Exhibit (D) (1)
AGREEMENT AND PLAN OF MERGER
AMONG
XXXXXXXX XXXXX GROUP PLC
BARREL ACQUISITION CORPORATION
AND
X.X. XXXXXX HOLDINGS, INC.
Dated as of April 15, 2001
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
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ARTICLE I THE TENDER OFFER....................................................................................... 2
1.1 The Offer................................................................................................... 2
1.2 Company Action.............................................................................................. 4
1.3 Board of Directors.......................................................................................... 5
ARTICLE II THE MERGER............................................................................................ 7
2.1 The Merger.................................................................................................. 7
2.2 Closing..................................................................................................... 7
2.3 Effective Time.............................................................................................. 7
2.4 Effects of the Merger....................................................................................... 7
2.5 Certificate of Incorporation and By-Laws.................................................................... 7
2.6 Directors................................................................................................... 8
2.7 Officers.................................................................................................... 8
ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES.. 8
3.1 Effect on Capital Stock..................................................................................... 8
3.2 Exchange of Certificates Representing Common Stock.......................................................... 10
3.3 Adjustment of Offer Price and Merger Consideration.......................................................... 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................................................... 12
4.1 Existence; Good Standing; Corporate Authority............................................................... 12
4.2 Authorization, Validity and Effect of Agreements............................................................ 12
4.3 Compliance with Laws........................................................................................ 13
4.4 Capitalization.............................................................................................. 13
4.5 Subsidiaries................................................................................................ 14
4.6 No Violation................................................................................................ 15
4.7 Company Reports; Undisclosed Liabilities.................................................................... 16
4.8 Litigation.................................................................................................. 16
4.9 Absence of Certain Changes.................................................................................. 17
4.10 Taxes...................................................................................................... 18
4.11 Employee Benefit Plans..................................................................................... 19
4.12 Brokers and Finders........................................................................................ 22
4.13 Opinion of Financial Advisor............................................................................... 22
4.14 State Anti-Takeover Laws................................................................................... 22
4.15 Voting Requirements........................................................................................ 22
4.16 Material Contracts......................................................................................... 22
4.17 Environmental Matters...................................................................................... 23
4.18 Intellectual Property; Technology.......................................................................... 23
4.19 Insurance.................................................................................................. 24
4.20 Rights Agreement........................................................................................... 25
4.21 Customers.................................................................................................. 25
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4.22 Employment Agreements...................................................................................... 25
4.23 Disclosure Documents....................................................................................... 26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE PURCHASER......................................... 26
5.1 Existence; Good Standing; Corporate Authority............................................................... 26
5.2 Authorization, Validity and Effect of Agreements............................................................ 26
5.3 Voting Requirements......................................................................................... 27
5.4 No Violation................................................................................................ 27
5.5 Ownership of Shares......................................................................................... 28
5.6 Interim Operations of the Purchaser......................................................................... 28
5.7 Financing Letter............................................................................................ 28
5.8 Disclosure Documents........................................................................................ 28
ARTICLE VI COVENANTS............................................................................................. 29
6.1 Conduct of the Business of the Company...................................................................... 29
6.2 Access to Information....................................................................................... 32
6.3 Stockholder Approvals....................................................................................... 33
6.4 Reasonable Best Efforts..................................................................................... 34
6.5 Certain Filings, Consents and Arrangements.................................................................. 35
6.6 Public Announcements........................................................................................ 35
6.7 No Solicitation............................................................................................. 35
6.8 Indemnification, Exculpation and Insurance.................................................................. 37
6.9 Employees and Employee Benefit Plans........................................................................ 38
6.10 Notification of Certain Matters............................................................................ 39
6.11 Anti-takeover Statutes..................................................................................... 39
6.12 Stockholder Litigation..................................................................................... 39
6.13 Availability of Witnesses.................................................................................. 40
6.14 Execution of Financing Documentation....................................................................... 40
6.15 Obtaining Stockholder Approvals............................................................................ 40
6.16 Repayment of Company Indebtedness.......................................................................... 40
6.17 Stay of Litigation......................................................................................... 41
6.18 Further Assurances......................................................................................... 41
ARTICLE VII CLOSING CONDITIONS................................................................................... 41
7.1 Conditions to the Obligations of the Parent, the Purchaser and the Company.................................. 41
7.2 Conditions to the Obligations of the Parent and the Purchaser............................................... 42
ARTICLE VIII TERMINATION AND ABANDONMENT......................................................................... 42
8.1 Termination................................................................................................. 42
8.2 Procedure and Effect of Termination......................................................................... 45
8.3 Fees and Expenses........................................................................................... 45
ARTICLE IX FINANCING CONDITION................................................................................... 47
9.1 Financing Condition......................................................................................... 47
ARTICLE X MISCELLANEOUS.......................................................................................... 47
10.1 Amendment and Modification................................................................................. 47
10.2 Procedure for Termination, Amendment, Extension or Waiver.................................................. 47
10.3 Waiver of Compliance; Consents............................................................................. 48
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10.4 Nonsurvival of Representations and Warranties.............................................................. 48
10.5 Disclosure Letter.......................................................................................... 48
10.6 Notices.................................................................................................... 48
10.7 Assignment; Parties in Interest............................................................................ 49
10.8 Specific Performance....................................................................................... 50
10.9 Governing Law.............................................................................................. 50
10.10 Counterparts.............................................................................................. 50
10.11 Entire Agreement.......................................................................................... 50
10.12 Investigations............................................................................................ 50
10.13 Severability.............................................................................................. 50
10.14 Interpretation; Definitions............................................................................... 51
EXHIBIT A - Form of Stay Orders
iii
AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER, dated as of April 15, 2001 (this "Agreement"
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or the "Merger Agreement"), by and among Xxxxxxxx Xxxxx Group PLC, a public
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limited company organized under the laws of England and Wales (the "Parent"),
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Barrel Acquisition Corporation, a Delaware corporation that is a wholly owned
direct or indirect subsidiary of the Parent (the "Purchaser"), and X.X. Xxxxxx
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Holdings, Inc., a Delaware corporation (the "Company"). Certain capitalized
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terms used herein are defined in Section 10.14(b) hereof.
WHEREAS the respective Boards of Directors of the Parent, the Purchaser and
the Company each have determined that it is advisable and in the best interests
of their respective stockholders for the Parent, or a direct or indirect
subsidiary thereof, to acquire the Company pursuant to a merger (the "Merger")
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in which the Purchaser shall be merged with and into the Company on the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, the Parent proposes to cause
the Purchaser to commence a tender offer to purchase all the outstanding shares
of Common Stock, par value $0.01 per share, of the Company (the "Common Stock";
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all the outstanding shares of Common Stock being hereinafter collectively
referred to as the "Shares") at a purchase price of $13.50 per Share (the "Offer
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Price"), net to the seller in cash, without interest thereon, upon the terms and
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subject to the conditions set forth in this Agreement (as such tender offer may
be amended from time to time as permitted under this Agreement, the "Offer");
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WHEREAS, the Board of Directors of the Company has determined that the
consideration to be paid for each Share in the Offer and the Merger is fair to
all holders of such Shares and has resolved to recommend that the holders of
such Shares accept the Offer and adopt this Agreement (if such adoption is
required);
WHEREAS, the respective Boards of Directors of the Parent, the Purchaser
and the Company have each approved the Merger following the expiration of the
offer, upon the terms and subject to the conditions set forth in this Agreement,
whereby each Share, other than Shares owned directly or indirectly by the Parent
or the Company and Dissenting Shares (as defined in Section 3.1(d)), will be
converted in the Merger into the right to receive cash in an amount equal to the
Offer Price, or such higher price per Share as may be offered by the Purchaser
in the Offer; and
WHEREAS, the Parent, the Purchaser and the Company wish to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Parent, the Purchaser and the Company hereby agree as follows:
ARTICLE I
THE TENDER OFFER
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1.1 The Offer.
