchase Plan shall be
deemed
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outstanding only to the extent of employees' elections to participate therein as
in effect on the date of purchase of Shares pursuant to the Offer. No further
options shall be granted under any Stock Option Plan after the date of this
Agreement except pursuant to the normal operation of the Company's Employee
Discount Stock Purchase Plan, and no further Options shall be granted thereunder
after the purchase of Shares pursuant to the Offer.
(d) Prior to the commencement of the Offer, the Board of Directors of
the Company or the Committee shall take action in accordance with the terms of
the Stock Option Plans and pursuant to all other plans and agreements providing
for the award of restricted Common Stock to cause the restrictions on the shares
of restricted Common Stock granted under such plans and agreements to lapse
effective upon the consummation of the Offer and to adopt procedures to enable
all holders thereof to tender such shares of Common Stock pursuant to the terms
of the Offer.
SECTION 7.5 Public Announcements. Parent and the Company will consult
with each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law or by
obligations pursuant to any listing agreement with any national securities
exchange.
SECTION 7.6 Real Estate Transfer Tax. Parent and the Company agree
that either the Surviving Corporation or Parent will pay any state or local tax
which is attributable to the transfer of the beneficial ownership of the
Company's or its Subsidiaries' real property, if any (collectively, the
"Transfer Taxes"), and any penalties or interest with respect to the Transfer
Taxes, payable in connection with the consummation of the Offer and the Merger.
The Company agrees to cooperate with Parent in the filing of any returns with
respect to the Transfer Taxes, including supplying in a timely manner a complete
list of all real property interests held by the Company and its Subsidiaries and
any information with respect to such property that is reasonably necessary to
complete such returns. The portion of the consideration allocable to the real
property of the Company and its Subsidiaries shall be determined by Parent in
its reasonable discretion. The stockholders of the Company shall be deemed to
have agreed to be bound by the allocation established pursuant to this Section
7.6 in the preparation of any return with respect to the Transfer Taxes.
SECTION 7.7 State Takeover Laws. If any "fair price" or "control share
acquisition" statute or other similar statute
-33-
or regulation shall become applicable to the transactions contemplated hereby,
Parent and the Company and their respective Boards of Directors shall use their
reasonable best efforts to grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
minimize the effects of any such statute or regulation on the transactions
contemplated hereby.
SECTION 7.8 Indemnification; Directors and Officers Insurance. (a)
From and after the Effective Time, Parent agrees to cause the Surviving
Corporation to exculpate, indemnify and hold harmless all past and present
officers and directors of the Company and its Subsidiaries (the "Indemnified
Parties") to the same extent such persons are currently exculpated and
indemnified by the Company pursuant to the Company's Charter and By-Laws for
acts or omissions occurring at or prior to the Effective Time. Parent shall
cause the Surviving Corporation to provide, for an aggregate period of not less
than six years from the Effective Time, the Company's current directors and
officers an insurance and indemnification policy that provides coverage for
events occurring prior to the Effective Time (the "D&O Insurance") that is no
less favorable than the Company's existing policy or, if substantially
equivalent insurance coverage is unavailable, the best available coverage;
provided, however, that the Surviving Corporation shall not be required to pay
an annual premium for the D&O Insurance in excess of 175 percent of the last
annual premium paid prior to the date hereof, but in such case shall purchase as
much coverage as possible for such amount.
(b) Any Indemnified Party wishing to claim indemnification under
Section 7.8(a), upon learning of any claim, action, suit, proceeding or
investigation subject to indemnification thereunder, shall promptly notify the
Surviving Corporation thereof. An Indemnified Party may select counsel to
represent him or her in connection with any of the foregoing, which counsel
shall be reasonably acceptable to the Surviving Corporation, and the Surviving
Corporation will cooperate in the defense of any such matter; provided, however,
that the Surviving Corporation shall not be liable for any settlement effected
without its written consent; and provided, further, that the Surviving
Corporation shall not be obligated to pay the fees and disbursements of more
than one counsel for all Indemnified Parties in any single matter except to the
extent that, in the opinion of counsel for the Indemnified Parties, two or more
of such Indemnified Parties have conflicting interests in the outcome of such
matter. The Surviving Corporation shall not have any obligation hereunder to an
Indemnified Party if and when a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final, that the
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indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law.
SECTION 7.9 Notification of Certain Matters. Parent shall give prompt
notice to the Company, and the Company shall give prompt notice to Parent, of:
(i) the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which would be likely to cause (x) any representation or warranty
contained in this Agreement that is not qualified as to materiality to be untrue
or inaccurate in any material respect, (y) any representation or warranty
contained in this Agreement that is qualified as to materiality to be untrue or
inaccurate in any respect, or (z) any covenant, condition or agreement contained
in this Agreement not to be complied with or satisfied; and (ii) any failure of
Parent or the Company, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 7.9 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
SECTION 7.10 Board of Directors. Promptly after such time as Sub
acquires Shares pursuant to the Offer, Sub shall be entitled to designate at its
option up to that number of directors, rounded to the nearest whole number, of
the Company's Board of Directors, subject to compliance with Section 14(f) of
the Exchange Act, as will make the percentage of the Company's directors
designated by Sub equal to the aggregate voting power of the Shares of Common
Stock held by Parent or any of its Subsidiaries (assuming the exercise of all
outstanding options to purchase, and the conversion or exchange of all
securities convertible or exchangeable into shares of the Company Common Capital
Stock, other than the conversion of the shares of Class B Preferred Stock);
provided, however, that in the event that Sub's designees are elected to the
Board of Directors of the Company, until the Effective Time, such Board of
Directors shall have at least three directors who are directors on the date of
this Agreement and who are not officers of the Company (the "Independent
Directors"); and provided, further that, in such event, if the number of
Independent Directors shall be reduced below three for any reason whatsoever,
the remaining Independent Directors shall designate a person to fill such
vacancy who shall be deemed to be an Independent Director for purposes of this
Agreement or, if no Independent Directors then remain, the other directors shall
designate three persons to fill such vacancies who shall not be officers or
affiliates of the Company or any of its Subsidiaries, or officers or affiliates
of Parent or any of its Subsidiaries, and such persons shall be deemed to be
Independent Directors for purposes of this Agreement. Subject to applicable law,
the Company shall take all action requested by
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Parent which is reasonably necessary to effect any such election, including
mailing to its stockholders the Information Statement containing the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, and the Company agrees to make such mailing with the mailing of the
Schedule 14D-9 (provided that Sub shall have provided to the Company on a timely
basis all information required to be included in the Information Statement with
respect to Sub's designees). In connection with the foregoing, the Company will
promptly, at the option of Parent, either increase the size of the Company's
Board of Directors and/or obtain the resignation of such number of its current
directors as is necessary to enable Sub's designees to be elected or appointed
to the Company's Board of Directors as provided above.
SECTION 7.11 Reasonable Best Efforts. Each of the Company, Parent
and Sub agrees to use its reasonable best efforts to cause the purchase of
Shares pursuant to the Offer and the consummation of the Merger to occur as soon
as practicable. Without limiting the foregoing, (a) each of the Company, Parent
and Sub agree to use its reasonable best efforts to take, or cause to be taken,
all actions necessary to comply promptly with all legal requirements that may be
imposed on itself with respect to the Offer and the Merger (which actions shall
include furnishing all information required under the HSR Act, including,
without limitation, with respect to the transactions contemplated by the
Preferred Stock Purchase Agreement, and in connection with approvals of or
filings with any other Governmental Entity) and shall promptly cooperate with
and furnish information to each other in connection with any such requirements
imposed upon any of them or any of their Subsidiaries in connection with the
Offer and the Merger and (b) each of the Company, Parent and Sub shall, and
shall cause its Subsidiaries to, use its reasonable best efforts to obtain (and
shall cooperate with each other in obtaining) any consent, authorization, order
or approval of, or any exemption by, any Governmental Entity or other public or
private third party required to be obtained or made by Parent, Sub, the Company
or any of their Subsidiaries in connection with the Offer and the Merger or the
taking of any action contemplated thereby or by this Agreement. Notwithstanding
anything to the contrary contained in this Agreement, (i) the Company shall not
be obligated to use its reasonable best efforts or to take any action pursuant
to this Section 7.11 if the Board of Directors of the Company shall determine,
in its good faith judgment, based on the opinion of independent outside legal
counsel to the Company, that such action would constitute a breach of such
Board's duties under applicable law, and (ii) in connection with any filing or
submission required or action to be taken by Parent, the Company or any of its
respective Subsidiaries to consummate the Offer, the Merger or the other
transactions contemplated in this
-36-
Agreement, the Company shall not, without Parent's prior written consent, commit
to any divestiture of assets or businesses of the Company and its Subsidiaries
if such divested assets and/or businesses are material to the assets or
profitability of the Company and its Subsidiaries taken as a whole; and neither
Parent nor any of its Subsidiaries shall be required to divest any assets or
business of Parent or its Subsidiaries or the Company or its Subsidiaries if
such divested assets and/or businesses are material to the assets or
profitability of Parent or its Subsidiaries taken as a whole or the Company and
its Subsidiaries taken as a whole, respectively, or hold separate or otherwise
take or commit to take any action that materially limits its freedom of action
with respect to the Company or any such assets or businesses.