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(a) Provided that (i) this Agreement shall not have been
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terminated in accordance with Section 8.1 and (ii) none of the events or
--
circumstances set forth in Annex A hereto shall have occurred or be
existing, the Purchaser agrees to commence the Offer by the tenth business
day after the first public announcement of the execution hereof or on such
earlier date as is reasonably practicable. The initial expiration date for
the Offer shall be twenty (20) business days after the commencement of the
Offer. The obligation of the Purchaser to accept for payment, purchase and
pay for any Shares tendered pursuant to the Offer shall be subject to the
condition (the "Minimum Condition") that the number of Shares validly
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tendered and not withdrawn prior to the expiration of the Offer, combined
with any Shares already owned by the Parent, the Purchaser or any of their
affiliates, constitute more than a majority of the Shares outstanding at
the expiration of the Offer and also shall be subject to the satisfaction
of the other conditions set forth in Annex A. The Purchaser expressly
reserves the right to waive any such condition (other than the Minimum
Condition), to increase the price per Share payable in the Offer, and to
make any other changes in the terms and conditions of the Offer, provided
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that the Purchaser agrees that no change may be made without the consent of
the Company which (a) decreases the price per Share payable in the Offer,
-
(b) changes the form of consideration to be paid in the Offer, (c) reduces
- -
the maximum number of Shares to be purchased in the Offer, (d) imposes
-
conditions to the Offer in addition to those set forth in Annex A hereto or
(e) extends the expiration date of the Offer. Notwithstanding the
-
foregoing, the Purchaser at any time or from time to time may (A) extend
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the Offer for one or more periods of time that the Purchaser reasonably
believes are necessary to cause the conditions to the Offer to be
satisfied, if at the scheduled expiration date of the Offer any of the
conditions to the Purchaser's obligation to accept Shares for payment is
not satisfied or waived, until such time as all such conditions are
satisfied or waived, provided that in no event shall any one such extension
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exceed 10 days or all such extensions, taken together, exceed 60 days
(provided that nothing in this clause (A) shall affect the Company's right
to terminate this Agreement pursuant to Section 8.1(e)(v)), (B) extend the
-
Offer for any period required by any rule, regulation, interpretation or
position of the U.S. Securities and Exchange Commission (the "SEC") or the
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staff thereof that is applicable to the Offer, or (C) extend the Offer for
-
an aggregate period of not more than 20 business days beyond the initial
expiration date of the Offer to the extent required by the Parent to enable
the Parent and the Purchaser to
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complete the financing of the purchase of shares of Company Common Stock
tendered pursuant to the Offer (provided that nothing in this clause (C)
shall affect the Company's right to terminate this Agreement pursuant to
Section 8.1(e)(v)). In addition to the foregoing, the Purchaser may provide
for a "subsequent offering period" to the extent provided in Rule 14d-11
under the Exchange Act after the purchase of Shares upon the expiration of
the initial offering period. In addition, the Parent and the Purchaser
agree that if all of the conditions set forth in Annex A hereto other than
the Financing Condition (as defined in Section 9.1) are satisfied on any
scheduled expiration date of the Offer and the Company is in compliance
with all of its covenants in this Agreement, then, provided that the
Financing Condition is reasonably capable of being satisfied by the
reasonable best efforts of the Parent and the Purchaser, the Purchaser
shall, if requested by the Company, extend the Offer from time to time
until such conditions are satisfied or waived, provided that the Purchaser
shall not be required to extend the Offer for a total of 20 business days
beyond the initial expiration date of the Offer. The Offer Price shall,
subject to applicable withholding of Taxes and, if such payment is to be
made other than to the registered holder, any applicable stock transfer
Taxes payable by such holder, be net to the seller in cash, upon the terms
and subject to the conditions of the Offer. Subject to the terms and
conditions of the Offer, the Purchaser agrees, and the Parent agrees to
cause the Purchaser, to accept for payment, purchase and pay for, in
accordance with the terms of the Offer all Shares validly tendered and not
withdrawn as promptly as practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, the Parent and
the Purchaser will file with the SEC a Tender Offer Statement on Schedule
TO (together with all amendments and supplements thereto, the "Schedule
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TO") with respect to the Offer, which shall have been provided to the
--
Company such that the Company and its counsel shall have a reasonable
opportunity to comment thereon. The Schedule TO shall contain or will
incorporate by reference an offer to purchase (the "Offer to Purchase") and
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forms of the related letter of transmittal and such other ancillary
documents and instruments to which the Offer will be made (the Schedule TO,
the Offer to Purchase and such other documents, together with all
supplements and amendments thereto, being referred to herein collectively
as the "Offer Documents"). The Schedule TO will comply in all material
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respects with the provisions of applicable federal securities laws and on
the date first published, sent or given to the Company's stockholders,
shall not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except no representation is made by the Parent and
the Purchaser with respect to information supplied by the Company in
writing for including in the Schedule TO. Each of the Parent, the Purchaser
and the Company agrees to correct promptly 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, and to supplement the information
provided by it specifically for use in the Schedule TO or the other Offer
Documents to include any information that shall become necessary in order
to make the statements therein, in light of the circumstances under which
they were made,
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not misleading. The Parent and the Purchaser further agree to take all
steps necessary to cause the Schedule TO as appropriately 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 Parent and the
Purchaser agree to provide to the Company and its counsel any comments
the Parent, the Purchaser or their counsel may receive from the SEC or
its staff with respect to the Offer Documents promptly after the receipt
of such comments and shall consult with the Company before responding to
such comments.
(c) The Parent shall provide or cause to be provided to the
Purchaser on a timely basis the funds necessary to accept for payment,
and pay, for any Shares that the Purchaser becomes obligated to accept
for payment, and pay for, pursuant to the Offer.
1.2 Company Action.
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(a) The Company hereby approves of and consents to the Offer and
represents that the Board of Directors of the Company (the "Company
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Board"), at a meeting duly called and held at which all directors were
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present, has unanimously (i) determined that this Agreement and the
-
transactions contemplated hereby, including, without limitation, the
Offer and the Merger and the purchase of Shares contemplated by the
Offer, are advisable and are 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) recommended that the
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stockholders of the Company accept the Offer and tender their Shares
pursuant to the Offer and approve and adopt this Agreement and the
transactions contemplated hereby (if required). The Company hereby
consents to the inclusion, in the Offer Documents and the Proxy
Statement, of reference to the recommendation of the Company Board
described in the immediately preceding sentence.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, subject to the terms thereof, the Company agrees that it will
file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9
(together with all amendments and supplements thereto, the "Schedule
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14D-9") containing the recommendation of the Company Board described in
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Section 1.2(a) and shall disseminate the Schedule 14D-9 to the extent
required by Rule 14d-9 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and any other applicable federal
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securities laws. The Schedule 14D-9 will comply in all material respects
with the provisions of applicable federal securities laws and, on the date
filed with the SEC and on the date first published, sent or given to the
Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that
no representation is made by the Company with respect to information
supplied by
4
the Parent or the Purchaser in writing for inclusion in the Schedule 14D-9.
The Company shall provide the Schedule 14D-9 to the Parent such that the
Parent and its counsel shall have a reasonable opportunity to comment
thereon. The Company, the Parent and the Purchaser each agrees to correct
promptly any information provided by the Company, the Parent or the
Purchaser, as the case may be, for use in the Schedule 14D-9 if and to the
extent that it shall have become false or misleading and to supplement the
information provided by it specifically for use in the Schedule 14D-9 or
the other Offer Documents to include any information that shall become
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as
appropriately corrected to be filed with the SEC and disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company agrees to provide the Parent and its
counsel any comments the Company or its counsel may receive from the SEC or
its staff with respect to the Schedule 14D-9 promptly after the receipt of
such comments and shall consult with the Parent and its counsel before
responding to such comments. The Parent, the Purchaser and the Company each
hereby agree to provide promptly such information necessary to preparation
of the exhibits and schedules to the Schedule 14D-9 and the Offer Documents
which the respective party responsible therefore shall reasonably request.
(c) The Company agrees promptly to furnish, or cause to be furnished,
to the Parent and the Purchaser mailing labels containing the names and
addresses of all record holders of Shares and with security position
listings of Shares held in stock depositories, each as of a recent date,
together with all other available listings and computer files containing
names, addresses and security position listings of record holders and
beneficial owners of Shares. The Company agrees to furnish the Purchaser
with such additional information, including, without limitation, updated
listings and computer files of stockholders, mailing labels and security
position listings, and such other assistance as the Parent, the Purchaser
or their agents may reasonably request in connection with communicating the
Offer to the stockholders of the Company and consummating the Merger.
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 Offer, the Parent, the Purchaser and their
affiliates shall hold in confidence the information contained in such
labels, listings, files and all other information delivered pursuant to
this Section 1.2(c), shall use such information only in connection with the
Offer and the Merger, and, if this Agreement shall be terminated in
accordance with Section 8.1, shall deliver to the Company all copies,
extracts and summaries of such information then in their possession or the
possession of their agents.