SECTION 7.12 Certain Litigation. The Company agrees that it shall not
settle any litigation commenced after the date hereof against the Company or any
of its directors by any stockholder of the Company relating to the Offer, the
Merger, this Agreement or the Preferred Stock Purchase Agreement without the
prior written consent of Parent (which shall not be unreasonably withheld).
SECTION 7.13 Employee Benefits. The Company shall take, or shall cause
to be taken, any and all action as shall be necessary or appropriate so that
effective upon the purchase of Shares pursuant to the Offer, neither the Company
nor any of its Subsidiaries shall be obligated to issue or sell to any Company
Plan (as defined in clause (i) of the definition of "Company Plan" set forth
below) any shares of or rights to acquire capital stock of the Company or any of
its Subsidiaries. Parent agrees that it will cause the Company, and each
Subsidiary of the Company, to honor from and after the Effective Time, all
Company Plans (as hereinafter defined); provided, however, that Parent may cause
the Company to amend or terminate any Company Plan in accordance with its terms
and applicable law. Except as otherwise provided by Section 7.4 or this Section
7.13, to the extent that after the purchase of Shares pursuant to the Offer,
Parent shall cause the amendment, modification or termination of any Company
Plan, Parent shall cause the affected employees, former employees and retirees
to receive benefits of the type affected by such amendment, modification or
termination no less favorable than the comparable type of benefits provided to
similarly situated employees, former employees and retirees of Parent or its
affiliates ("Parent-Provided Plans").
For purposes of eligibility to participate, vesting and eligibility
for and accrual of benefits under all Company Plans and Parent-Provided Plans,
all service of any individual who is an employee of the Company or any
Subsidiary of the Company
-37-
immediately prior to the Effective Time (a "Company Employee") with the Company
and/or any Subsidiary of the Company prior to the Effective Time shall, on and
after the Effective Time, be treated as service with the Company, all
Subsidiaries of the Company, the Parent and/or Subsidiaries of the Parent (as
applicable); provided, however, that, with respect to a Company Employee's
service prior the Effective Time, the Parent shall not be required to provide
any benefit under any defined benefit pension plan to such Company Employee in
an amount greater than the benefit such Company Employee has accrued as of the
Effective Time, except that in determining the amount of such accrued benefit,
compensation paid to such Company Employee on or after the Effective Time shall
be counted to the extent that the compensation of such Company Employee after
the Effective Time remains a factor used in determining such accrued benefit
under such plan. The Company, the Subsidiaries of the Company, the Parent and
the Subsidiaries of the Parent shall cause all Company Plans and Parent-Provided
Plans to (x) waive any pre-existing condition limitations otherwise applicable
on and after the Effective Time to Company Employees who are not subject to pre-
existing condition limitations immediately prior to the Effective Time, and (y)
provide that any expenses incurred by Company Employees (and their dependents)
during any plan year within which the Effective Time occurs shall be taken into
account for purposes of satisfying applicable deductible, coinsurance and
maximum out-of-pocket provisions (and like adjustments or limitations on
coverage) under the Company Plans and Parent-Provided Plans. As used in this
Agreement, except as otherwise provided above, "Company Plan" shall include any
United States or non-United States (i) "employee benefit plan," within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), (ii) bonus, stock option, stock purchase, restricted
stock, incentive, equity participation, profit-sharing, savings, pension,
retirement, deferred compensation, medical, health, life insurance, disability,
accident, accrued leave, vacation, sick pay, sick leave, supplemental retirement
and unemployment benefit plan, program, arrangement, commitment and/or practice,
and (iii) employment, consulting, termination, change in control, severance and
salary continuation agreement, contract, plan, policy, program and/or
arrangement, that, in the case of (i), (ii) and (iii), the Company and/or any
Subsidiary of the Company currently maintains or contributes to (or with respect
to which the Company or any Subsidiary of the Company has any obligation) for
active, retired or former employees or directors of the Company or any
Subsidiary of the Company, whether or not any such plan, program, arrangement,
commitment, contract, agreement and/or practice (referred to in (i), (ii) or
(iii)) is in writing, is insured or is exempt from the provisions of ERISA. Any
Company Employee whose employment is terminated by the Company, any Subsidiary
of
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the Company, the Parent or any Subsidiary of the Parent, or any successor of any
thereof, on or before one (1) year following the Effective Time (except for any
Company Employee whose employment is terminated for engaging in criminal conduct
or malfeasance in connection with his or her employment) shall be provided, in
addition to all other applicable non-severance benefits, severance benefits no
less favorable than those such Company Employee would have received upon such
termination of his or her employment with the Company or a Subsidiary of the
Company (as applicable) occurring immediately prior to the Effective Time.
At the Effective Time, the employment of Xxxxx X. Xxxx with the
Surviving Corporation shall be terminated without cause.
SECTION 7.14 Stapled Securities. (a) Simultaneously with any
retraction at the option of a holder of RSC Class 1 Shares for shares of Common
Stock, whether as contemplated by Section 1.3 or otherwise, the Company shall
repurchase from the Trustee (as hereinafter defined), pursuant to the relevant
Exchange and Trust Agreement, among the Company, RSC and The Montreal Trust
Company, as trustee (the "Trustee"), an amount of shares of Class A Common Stock
equal to the amount of RSC Class 1 Shares so retracted and at a repurchase price
of Cdn. $0.00001 per share of Class A Common Stock.
(b) Simultaneously with any conversion at the option of a holder of
Class C Common Stock into Common Stock, whether as contemplated by Section 1.4
or otherwise, the Company shall cause AAUK to mandatorily redeem at par (2 xxxxx
per share) each Dividend Share associated with a share of Class C Common Stock
so converted.
(c) Immediately following the purchase of Shares pursuant to the Offer
and in any event prior to the Effective Time, the Company shall (i) take such
actions as Parent may reasonably request to cause all of the RSC Class 1 Shares
then outstanding to be redeemed or retracted for shares of Common Stock (on a
share-for-share basis), pursuant to Section 4 or 5 of the Restated Certificate
of Incorporation of RSC (which shares of Common Stock the Company shall then
issue) (ii) repurchase from the Trustee, pursuant to the Trust Agreement, an
amount of shares of Class A Common Stock equal to the amount of RSC Class 1
Shares redeemed or retracted in accordance with the preceding clause (i) and at
a repurchase price of Cdn. $0.00001 per share of Class A Common Stock, (iii)
take such actions as Parent may reasonably request to cause all of the shares of
Class C Common Stock then outstanding to be converted into an identical amount
of shares of Common Stock, pursuant to subsection E, F or G of Article SIXTH of
the Charter of the Company (which shares of Common Stock the Company shall then
issue) and (iv) cause AAUK to mandatorily
-39-
redeem at par (2 xxxxx per share) each Dividend Share related to a share of
Class C Common Stock so converted.
ARTICLE VIII
CONDITIONS PRECEDENT
--------------------
SECTION 8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Company Stockholder Approval. If required by applicable law, the
Company Stockholder Approval shall have been obtained; provided, however,
that Parent and Sub shall vote all of their shares of capital stock of the
Company entitled to vote thereon in favor of the Merger.
(b) No Injunction or Restraint. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other Governmental Entity preventing the consummation of
the Merger shall be in effect; provided, however, that each of the parties
shall have used its reasonable best efforts to prevent the entry of any
such temporary restraining order, injunction or other order and to appeal
as promptly as possible any injunction or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for payment
and paid for Shares pursuant to the Offer; provided, however, that this
condition will be deemed satisfied with respect to the obligations of
Parent or Sub if Sub fails to accept for payment and pay for any Shares
pursuant to the Offer in violation of the terms of this Agreement.