1.3 Board of Directors.
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(a) Promptly upon the purchase by the Purchaser of Shares pursuant to
the Offer, and from time to time thereafter, the Purchaser shall be
entitled, subject to compliance with Section 14(f) of the Exchange Act, to
designate for election to the
5
Company Board, a number of directors, equal to the next whole number
greater than the product of (i) the total number of directors on the
-
Company Board (giving effect to any increase in the number of directors in
order to comply with this Section 1.3) multiplied by (ii) the percentage
--
that the aggregate number of Shares beneficially owned by the Parent, the
Purchaser or any of their affiliates at such time (including Shares paid
for pursuant to the Offer) bears to the total number of Shares then
outstanding, and the Company shall, at such time, promptly take all actions
necessary to cause the Purchaser's designees to be elected as directors of
the Company, including increasing the size of the Company Board or securing
the resignations of incumbent directors or both, provided, however, that in
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the event that the Purchaser's designees are elected to the Company Board,
until the Effective Time (as defined in Section 2.3), the Company Board
shall have at least two directors who are directors of the Company on the
date of this Agreement (the "Continuing Directors"). At such time, the
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Company shall also use reasonable best efforts to cause individual
directors designated by the Purchaser to constitute the number of members,
rounded up to the next whole number, that represents the same percentage as
persons designated by the Purchaser represent on the Company Board with
respect to (i) each committee of the Company Board other than any committee
-
of the Company Board established to take action under this Agreement, (ii)
--
each board of directors of each subsidiary of the Company and (iii) each
---
committee of each such board, in each case only to the extent permitted by
applicable law and the rules and regulations of the New York Stock
Exchange.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in
order to fulfill its obligations under this Section 1.3 and shall include
the Information Statement containing such information with respect to the
Company and its officers and directors as is required under Section 14(f)
and Rule 14f-1 (the "Information Statement") as an annex to the Schedule
---------------------
14D-9 to fulfill such obligations. The Purchaser shall supply to the
Company and be solely responsible for any information with respect to the
Purchaser or the Parent and their nominees, officers, directors and
affiliates required by such Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of designees of the
Purchaser pursuant to this Section 1.3 (the "Purchaser Designees") and
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prior to the Effective Time, any amendment of this Agreement or the
Constituent Documents (as defined in Section 4.1), any termination of this
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of the Parent or the
Purchaser or any waiver of any of the Company's rights or the obligations
of the Parent or the Purchaser hereunder shall require the authorization of
a majority of the Continuing Directors (and such authorization shall
constitute the authorization of the Company Board and no other action on
the part of the Company, including any action by any other directors of the
Company, shall be required to authorize).
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ARTICLE II
THE MERGER
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2.1 The Merger. Upon the terms and subject to the satisfaction or waiver,
----------
if permissible, of the conditions set forth in Article VII hereof, as promptly
as practicable following the consummation of the Offer, in accordance with the
provisions of this Agreement and the Delaware General Corporation Law (the
"DGCL"), the parties hereto shall cause the Purchaser to be merged with and into
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the Company, and the Company shall be the surviving corporation (hereinafter
sometimes called the "Surviving Corporation") and shall continue its corporate
---------------------
existence under the laws of the State of Delaware. At the Effective Time, the
separate existence of the Purchaser shall cease.
2.2 Closing. The closing of the Merger will take place at 10:00 a.m. (New
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York City time) on a date to be specified by the Parent or the Purchaser, which
shall be no later than the second business day after satisfaction or waiver of
the conditions set forth in Article VII (the "Closing Date"), at the offices of
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Debevoise & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another
date, time or place are agreed to in writing by the parties hereto.
2.3 Effective Time. Subject to the provisions of this Agreement, upon the
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Closing Date the parties shall file a certificate of merger or other appropriate
documents (in any such case, the "Certificate of Merger") executed in accordance
---------------------
with the relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL and other applicable law. The Merger shall
become effective at such time as the Certificate of Merger is duly filed with
the Delaware Secretary of State, or at such other time specified in the
Certificate of Merger as the Purchaser and the Company shall agree (the time the
Merger becomes effective being hereinafter referred to as the "Effective Time").
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2.4 Effects of the Merger. The Merger shall have the effects set forth in
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the DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time all the properties, rights, privileges, powers and
franchises of the Company and the Purchaser shall vest in the Surviving
Corporation and all debts, liabilities and duties of the Company and the
Purchaser shall become the debts, liabilities and duties of the Surviving
Corporation.
2.5 Certificate of Incorporation and By-Laws.
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(a) The Certificate of Incorporation of the Company (the "Certificate of
--------------
Incorporation"), as in effect immediately prior to the Effective Time, shall be
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the certificate of incorporation of the Surviving Corporation, until thereafter
changed or amended as provided therein or by applicable law.
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(b) The by-laws of the Company (the "By-laws") as in effect immediately
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prior to the Effective Time shall be the by-laws of the Surviving Corporation,
until thereafter changed or amended as provided therein or by applicable law.
2.6 Directors. The directors of the Purchaser immediately prior to the
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Effective Time shall be the directors of the Surviving Corporation, in each case
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
2.7 Officers. The officers of the Company immediately prior to the
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Effective Time shall be the officers of the Surviving Corporation, in each case
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
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3.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
-----------------------
Merger and without any action on the part of the holder of any Shares or any
shares of capital stock of the Purchaser:
(a) Capital Stock of the Purchaser. Each share of capital stock of the
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Purchaser outstanding immediately prior to the Effective Time shall be converted
into and become one fully paid and nonassessable share of common stock, par
value $0.01 per share, of the Surviving Corporation with the same rights, powers
and privileges as the Shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock. Each Share that
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is owned by or held in the treasury of the Company and each Share that is owned
by the Parent, the Purchaser or any other direct or indirect wholly owned
subsidiary of the Parent or the Company shall automatically be canceled and
retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section 3.1(d), each
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issued and outstanding Share (other than Shares to be canceled in accordance
with Section 3.1(b)) shall be converted into the right to receive in cash the
price per Share actually paid in the Offer (the "Merger Consideration"), which
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cash payment shall be reduced by any applicable withholding Taxes and be without
interest. As of the Effective Time, all such Shares shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a
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certificate representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration, less any
applicable withholding Tax, without interest, as provided herein.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in this
---------------------------------
Agreement to the contrary, any issued and outstanding Shares held by a person (a
"Dissenting Stockholder") who has neither voted in favor of the Merger nor
----------------------
consented in writing thereto and otherwise complies with all the applicable
provisions of the DGCL concerning the right of holders of Common Stock 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
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the right to receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to the laws of the State of Delaware. 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 DGCL, his Shares shall be deemed to be converted as of the
Effective Time into the right to receive the Merger Consideration. The Company
shall give the Parent (i) prompt notice of any demands for appraisal of Shares
-
received by the Company, attempted withdrawals of such demands, and any other
instruments served pursuant to the DGCL received by the Company relating to
stockholders' rights of appraisal 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 the Parent, make any
payment with respect to, or settle, offer to settle or otherwise negotiate, any
such demands or approve any withdrawal of any such demands.
(e) Stock Options; Restricted Stock. Each option to purchase Shares granted
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to any employee, consultant or director of the Company or any of its
subsidiaries pursuant to any of the Company Stock Option Plans that, immediately
prior to the Effective Time, is outstanding, whether vested or not vested (each,
an "Option" and, collectively, the "Options") shall be canceled in exchange for
------ -------
the right to receive a cash payment as soon as reasonably practicable, but in no
event more than 20 days following the Effective Time, equal to the product (such
product, the "Option Consideration") of (i) the excess (if any) of (x) the
-------------------- - -
Merger Consideration over (y) the exercise price per share under such Option
-
multiplied by (ii) the number of Shares covered by such Option, which cash
--
payment shall be reduced by any applicable withholding Taxes and be without
interest. The Company shall take all actions reasonably necessary to effectuate
the cancellation of each outstanding option in exchange for the Option
Consideration, including, without limitation, obtaining consents of the Option
holders, if the Company deems it necessary to do so. All shares of restricted
stock granted to any employee, consultant or director of the Company or any of
its subsidiaries that, immediately prior to the Effective Time, are outstanding
shall, as of the Effective Time, become fully vested and nonforfeitable Shares,
which will be converted into the right to receive the Merger Consideration in
accordance with Section 3.1(c). Any and all sums paid to the Company or any of
its subsidiaries, or withheld from the compensation of any employee, consultant
9
or director of the Company or any of its subsidiaries, in connection with the
purchase by any such employee, consultant or director of restricted stock shall,
if such sums have not yet been used to purchase restricted stock, be returned to
such employee, consultant or director as promptly as practicable after the
Closing Date.
3.2 Exchange of Certificates Representing Common Stock.
---------------------------------------------------
(a) Prior to the Effective Time, the Purchaser and the Parent shall appoint
a commercial bank or trust company having net capital of not less than
$100,000,000, to act as paying agent hereunder (the "Paying Agent") for payment
------------
of the Merger Consideration upon surrender of certificates representing Shares
("Certificates"). The Purchaser shall, or the Parent shall cause the Surviving
------------
Corporation or any other direct or indirect subsidiary of the Parent to, provide
the Paying Agent with cash in amounts necessary to pay for all the shares of
Common Stock pursuant to Section 3.1(c) and to make all payments in connection
with the Options as to which payments are due pursuant to Section 3.1(e), as and
when such amounts are needed by the Paying Agent. Such amounts shall hereinafter
be referred to as the "Exchange Fund."
-------------
(b) Promptly after the Effective Time and in no event more than 10 days
thereafter, the Purchaser and the Parent shall cause the Paying Agent to mail to
each holder of record of Shares immediately prior to the Effective Time (i) a
-
letter of transmittal which shall specify that delivery shall be effected, and
risk of loss and title to such Certificates shall pass, only upon delivery of
the Certificates to the Paying Agent and which letter shall be in customary form
and have such other provisions as the Purchaser or the Parent may reasonably
specify and (ii) instructions for effecting the surrender of such Certificates
--
in exchange for the Merger Consideration applicable thereto. Upon surrender of a
Certificate to the Paying Agent together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto, and such
other documents as may reasonably be required by the Paying Agent, each holder
of a Certificate (other than the Parent, the Purchaser, the Company or any
direct or indirect subsidiary of any of them) shall be entitled to receive in
exchange therefor cash in an amount equal to the product of the number of Shares
previously represented by such Certificate multiplied by the Merger
Consideration, less any applicable withholding Tax. No interest will be paid or
will accrue on the cash payable upon surrender of any Certificate.