(d) HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the Merger shall have expired or been terminated.
-40-
ARTICLE IX
TERMINATION AND AMENDMENT
-------------------------
SECTION 9.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the Company
Stockholder Approval (if required by applicable law):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the Offer
Conditions set forth in Exhibit A the Offer shall have terminated or
expired in accordance with its terms without Sub having accepted for
payment any Shares pursuant to the Offer or (y) all of the Offer
Conditions have not been satisfied prior to April 1, 1997; provided,
however, that the right to terminate this Agreement pursuant to this
Section 9.1(b)(i) shall not be available to any party whose failure to
perform any of its obligations under this Agreement results in the
failure of any such Offer Condition or if the failure of such Offer
Condition results from facts or circumstances that constitute a breach
of representation or warranty under this Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree or ruling or other action shall
have become final and nonappealable; provided, however, that Parent
shall, if necessary to prevent any such issuance or the taking of such
action, offer to accept an order to divest such of the Company's or
Parent's assets and businesses as may be necessary to forestall such
injunction or order and to hold separate such assets and business
pending such divestiture, but only if the amount of such assets and
businesses is not material to the assets or profitability of the
Company and its Subsidiaries taken as a whole or Parent and its
Subsidiaries taken as a whole, respectively;
-41-
(c) by Parent or Sub prior to the purchase of Shares pursuant to the
Offer in the event of a breach by the Company of any representation,
warranty, covenant or other agreement contained in this Agreement which (i)
would give rise to the failure of a condition set forth in paragraph (d) or
(e) of Exhibit A and (ii) cannot be or has not been cured within 20 days
after the giving of written notice to the Company;
(d) by Parent or Sub if either Parent or Sub is entitled to terminate
the Offer as a result of the occurrence of any event set forth in paragraph
(c) of Exhibit A to this Agreement;
(e) by either Parent or the Company if the Board of Directors of the
Company reasonably determines that a Takeover Proposal constitutes a
Superior Proposal and the Board of Directors of the Company determines, in
its good faith judgment, based on the opinion of independent outside legal
counsel to the Company, that failing to terminate this Agreement would
constitute a breach of such Board's duties under applicable law; provided,
however, that the Company may not terminate this Agreement pursuant to this
Section 9.1(e) unless and until 48 hours have elapsed following delivery to
Parent of a written notice of such determination by the Board of Directors
of the Company; provided, further, that the Company may not terminate this
Agreement pursuant to this Section 9.1(e) unless simultaneously with such
termination the Company pays to Parent the amount specified under Section
7.3(b); and provided, further, that any termination by Parent pursuant to
this Section 9.1(e) shall in no way constitute an admission that the
Company complied with the provisions of Section 6.2 or any other provision
hereof, or prejudice any claim by Parent that the Company did not comply
with the provisions of Section 6.2 or any other provisions hereof.
(f) by the Company, if (i) any of the representations or warranties
of Parent or Sub set forth in this Agreement that are qualified as to
materiality shall not be true and correct in any respect or any such
representations or warranties that are not so qualified shall not be true
and correct in any material respect, or (ii) Parent or Sub shall have
failed to perform in any material respect any obligation or to comply in
any material respect with any agreement or covenant of Parent or Sub to be
performed or complied with by it under this Agreement
-42-
and, in the case of (i) or (ii), such untruth or incorrectness or failure
cannot be or has not been cured within 20 days after the giving of written
notice to Parent or Sub, as applicable; or
(g) by the Company, (i) if the Offer has not been timely commenced in
accordance with Section 1.1 or (ii) Sub shall not have accepted for payment
any Shares pursuant to the Offer prior to April 1, 1997;
SECTION 9.2 Effect of Termination. In the event of a termination of
this Agreement by either the Company or Parent as provided in Section 9.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
officers or directors, except with respect to the last sentences of each of
Section 1.2(c), 1.3 and 1.4, Section 4.15, Section 5.6, the last sentence of
Section 7.2, Section 7.3, this Section 9.2 and Section 10.7; provided, however,
that nothing herein shall relieve any party for liability for any breach hereof.