(c) At and after the Effective Time, there shall be no transfers on the
share transfer books of the Company of the Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged as provided in this Article III.
(d) Any portion of the Exchange Fund (including the proceeds of any
interest and other income received by the Paying Agent in respect of all such
funds) that remains unclaimed by the former stockholders of the Company six
months after the
10
Effective Time shall be delivered to the Surviving Corporation. Any former
stockholders of the Company who have not theretofore complied with this Article
III shall thereafter look only to the Surviving Corporation for payment of any
Merger Consideration that may be payable upon surrender of any Certificates such
stockholder holds, as determined pursuant to this Agreement, without any
interest thereon.
(e) None of the Purchaser, the Parent, the Company, the Surviving
Corporation, the Paying Agent or any other person shall be liable to any former
holder of Shares for any amount properly delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws.
(f) In the event of a transfer of ownership of Shares that is not
registered in the transfer records of the Company or its transfer agent, payment
may be made to the transferee of such Shares if the Certificate representing
such Shares is presented to the Paying Agent, accompanied by all documents
reasonably required to evidence and effect such transfer and to evidence that
any applicable stock transfer Taxes have been paid. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by the Surviving Corporation or the Paying Agent, the posting
by such person of a bond in such reasonable amount as the Surviving Corporation
or the Paying Agent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Paying Agent will pay in
exchange for such lost, stolen or destroyed Certificate, the Merger
Consideration payable in respect of the Shares represented thereby as
contemplated by this Article.
(g) The Paying Agent shall invest the cash in the Exchange Fund on a daily
basis, as instructed by the Purchaser. Any interest and other income resulting
from such investments shall be paid to the Purchaser before the Effective Time
and to the Surviving Corporation thereafter.
(h) The Surviving Corporation shall pay all charges and expenses of the
Paying Agent.
3.3 Adjustment of Offer Price and Merger Consideration. In the event of
--------------------------------------------------
any reclassification, recapitalization, stock split, stock dividend or similar
transaction with respect to the Common Stock (or if a record date with respect
to any of the foregoing shall occur) prior to the Effective Time, appropriate
and proportionate adjustments, if any, shall be made to the amount of the Offer
Price and Merger Consideration, and all references to the Offer Price or the
Merger Consideration in this Agreement shall be deemed to be to the Offer Price
or the Merger Consideration as so adjusted.
11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to the Parent and the Purchaser as
follows:
4.1 Existence; Good Standing; Corporate Authority. The Company and each of
---------------------------------------------
its subsidiaries is (a) a corporation duly incorporated, validly existing and in
-
good standing under the laws of its jurisdiction of incorporation and (b) is
-
duly licensed or qualified to do business as a foreign corporation and is in
good standing under the laws of any other jurisdiction in which the character of
the properties owned or leased by it or in which the transaction of its business
makes such licensure, qualification or good standing necessary, except where the
failure to be so in good standing or to be so licensed or qualified,
individually or in the aggregate, would not, or would not reasonably be expected
to, have a Material Adverse Effect. "Material Adverse Effect" means any event,
-----------------------
occurrence, fact, condition, change, development or effect that (i) has a
-
material adverse effect upon the business, operations, results of operations,
assets or financial condition of the Company and its subsidiaries, taken as a
whole, or (ii) prevents the Company from consummating the transactions
--
contemplated hereby; provided, in either case, that "Material Adverse Effect"
-------- -----------------------
shall not include any change in or effect upon the business, assets, financial
condition or results of operations of the Company and any of its subsidiaries
directly arising out of (a) changes in generally accepted accounting principles,
-
(b) acts or omissions of the Company or any of its subsidiaries taken with the
-
prior written consent of the Parent, (c) conditions, events or circumstances
-
generally affecting the United States economy, the world economy, or the
segments of either the United States insurance brokerage or reinsurance
brokerage industry or the world insurance brokerage or reinsurance brokerage
industry in which the Company participates, (d) the litigation set forth in
-
Section 4.1 of the Company Disclosure Letter, (e) any claim made by the Parent
-
or its affiliates against the Company or any of its subsidiaries in any
litigation or otherwise, (f) any changes or effects resulting solely from the
-
announcement of the Offer or the Merger, and (g) the loss of the customer
-
accounts or contracts set forth in Section 4.1 of the Company Disclosure Letter
(as defined in Section 4.3). Each of the Company and its subsidiaries has the
requisite corporate power and authority to own, operate and lease its properties
and carry on its business as now conducted. The Company has heretofore delivered
to the Parent true and correct copies of the Certificate of Incorporation and
By-laws of the Company (the "Constituent Documents") and the organizational
---------------------
documents of each subsidiary, in each case as amended through the date hereof,
and all such Constituent Documents and organizational documents are in full
force and effect as of the date hereof.
4.2 Authorization, Validity and Effect of Agreements. The Company has all
------------------------------------------------
requisite corporate power and authority to execute and deliver this Agreement
and, subject to obtaining the Company Stockholder Approval, if required by law,
to consummate the transactions contemplated hereby. The execution and delivery
of this
12
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by the Company Board,
and no other corporate proceedings on the part of the Company (other than the
Company Stockholder Approval, if required by law) are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Company, and
(assuming this Agreement constitutes the valid and binding obligation of the
Parent and the Purchaser) constitutes the valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or similar laws of general applicability affecting or relating to the
rights of creditors or by general principles of equity.
4.3 Compliance with Laws. Except as set forth on Section 4.3 of the
--------------------
disclosure letter delivered by the Company to the Parent on or prior to the date
hereof (the "Company Disclosure Letter") or as disclosed in the Company Reports
-------------------------
(as defined in Section 4.7), the Company and each of its subsidiaries is in
compliance with all federal, state, local or foreign law, statute, ordinance,
rule, regulation, order, judgment, ruling or decree ("Laws") of any federal,
----
state, local or foreign judicial, legislative, executive, administrative or
regulatory body or authority or any court, arbitration, board or tribunal (each
such entity, a "Governmental Entity") applicable to the Company or such
-------------------
subsidiaries or any of their respective properties or assets, except for
violations which, individually or in the aggregate, would not have, or would not
reasonably be expected to result in, a Material Adverse Effect. The Company and
each of its subsidiaries has in effect all Permits necessary for it to own,
lease or operate its properties and assets and to carry on its business as now
conducted, and there has occurred no default under any such Permit, except for
the lack of Permits and for defaults under such Permits which lack or default
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect. No action, demand, requirement or investigation by any
Governmental Entity with respect to the Company or its subsidiaries is pending
and has been served upon the Company or, to the knowledge of the Company, is
threatened, with respect to any of the foregoing which, if resolved in favor of
such Governmental Entity, would, or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
4.4 Capitalization. The authorized capital stock of the Company consists of
--------------
60,000,000 Shares and 10,000,000 shares of Preferred Stock ("Preferred Stock"),
---------------
par value $0.01 per share. As of March 31, 2001, (a) 14,141,671 Shares were
-
issued, 13,045,434 were outstanding (of which 90,485 constituted shares of
restricted stock) and 1,096,237 were held by the Company in treasury and no
shares of Preferred Stock were outstanding, (b) Options to purchase an aggregate
-
of 2,950,609 Shares were outstanding, 2,950,609 Shares were reserved for
issuance upon the exercise of outstanding Options and 4,049,391 Shares were
reserved for future grants under the Company Stock Option Plans, and there were
no stock appreciation rights or limited stock appreciation rights outstanding
other than those attached to such Options, and (c) no Shares were held by the
-
13
Company's subsidiaries. As of the date hereof, except for the Options and the
preferred share purchase rights issued under the Rights Agreement, the Company
and its subsidiaries have no outstanding shares of preferred stock, bonds,
debentures, notes or other obligations or securities the value of which is in
any way based upon or derived from any capital or voting stock of the Company or
any of its subsidiaries or entitling the holders thereof to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of the Company or any of its subsidiaries on any matter. All
issued and outstanding Shares are, and all shares that may be issued pursuant to
the Company Stock Option Plans (when issued in accordance with the terms
thereof) will be, duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. As of the date hereof, except as set forth in this
Section 4.4 or in Section 4.4 of the Company Disclosure Letter, there are no
preemptive or similar rights on the part of any holders of any class of
securities of the Company or any of its subsidiaries, and there are no other
shares of capital stock of the Company, no securities of the Company or any of
its subsidiaries convertible or exchangeable for shares of capital stock or
voting securities of the Company or any of its subsidiaries, and no existing
options, warrants, calls, subscriptions, convertible securities, or other
rights, agreements or commitments which obligate the Company or any of its
subsidiaries to issue, deliver, grant, purchase or sell (or cause to be issued,
delivered, granted, purchased or sold) any shares of capital stock of, or other
equity or voting interests in, the Company or any of its subsidiaries or any
"phantom stock" right, stock appreciation right or other similar right with
respect to the Company or any of its subsidiaries, or obligating the Company to
enter into any such agreement or commitment. There are no outstanding
obligations of the Company or any subsidiary of the Company to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its subsidiaries. Except as set forth in this Section 4.4 or in Section 4.4 of
the Company Disclosure Letter, after the Effective Time, the Surviving
Corporation will have no obligation created by the Company prior to the date
hereof to issue, transfer on its behalf or sell any shares of capital stock of
the Company or the Surviving Corporation. Except as set forth in Section 4.4 of
the Company Disclosure Letter, there are no voting trusts or other agreements or
understandings to which the Company or any of its subsidiaries is a party with
respect to the voting of capital stock of the Company or any of its
subsidiaries.
4.5 Subsidiaries. Section 4.5 of the Company Disclosure Letter sets forth
------------
for each subsidiary of the Company: (i) its name and jurisdiction of
-
incorporation or organization; (ii) its authorized capital stock or share or
--
equity capital; (iii) the number of issued and outstanding shares of capital
---
stock or share or equity capital; and (iv) the holder or holders of such shares.
--
The Company owns, directly or indirectly through another subsidiary, that number
of the outstanding shares of capital stock (or other ownership interests having
by their terms ordinary voting power to elect directors or others performing
similar functions with respect to such subsidiary) of each of the Company's
subsidiaries set forth in Section 4.5 of the Company Disclosure Letter. All
outstanding shares of capital stock of each of the Company's subsidiaries are
duly authorized, validly issued, fully paid and nonassessable, and those shares
owned directly
14
or indirectly by the Company are so owned free and clear of all liens, pledges,
security interests, claims or other encumbrances ("Encumbrances"), and free of
------------
any rights of first refusal or other contractual transfer restrictions,
agreements and limitations on the Company's or any of its subsidiaries' voting
rights of any nature whatsoever. There are no outstanding options, warrants or
other securities or subscription, preemptive or other rights convertible into or
exchangeable or exercisable for shares of capital stock or other equity voting
interests in any subsidiary of the Company and there are no "phantom stock"
rights, stock appreciation rights or other similar rights with respect to any
subsidiary of the Company. Except for interests in the Company's subsidiaries or
as set forth in Section 4.5 of the Company Disclosure Letter, neither the
Company nor any of its subsidiaries owns directly or indirectly any capital
stock or other ownership interest or investment in any corporation, partnership,
joint venture, trust or other entity.
4.6 No Violation. Neither the execution and delivery by the Company of this
------------
Agreement nor the performance by the Company of its obligations hereunder and
the consummation of the transactions contemplated hereby will: (a) violate,
-
conflict with or result in a breach of any provisions of the Constituent
Documents or the certificate of incorporation or bylaws (or comparable
constituent documents) of any of its subsidiaries; (b) except as set forth in
-
Section 4.6 of the Company Disclosure Letter, contravene, conflict, in any
material respect, with, or result in a material violation or breach of,
constitute a material default (or an event which, with notice or lapse of time
or both, would constitute a material default) under, result in the termination
or in a right of termination of, accelerate the performance required by or
benefit obtainable under, result in the vesting, triggering or acceleration of
any material payment or other material obligations pursuant to, result in the
creation of any Encumbrance (other than Permitted Liens) upon any of the
material properties of the Company or its subsidiaries under, or result in there
being declared void, voidable, subject to withdrawal, or without further binding
effect, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust or any license, franchise, Permit, lease, contract,
agreement or other instrument, commitment or obligation (each of the foregoing,
to the extent the same have any continuing force or effect, a "Contract" and
--------
collectively, "Contracts") to which the Company or any of its subsidiaries is a
---------
party, by which the Company or any of its subsidiaries or any of their
respective properties is bound, or under which the Company or any of its
subsidiaries or any of their respective properties is entitled to a benefit; (c)
-
other than the filings provided for in Section 2.3 or Section 4.6 of the Company
Disclosure Letter, filings required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX Xxx") and filings pursuant to the EC Merger
-------
Regulation, the UK Fair Trading Act 1973 and similar applicable competition,
merger control, antitrust or other laws, any applicable filings under federal
and state securities laws or state anti-takeover laws, filings with the New York
Stock Exchange, or filings in connection with the maintenance of qualification
to do business in other jurisdictions (the filings disclosed in Section 4.6 of
the Company Disclosure Letter in response to this clause (c), the other filings
referred to in this clause (c) and Consents required or permitted to be made or
obtained in connection therewith, collectively, the "Regulatory Filings"),
------------------
require any
15
Consent of any Governmental Entity, except for those Consents, the failure of
which to obtain or make individually or in the aggregate would not have, or
would not be reasonably expected to result in, a Material Adverse Effect; or (d)
-
violate any Laws material to the business of the Company, any of its
subsidiaries or any of their respective assets.
4.7 Company Reports; Undisclosed Liabilities. The Company has filed with
----------------------------------------
the SEC all forms, reports, statements and schedules required to be filed
pursuant to the Exchange Act, or other federal securities laws and the rules and
regulations promulgated thereunder since December 31, 1997 (collectively, in the
form filed with the SEC and including exhibits and any amendments thereto, the
"Company Reports") and has made true, complete and correct copies of each non-
---------------
public Company Report available to the Parent. As of their respective dates, the
Company Reports (a) complied as to form in all material respects with the
-
applicable requirements of the Securities Act of 1933, as amended, and the rules
and regulations thereunder (the "Securities Act") or the Exchange Act, as the
--------------
case may be, and (b) did not contain any untrue statement of a material fact or
-
omit to state a material fact required to be stated therein or necessary to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. Except as set forth in Section 4.7 of the Company
Disclosure Letter, each of the consolidated balance sheets of the Company
included in or incorporated by reference into the Company Reports (including the
related notes and schedules) fairly presented the consolidated financial
position of the Company and its consolidated subsidiaries as of its date, and
each of the consolidated statements of income, cash flows and shareholders'
equity of the Company included in or incorporated by reference into the Company
Reports (including any related notes and schedules) fairly presented the results
of operations, income, cash flows or shareholders' equity, as the case may be,
of the Company and its subsidiaries for the periods set forth therein, in each
case in accordance with GAAP consistently applied during the periods involved,
except as may be noted therein and subject, in the case of unaudited statements,
to normal year-end audit adjustments (consisting only of normal recurring
accruals), and in each case comply as to form in all material respects with
applicable accounting principles and the published rules and regulations of the
SEC with respect thereto. Neither the Company nor any of its subsidiaries has
any liabilities or obligations, whether accrued, absolute, contingent or
otherwise, except liabilities and obligations (i) in the respective amounts
-
reflected on or reserved against in the Company's most recent consolidated
balance sheet included in the Company Reports, (ii) liabilities and obligations
--
incurred in connection with the transactions contemplated hereby, (iii)
---
liabilities and obligations incurred in the ordinary course of business since
the date of such balance sheet which would not be prohibited by this Agreement
and (iv) liabilities and obligations of the Company and its Subsidiaries that
--
would not, individually or in the aggregate, have or reasonably be expected to
have a Material Adverse Effect.
4.8 Litigation. Except as set forth in Section 4.8 of the Company
----------
Disclosure Letter or disclosed in the Company Reports, there are no claims,
actions, suits,
16
proceedings, arbitrations, investigations or audits (collectively, "Litigation")
----------
by a third party (including a Governmental Entity) pending or, to the knowledge
of the Company, threatened, at law or in equity, against the Company or any of
its subsidiaries or any of their respective properties or assets. Except as set
forth in Section 4.8 of the Company Disclosure Letter, there are no
circumstances which could reasonably be expected to give rise to such Litigation
in the future that have been notified to the insurer under any of the insurance
policies held or maintained, or previously held or maintained, by the Company or
any of its subsidiaries since December 31, 1998, which would reasonably be
expected to have or result in a liability of the Company or any of its
subsidiaries in excess of $100,000 individually or $300,000 in the aggregate,
nor, to the knowledge of the Company are there any such circumstances that would
have been required to be notified to an insurer if the policies held by the
Company provided for mandatory, rather than permissive, notifications of such
circumstances and which would be reasonably likely to have or result in a
liability of the Company or any of its subsidiaries in excess of $5,000,000, in
each case regardless of whether the Company has available insurance to indemnify
it with respect to any such liability. There is no judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against the Company or any of its subsidiaries which would reasonably be
expected to have or result in a liability of the Company or any of its
subsidiaries in excess of $500,000 individually or $1,000,000 in the aggregate,
regardless of whether the Company has available insurance to indemnify it with
respect to any such liability.