SECTION 9.3 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors at
any time before or after obtaining the Company Stockholder Approval (if required
by law), but, after the purchase of Shares pursuant to the Offer no amendment
shall be made which decreases the Merger Consideration and after the Company
Stockholder Approval no amendment shall be made which by law requires further
approval by the stockholders of the Company without obtaining such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. Following the election or
appointment of the Sub's designees pursuant to Section 7.10 and prior to the
Effective Time, the affirmative vote of a majority of the Independent Directors
then in office shall be required by the Company to (i) amend or terminate this
Agreement by the Company, (ii) exercise or waive any of the Company's rights or
remedies under this Agreement or (iii) extend the time for performance of Parent
and Sub's respective obligations under this Agreement.
SECTION 9.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Board of Directors, may, to the extent legally allowed, (i) subject to the
provisions of Section 9.3, extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) subject to the
provisions of Section 9.3, waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or
(iii)
-43-
subject to the provisions of Section 9.3, waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party. The failure of any party to
this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
ARTICLE X
GENERAL PROVISIONS
------------------
SECTION 10.1 Non-Survival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time.
SECTION 10.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given when delivered personally, one day
after being delivered to an overnight courier or when telecopied (with a
confirmatory copy sent by overnight courier) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Sub, to
Aon Corporation
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Executive Vice President
& Chief Counsel
with a copy to:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxx, Esq.
-44-
(b) if to the Company, to
Alexander & Alexander Services Inc.
1185 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Xx.
Senior Vice President
& General Counsel
with a copy to:
White & Case
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
SECTION 10.3 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." As used in this Agreement, the term
"subsidiary" or "Subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person. As used in this Agreement, the term "Significant Subsidiary" of any
person means a Subsidiary of such person that would constitute a "significant
subsidiary" of such person within the meaning of Rule 1.02(v) of Regulation S-X
as promulgated by the SEC. As used in this Agreement, "Material Adverse Change"
or "Material Adverse Effect" means, when used in connection with the Company or
Parent, as the case may be, any change or effect (or any development that,
insofar as can reasonably be foreseen, is likely to result in any change or
effect) that is materially adverse to the business, financial condition or
results of operations of the Company and its Subsidiaries taken as a whole or
Parent and its Subsidiaries taken as a whole, as the case may be. As used in
this Agreement, "consummation of the Offer" means the purchase of Shares
pursuant to the Offer.
SECTION 10.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one
-45-
and the same agreement, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties.
SECTION 10.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, except as provided in the last sentence of Section 7.2, constitute
the entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
This Agreement, except for the provisions of Section 7.8, is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
SECTION 10.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Maryland, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 10.7 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties, except
that Sub may assign, in its sole discretion, any of or all its rights, interests
and obligations under this Agreement to Parent or to any direct or indirect
wholly owned Subsidiary of Parent, but no such assignment shall relieve Sub of
any of its obligations hereunder. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
SECTION 10.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties 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 in
order that the transactions contemplated by this Agreement may be consummated as
originally contemplated to the fullest extent possible.
SECTION 10.9 Enforcement of this Agreement. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties
-46-
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, such remedy being
in addition to any other remedy to which any party is entitled at law or in
equity.
SECTION 10.10 Obligations of Subsidiaries. Whenever this Agreement
requires any Subsidiary of Parent (including Sub) or of the Company to take any
action, such requirement shall be deemed to include an undertaking on the part
of Parent or the Company, as the case may be, to cause such Subsidiary to take
such action.
-47-
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
AON CORPORATION
By:
-------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman, President
& Chief Executive
Officer
Attest:
--------------------------
Name: Xxxxxxx X. Xxxxx
Title: Corporate Secretary
SUBSIDIARY CORPORATION, INC.
By:
-------------------------
Name: Xxxxxxx X. Xxxx
Title: President
Attest:
--------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Secretary
-48-
ALEXANDER & ALEXANDER SERVICES INC.