4.9 Absence of Certain Changes. Except as and to the extent set forth in
--------------------------
Section 4.9 of the Company Disclosure Letter or disclosed in the Company
Reports, since December 31, 2000, the Company and its subsidiaries have
conducted their business only in the ordinary course of such business, and there
has not been (a) any Material Adverse Effect (or any event or condition that
-
would reasonably be expected to result in a Material Adverse Effect) suffered by
the Company or any of its subsidiaries; (b) any declaration, setting aside or
-
payment of any dividend or other distribution with respect to the capital stock
of the Company or its subsidiaries (other than wholly-owned subsidiaries) or,
except as required by the Company's benefit plans, any repurchase, redemption or
any other acquisition by the Company or its subsidiaries of any outstanding
shares of capital stock or other securities of, or other ownership interests in,
the Company or its subsidiaries; (c) any change in accounting principles,
-
practices or methods by the Company or its subsidiaries; (d) any increase or
-
commitment to increase the remuneration (including salary, incentive
compensation, benefits in severance or termination pay) of any director or
employee of or consultant to the Company or any of its subsidiaries, whether
directly or indirectly (including by amendment, implementation or the entering
into of any employment or employee benefit or compensation agreement, plan or
arrangement), by any amount in excess of $50,000 per annum (or, in the case of
any executive officer of the Company or any such subsidiary, by any amount)
other than any changes required by the current terms of any existing plan or
agreement or pursuant to this Agreement or changes in the ordinary course of
business; (e) any revaluation by the Company or any of its subsidiaries of any
-
of their respective assets, other than normal
17
recurring adjustments made in the ordinary course of business, including,
without limitation, write-downs of inventory or write-offs of accounts
receivable; or (f) any transaction or commitment made by the Company or any of
-
its subsidiaries to buy or sell any assets of the Company's business, other than
sales of products or services in the ordinary course of business.
4.10 Taxes.
-----
(a) Except as set forth on Section 4.10 of the Company Disclosure Letter
(i) the Company and each subsidiary of the Company has (or will have by the
-
Effective Time) timely filed all material Tax Returns required to be filed by
any of them; (ii) all Taxes of the Company and its subsidiaries have been paid
--
or adequate reserves for such Taxes have been established in the financial
statements included in the most recent Company Report in accordance with GAAP;
and (iii) the Company and each subsidiary of the Company has either withheld and
---
paid over to the relevant taxing authority or set aside in accounts for such
purpose amounts sufficient to pay all material Taxes required to have been
withheld and paid in connection with payments to employees, independent
contractors, creditors, stockholders or other third parties.
(b) Except as set forth in Section 4.10 of the Company Disclosure Letter,
(i) there are no material Encumbrances for Taxes upon the assets of the Company
-
or any subsidiary of the Company except Encumbrances for Taxes not yet due; (ii)
--
there are no material outstanding deficiencies for any Taxes threatened,
proposed, asserted or assessed in writing against the Company or any subsidiary
of the Company which are not adequately provided for in the financial statements
included in the most recent Company Report; (iii) no Taxes or Tax Returns of the
---
Company or any subsidiary of the Company are currently under audit or
examination or subject to any other administrative or judicial proceedings by
any taxing authority; (iv) to the knowledge of the Company, the Internal Revenue
--
Service has completed examinations of the federal income Tax returns filed by
the Company or any subsidiary of the Company (or the statute of limitations for
the assessment of federal income Taxes for such period has expired) for all
periods through and including 1996; (v) none of the Company or any subsidiary of
-
the Company has been a member of an "affiliated group" (within the meaning of
Section 1504(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
----
or any similar affiliated, combined or consolidated group for state, local or
foreign Tax purposes (other than a group the common parent of which is the
Company), or has any liability for the Taxes of any person (other than the
Company or any subsidiary of the Company) under Treasury Regulation Section
1.1502-6 or any similar provision of state, local or foreign law or as a
transferee, successor, by contract or otherwise; (vi) neither the Company nor
--
any subsidiary of the Company is a party to any Tax sharing, Tax indemnity or
other agreement or arrangement with respect to Taxes with any entity not
included in the financial statements included in the Company Report; (vii) to
---
the knowledge of the Company, no material claim has been made by any taxing
authority in any jurisdiction where the Company or any subsidiary of the Company
does not file Tax Returns that the
18
Company or such subsidiary of the Company is or may be subject to taxation by
that jurisdiction; and (viii) no agreement or other document waiving, extending,
----
or having the effect of waiving or extending the statute of limitations, the
period of assessment or collection of any Taxes on the Company or any subsidiary
of the Company and no power of attorney with respect to any such Taxes, has been
filed with any governmental authority which waiver, extension or power of
attorney is currently in effect.
(c) The Company is not a "U.S. real property holding company" as defined in
Section 897 of the Code.
4.11 Employee Benefit Plans.
----------------------
(a) Absence of Changes in Benefits Plans. Section 4.11(a) of the Company
-------------------------------------
Disclosure Letter contains a complete and correct list, as of the date hereof,
of (i) all material severance and employment agreements of the Company or its
-
subsidiaries with their respective current employees and their respective
officers, independent contractors, or directors, (ii) all material severance
--
programs, policies and practices of each of the Company and each of its
subsidiaries, (iii) all other material plans or arrangements of the Company and
---
each of its subsidiaries relating to its current employees, officers,
independent contractors, or directors which contain change in control
provisions, including in all cases any and all amendments entered on or prior to
the date hereof, and (iv) all other material Plans. For purposes of this
--
Agreement, "Plan" shall mean collective bargaining agreement, employment
----
agreement, consulting agreement, severance agreement or any bonus, pension,
post-retirement benefit, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization,
medical, dental or other plan, arrangement or understanding providing material
benefits to current employees, officers, independent contractors, or directors
of the Company or any of its subsidiaries. Since January 1, 2000, until the date
hereof, there has not been any adoption or amendment in any respect by the
Company or any of its subsidiaries of any Plan, nor has there been any material
change in any actuarial or other assumptions used to calculate funding
obligations with respect to any material Plan, or any change in the manner in
which such contributions are determined which, individually or in the aggregate,
would result in a material increase in the Company's or its subsidiaries'
liabilities thereunder.
(b) Stock Options. All of the Options have been granted in compliance with
-------------
all the terms and provisions of the Company Stock Option Plans, any awards made
thereunder and all applicable law, except where the failure to so comply would
not, individually or in the aggregate, have, or be reasonably expected to have,
Material Adverse Effect.
19
(c) ERISA Compliance.
----------------
(i) With respect to Plans, no event has occurred and there exists no
condition or set of circumstances, in connection with which the Company or any
of its subsidiaries could be subject to any liability under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the Code or any
-----
other applicable law that individually or in the aggregate would have, or would
reasonably be expected to result in, a Material Adverse Effect on the Company or
any of its subsidiaries.
(ii) Each Plan has been administered substantially in accordance with its
terms and all the Plans have been operated, and are in material compliance with
the applicable provisions of ERISA, the Code and all other applicable laws and
the terms of all applicable collective bargaining agreements. The IRS has issued
a favorable determination letter with respect to the qualification of each Plan
that constitutes an "employee pension benefit plan" as defined in ERISA, and, as
of the date hereof, to the knowledge of the Company, the IRS has not taken any
action to revoke any such letter.
(iii) Neither the Company nor any trade or business, whether or not
incorporated (an "ERISA Affiliate"), which together with the Company would be
---------------
deemed a "single employer" within the meaning of Section 4001(b) of ERISA, has
incurred any material unsatisfied liability under Title IV of ERISA in
connection with any Plan and, to the knowledge of the Company, no condition
exists that presents a material risk to the Company or any ERISA Affiliate of
incurring any such liability (other than liability for premiums to the Pension
Benefit Guaranty Corporation ("PBGC") arising in the ordinary course). No Plan
----
has incurred an "accumulated funding deficiency" within the meaning of Section
302 of ERISA or Section 412 of the Code, whether or not waived.
(iv) As of the date hereof, except as set forth in Section 4.11(c) of the
Company Disclosure Letter, no Plan (A) is subject to Title IV of ERISA; (B) is a
- -
"multiemployer plan" within the meaning of Section 3(37) of ERISA; (C) is a
-
"multiple employer plan" within the meaning of Section 413(c) of the Code; or
(D) is or at any time was funded through a "welfare benefit fund" within the
-
meaning of Section 419(e) of the Code and no benefits under a Plan are or at any
time have been provided through a voluntary employees' beneficiary association
within the meaning of Section 501(c)(9) of the Code or a supplemental
unemployment benefit plan within the meaning of Section 501(c)(17) of the Code.
20
(v) Except as set forth in Section 4.11(c) of the Company Disclosure
Letter, no Plan provides medical benefits (whether or not insured), with respect
to current or former employees after retirement or other termination of service
(other than (x) coverage mandated by applicable law or (y) benefits the full
- -
cost of which is borne by the current or former employee).
(vi) All U.K. pension schemes currently maintained by the Company or any of
its subsidiaries are defined contribution plans and there are no unfunded
obligations with respect to any of them. Any U.K. pension schemes previously
operated by the Company or any of its subsidiaries that are or were defined
benefit plans (A) either have been wound-up prior to the date of this Agreement,
-
or currently are in the process of being wound-up, and (B) are fully funded.
-
(vii) Except as set forth in Section 4.11(c) of the Company Disclosure
Letter, all material amounts payable under Plans are deductible for federal
income Tax purposes. Except as set forth in Section 4.11(c) of the Company
Disclosure Letter, the consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event undertaken
by the Company or any of its subsidiaries prior to the date hereof, (A) entitle
-
any current or former employee, agent, independent contractor or officer of the
Company or any ERISA Affiliate to severance pay, unemployment compensation or
any other payment, except as expressly provided in this Agreement, (B)
-
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee, agent, independent contractor or officer,
(C) constitute a "change in control" causing a material increase or acceleration
-
of benefits under any Plan, and the Company or (D) result in any payment or
-
benefit that will be characterized as an "excess parachute payment" within the
meaning of Section 280(G)(b)(1) of the Code.
(viii) There is no pending or, to the knowledge of the Company, threatened
assessment, complaint, proceeding, or investigation of any kind in any court or
government agency with respect to any Plan (other than routine claims for
benefits).
(d) Employee Stock Purchase Plan. The Company has taken all permitted
----------------------------
action necessary with respect to its Employee Stock Purchase Plan (the "ESPP")
to preclude (i) any increase in the rate of payroll deduction contributions that
-
may be made under the ESPP on or after the date hereof, (ii) any lump sum
--
contribution under the ESPP on or after the date hereof, and (iii) any
---
contribution under the ESPP on or after the Closing Date.
21
4.12 Brokers and Finders. Except for Lazard Freres & Co. LLC ("Lazard
------------------- ------
Freres"), no investment banker, broker, dealer, finder, financial advisor or
------
other intermediary is entitled to receive from the Company or any of its
subsidiaries any fee or commission in connection with this Agreement or the
transactions contemplated hereby.
4.13 Opinion of Financial Advisor. The Company Board has received the
----------------------------
opinion of Lazard Freres, to the effect that, as of the date of this Agreement,
the consideration to be received by holders of Shares (other than the Parent and
its affiliates) in the Offer and the Merger is fair, from a financial point of
view, to such holders of Shares. The Company has been authorized by Lazard
Freres to permit, subject to review and consent by Lazard Freres (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 and the
Proxy Statement, if any.
4.14 State Anti-Takeover Laws. The Company Board has approved the terms of
------------------------
this Agreement and the consummation of the Merger and the other transactions
contemplated by this Agreement, and such approval is sufficient to render
inapplicable to the Merger and the other transactions contemplated by this
Agreement the provisions of Section 203 of the DGCL. No other state takeover
statute or similar statute or regulations applies or purports to apply to the
Merger, this Agreement, or any of the transactions contemplated by this
Agreement, and no provision of the Constituent Documents or the certificate of
incorporation, by-laws or other governing instruments of any of the subsidiaries
of the Company would, directly or indirectly, restrict or impair the ability of
the Parent to vote shares of the capital stock of the Company and its
subsidiaries that may be acquired or controlled by the Parent.
4.15 Voting Requirements. The affirmative vote of the holders of a majority
-------------------
of the outstanding Shares, voting as a single class, at the Company Stockholder
Meeting (the "Company Stockholder Approval") to adopt this Agreement and the
----------------------------
transactions contemplated hereby is the only vote of the holders of any class or
series of the capital stock of the Company necessary to approve and adopt this
Agreement and the transactions contemplated hereby.
4.16 Material Contracts. Except as set forth in Section 4.16 of the Company
------------------
Disclosure Letter or as filed as an exhibit to any Company Report, neither the
Company nor any of its subsidiaries is a party to or bound by (i) any Material
-
Contracts or (ii) any material non-competition agreements or any other
--
agreements or arrangements that limit or otherwise restrict the Company or any
of its subsidiaries or any successor thereto from engaging in or competing in
any line of business or in any geographic area. As used in this Agreement,
"Material Contract" shall mean a material contract as defined in Item 601(b)(10)
-----------------
of Regulation S-K of the SEC. Except, with respect to clauses (i), (ii) and
(iii) below, as would not, individually or in the aggregate, have or be
reasonably expected to result in a Material Adverse Effect, (i) all Material
-
Contracts are, with respect to the Company and its subsidiaries, valid and
binding, in full force and effect and enforceable
22
against the Company or its subsidiaries, as the case may be, in accordance with
their respective terms, except as may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or similar laws of general
applicability affecting or relating to the rights of creditors or by general
principles of equity; (ii) to the knowledge of the Company, all Material
--
Contracts are, with respect to the other parties thereto, valid and binding, in
full force and effect and enforceable against such parties in accordance with
their respective terms, except as may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or similar laws of general
applicability affecting or relating to the rights of creditors or by general
principles of equity; and (iii) there is not under any Contract to which the
---
Company or any of its subsidiaries is party or by which any of them or any of
their respective assets are bound, any existing default, or event, which after
notice or lapse of time, or both, would constitute a default, by the Company or
any of its subsidiaries, or to the knowledge of the Company, any other party.
4.17 Environmental Matters. Except as described in Section 4.17 of the
---------------------
Company Disclosure Letter or as would not have a Material Adverse Effect, (i)
-
the Company and its subsidiaries have at all times complied with all applicable
Environmental Laws, including compliance with all Permits and authorizations
required pursuant to all applicable Environmental Laws; (ii) the Company and its
--
subsidiaries are not the subject of any litigation related to any Environmental
Law with respect to any of the current or past operations of the Company or any
of its subsidiaries, or any of the currently or formerly owned, leased or used
property or assets of the Company or any of its subsidiaries; (iii) neither the
---
Company nor any of its subsidiaries, nor, to the knowledge of the Company, any
other person, has caused or taken any action that will result in any liability
or obligation on the part of the Company or any of its subsidiaries relating to
(x) the environmental conditions on, under, or about the real property or other
-
properties or assets currently or formerly owned, leased, operated or used by
the Company or any of its subsidiaries or (y) the past or present use,
-
management, handling, transport, treatment, generation, storage, disposal, or
release of any Hazardous Materials; and (iv) neither the Company nor any of its
--
subsidiaries is subject to any outstanding order from, or contractual or other
obligation with, any Governmental Entity or other person in respect of which the
Company or any of its subsidiaries may be required to incur costs arising from
the release or threatened release of a Hazardous Material. The representations
and warranties set forth in this Section 4.17 are the exclusive representations
and warranties of the Company regarding any matters arising under Environmental
Law.
4.18 Intellectual Property; Technology. Except as would not have a Material
---------------------------------
Adverse Effect or except as set forth in Section 4.18 of the Company Disclosure
Letter, (a) the conduct of the business of the Company and its subsidiaries as
-
currently conducted does not infringe upon or misappropriate the Intellectual
Property rights of any third party, and no claim has been asserted to the
Company that the conduct of the business of the Company and its subsidiaries as
currently conducted infringes upon the Intellectual Property rights of any third
party; (b) with respect to each item of Intellectual
-
23
Property owned by the Company or a subsidiary of the company and used in
connection with its business as currently conducted ("Company Owned Intellectual
--------------------------
Property"), the Company or such subsidiary of the Company is the owner of the
--------
entire right, title and interest in and to such Company Owned Intellectual
Property; (c) with respect to each item of Intellectual Property licensed to the
-
Company or a subsidiary of the Company ("Company Licensed Intellectual
-----------------------------
Property"), the Company or such subsidiary has the right to use such Company
--------
Licensed Intellectual Property in the continued operation of its respective
business pursuant to the terms of the license agreement governing the use of
such Company Licensed Intellectual Property; (d) the Company Owned Intellectual
-
Property is valid and enforceable, and has not been adjudged invalid or
unenforceable in whole or in part; (e) to the knowledge of the Company, no
-
person is engaging in any activity that infringes upon the Company Owned
Intellectual Property; (f) each license governing the use of the Company
-
Licensed Intellectual Property is valid and enforceable, is binding (except as
may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or similar laws of general applicability affecting or relating to the
rights of creditors or by general principles of equity) on the Company or its
subsidiary and, to the knowledge of the Company, all other parties to such
license, and is in full force and effect; (g) neither the Company nor any
-
subsidiary is, and, to the knowledge of the Company, no other party to any
license of the Company Licensed Intellectual Property is in breach thereof or
default thereunder; and (h) neither the execution of this Agreement nor the
-
consummation of the transactions contemplated hereby shall adversely affect any
of the Company's rights with respect to the Company Owned Intellectual Property
or the Company Licensed Intellectual Property. "Intellectual Property" means the
---------------------
United States and foreign trademarks, service marks, trade names, trade dress,
domain names, logos, business and product names, and slogans including
registrations and applications to register or renew the registration of any of
the foregoing; copyrights and registrations or renewals thereof; United States
and foreign letters patent and patent applications, including all reissues,
continuations, divisions, continuations-in-part or renewals or extensions
thereof; inventions, processes, designs, formulae, trade secrets, know-how,
confidential business and technical information; software and computer programs
of any kind whatsoever (including without limitation all modelling software in
both source code and object code versions) and all documentation relating
thereto; Internet websites; mask works and other semiconductor chip rights and
registrations or renewals thereof; and all other intellectual property and
proprietary rights, tangible embodiments of any of the foregoing (in any form or
medium including electronic media), and licenses of any of the foregoing.