By:
------------------------------
Name: Xxxxx X. Xxxx
Title: Chairman of the Board,
President & Chief
Executive Officer
Attest:
--------------------------
Name: Xxxxx Xxxxxxx
Title: Secretary
-49-
EXHIBIT A
---------
CONDITIONS OF THE OFFER
-----------------------
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered pursuant
to the Offer unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer such number of Shares that would constitute
a majority of the combined voting power of the shares of the Company Common
Capital Stock (assuming the exercise of all options to purchase, and the
conversion or exchange of all securities convertible or exchangeable into,
shares of the Company Common Stock outstanding at the expiration date of the
Offer, other than the conversion of the shares of the Series B Preferred Stock)
(the "Minimum Condition"), (ii) any waiting period under the HSR Act or the
Competition Act (Canada) applicable to the purchase of Shares pursuant to the
Offer shall have expired or been terminated and (iii) the approvals of the
Department of Insurance of the States of Delaware, New York and Vermont, shall
have been received with respect to the acquisition of control (or the disclaimer
thereof) resulting from the transactions contemplated by this Agreement of the
insurance-underwriting Subsidiaries of the Company organized under the laws of
Delaware and New York, respectively. Furthermore, notwithstanding any other term
of the Offer or this Agreement, Sub shall not be required to accept for payment
or, subject as aforesaid, to pay for any Shares not theretofore accepted for
payment or paid for, and may terminate the Offer if, at any time on or after the
date of this Agreement and before the acceptance of such Shares for payment or
the payment therefor, any of the following conditions exists (other than as a
result of any action or inaction of Parent or any of its Subsidiaries that
constitutes a breach of this Agreement):
(a) there shall be instituted by any Governmental Entity any suit,
action or proceeding (i) making illegal or prohibiting the acquisition by
Parent or Sub of any Shares under the Offer, making illegal or prohibiting
the making or consummation of the Offer or the Merger or the performance of
any of the other transactions contemplated by this Agreement, or seeking to
obtain from the Company, Parent or Sub any damages that are material in
relation to the Company and its Subsidiaries taken as a whole, (ii)
prohibiting or materially limiting the ownership or operation by the
Company, Parent or any of their respective Subsidiaries
of any material business or assets of the Company and its Subsidiaries, or
Parent and its Subsidiaries, or compelling the Company or Parent to dispose
of or hold separate any material business or assets of the Company and its
Subsidiaries or Parent and its Subsidiaries, as a result of the Offer, the
Merger or any of the other transactions contemplated by this Agreement,
(iii) imposing material limitations on the ability of Parent or Sub to
acquire or hold, or exercise full rights of ownership of, any Shares to be
accepted for payment pursuant to the Offer, including, without limitation,
the right to vote such Shares or shares on all matters properly presented
to the stockholders of the Company, or (iv) prohibiting Parent or any of
its Subsidiaries from effectively controlling any business or operations of
the Company or its Subsidiaries, provided, however, that Parent shall, if
necessary to prevent any such consequence, offer to accept an order to
divest such of the Company's or Parent's assets and businesses as may be
necessary to prevent such consequence and to hold separate such assets and
businesses pending such divestiture, but only if the amount of such assets
and businesses is not material to the assets or profitability of the
Company and its Subsidiaries taken as a whole or Parent and its
Subsidiaries taken as a whole, as the case may be;
(b) there shall be enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger by any Governmental Entity, any
statute, rule, regulation, judgment, order or injunction, other than the
application to the Offer or the Merger of applicable waiting periods under
the HSR Act or the Competition Act (Canada), that would reasonably be
expected to result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (iv) of paragraph (a) above;
(c) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or Sub its
approval or recommendation of the Offer, the Merger or this Agreement, or
approved or recommended any Takeover Proposal or (ii) the Board of
Directors of the Company or any committee thereof shall have resolved to
take any of the foregoing actions (it being understood that the taking and
disclosing to the Company's stockholders of a position contemplated by Rule
14d-9(e) promulgated under the Exchange Act shall not constitute an event
referred to in clause (i) or (ii));
-2-
(d) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall not be
true and correct in any respect or any such representations and warranties
that are not so qualified shall not be true and correct in any material
respect, in each case as if such representations and warranties were made
as of such time;
(e) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement;
(f) there shall have occurred and continued to exist for not less
than three business days (i) any general suspension of trading in, or
limitation on prices for, securities on a national securities exchange in
the United States (excluding any coordinated trading halt triggered solely
as a result of a specified decrease in a market index) or (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States; or
(g) this Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of Parent and Sub
and may, subject to the terms of this Agreement, be waived by Parent and Sub in
whole or in part at any time and from time to time in their sole discretion.
The failure by Parent or Sub at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a waiver
with respect to any other facts and circumstances and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
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