4.19 Insurance. Section 4.19 of the Company Disclosure Letter contains a
---------
complete and correct list and summary description of all material insurance
policies maintained (including directors' and officers' liability insurance) by
or on behalf of the Company and its subsidiaries. The Company has made available
to the Parent complete and correct copies of all such policies together with all
riders and amendments thereto. Such policies are valid and in full force and
effect, and all premiums due thereon have been paid. The Company and its
subsidiaries have complied in all material respects with
24
the terms and provisions of such policies. The insurance coverage provided by
such policies (i) is on such terms (including, without limitation, as to
-
deductibles and self- insured retentions), (ii) covers such categories of risk
--
(including, without limitation, errors and omissions, property and casualty,
directors' and officers' liability, and workers' compensation liabilities
liability, securities liability, fiduciary liability, employment practices),
(iii) contains such deductibles and retentions, and (iv) is in such amounts as,
--- --
with respect to each of the criteria set forth in the foregoing clauses (i)
through (iv), is adequate and suitable for the business and operations of the
Company and its subsidiaries.
4.20 Rights Agreement. The Company Board has taken any and all necessary
----------------
action to authorize, and the Company has taken, or will take promptly, and
notwithstanding any other provision of this Agreement will continue to take
promptly, any and all necessary action to (i) render the Company's Rights
-
Agreement dated January 24, 1997 between the Company and Norwest Bank Minnesota,
N.A. as Rights Agent, as amended (the "Rights Agreement") inapplicable with
----------------
respect to the Offer and the Merger and (ii) ensure that (A) neither the Parent
-- -
or the Purchaser nor any of their Affiliates (as defined in the Rights
Agreement) or Associates (as defined in the Rights Agreement) is considered an
Acquiring Person (as defined in the Rights Agreement), (B) the provisions of the
-
Rights Agreement, including the occurrence of a Distribution Date (as defined in
the Rights Agreement), are not and shall not be triggered by reason of the
announcement or consummation of the Offer or the Merger, and (C) the Offer shall
-
be considered a Permitted Offer (as defined in the Rights Agreement).
4.21 Customers. Other than as set forth in Section 4.21 of the Company
---------
Disclosure Letter, since December 31, 2000 neither the Company nor any of its
subsidiaries has received any written notice, or to the knowledge of the
executive officers of the Company (as defined in Rule 3b-7 under the Exchange
Act, but without giving effect to the last sentence thereof), any oral notice
specifically providing, that (i) any customer of the Company or any of its
-
subsidiaries that accounted for in excess of $500,000 in gross revenues during
the 12 month period ended December 31, 2000, as reflected on the audited
statements of income and cash flows of the Company for such period, (x) has
-
ceased, or will cease, transacting business with the Company or such subsidiary
or (y) has materially reduced or will materially reduce the amount of business
-
it transacts with the Company or such subsidiary; or (ii) any loss of customers
--
or other event described in the foregoing clauses (x) or (y) has occurred which,
individually or in the aggregate, could reasonably be expected to result in a
loss of gross revenues for the 12 month period ending December 31, 2001 in
excess of $10,000,000, determined on a basis consistent with the historical
consolidated statements of income and cash flows of the Company and its
subsidiaries.
4.22 Employment Agreements. The Company has entered into written employment
---------------------
agreements with each of the individuals listed in Section 4.22 of the Company
Disclosure Letter in form satisfactory to the Parent (the "Key Employee
------------
25
Contracts"). Each of the Key Employee Contracts is in full force and effect and
---------
the Company has not taken any action, or omitted to take any action, which
action or omission contravenes or conflicts in any material respect with,
results in a material violation or breach of, or constitutes a material default
(or upon notice or lapse of time would constitute a material default) under, any
of the Key Employee Contracts.
4.23 Disclosure Documents. The information with respect to the Company and
--------------------
its subsidiaries that the Company furnishes to the Parent and the Purchaser for
use in the Schedule TO or the other Offer Documents will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made therein, in light of the circumstances under which
they are made, not misleading at the time the Schedule TO or any other Offer
Documents or any amendments or supplements thereto are mailed to the
stockholders of the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND THE PURCHASER
-------------------------------
As of the date hereof and as of the Effective Date, the Parent and the
Purchaser jointly and severally represents and warrants to the Company and
agrees as follows:
5.1 Existence; Good Standing; Corporate Authority. (i) The Purchaser is a
--------------------------------------------- -
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware; (ii) the Parent is a public limited company duly incorporated
--
and validly existing under the laws of England and Wales, and (iii) each of the
---
Purchaser and the Parent has all requisite power and authority to own, lease and
operate its properties and assets, and to carry on its business as now
conducted, except in each case where the failure to be so organized, existing or
in good standing or to have such power and authority would not, and would not
reasonably be expected to, (x) have a material adverse effect upon the business,
-
operations, results of operations, assets or financial condition of either the
Purchaser or the Parent or (y) materially adversely affect or delay the ability
-
of the Purchaser or the Parent to consummate the transactions contemplated
hereby.
5.2 Authorization, Validity and Effect of Agreements. Each of the Purchaser
------------------------------------------------
and the Parent has all requisite corporate power and authority to execute and
deliver this Agreement and to approve, fund, effect and implement the Offer and
the Merger and to consummate the other transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation by the Purchaser
and the Parent of the transactions contemplated hereby, including, without
limitation, the Offer and the Merger, and the execution and delivery of the
Financing Letter (as defined in Section 5.7), have been duly and validly
authorized by the respective Boards of Directors of the Purchaser and the
Parent, as applicable, and no other corporate proceedings on the part of the
Purchaser or
26
the Parent are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby other than (i) the Consent of the holders of
-
preferred ordinary shares of the Parent (the "Preferred Stockholder Consent")
-----------------------------
described in Section 5.2 of the disclosure letter delivered by the Parent and
the Purchaser to the Company (the "Purchaser Disclosure Letter"), (ii) the
--------------------------- --
Required Stockholder Approvals (as defined in Section 5.3), and (iii) the
---
approval by the boards of directors of the Parent and the Purchaser of the
Financing Documentation. This Agreement has been duly and validly executed and
delivered by the Purchaser and the Parent, and (assuming this Agreement
constitutes the valid and binding obligation of the Company) constitutes the
valid and binding obligation of each of the Purchaser and the Parent,
enforceable against the Purchaser and the Parent in accordance with its terms,
except as may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting or relating to enforcement of creditors' rights generally or by
general principles of equity.
5.3 Voting Requirements. The only votes of the holders of any class or
-------------------
series of shares or other securities of either the Parent or the Purchaser
necessary to approve and adopt this Agreement and the transactions contemplated
hereby are (i) the passing at an extraordinary general meeting of the
-
stockholders of the Parent (an "Extraordinary General Meeting") (or an
-----------------------------
adjournment thereof) and at any separate class meeting or meetings of certain
categories of such stockholders of the Parent which may be required (each, a
"Class Meeting") of the resolutions described in Section 5.3 of the Purchaser
-------------
Disclosure Letter by an affirmative vote of the stockholders representing 75% of
the shares entitled to vote at the Extraordinary General Meeting and each Class
Meeting (the "Required Stockholder Approvals"), in each case as necessary, inter
------------------------------
alia, to satisfy the conditions to the Consents disclosed in Section 5.2 and 5.4
of the Purchaser Disclosure Letter; (ii) the Preferred Stockholder Consent; and
--
(iii) any vote of the stockholders of the Purchaser required under Section 251
---
or Section 253, as the case may be, of the DGCL. Prior to the date of this
Agreement, (i) the Parent has been advised by the stockholders representing in
-
excess of 50% of the issued ordinary shares of the Parent that they intend to
enter into an irrevocable agreement to vote in favor of the resolutions
described in Section 5.3 of the Purchaser Disclosure Letter and (ii) the Parent
--
has obtained the Preferred Stockholder Consent, the effectiveness of which is
conditioned upon receiving the Required Stockholder Approvals.
5.4 No Violation. Neither the execution and delivery of this Agreement by
------------
the Purchaser and the Parent nor the consummation by them of the transactions
contemplated hereby will (i) subject to the Preferred Stockholder Consent and
-
the Required Stockholder Approvals, violate, conflict with or result in any
breach of any provision of the Articles of Incorporation or By-Laws of the
Purchaser or the Memorandum and Articles of Association, in each case as
amended, of the Parent; (ii) other than as set forth in Section 5.4 of the
--
Purchaser Disclosure Letter, contravene, conflict in any material respect with,
or result in a material violation or breach of, constitute a material default
(or with notice or lapse of time or both, would constitute a material default)
under, result in a right of termination of, or the creation of any
27
Encumbrance (other than Permitted Liens and any and all Encumbrances to be
created in connection with the Financing Documentation (as defined in Section
6.14)) upon, any note, bond, mortgage, indenture, deed of trust, license,
Permit, contract, agreement or commitment to which the Parent, the Purchaser or
any of the Parent's other subsidiaries is a party, or by which any of their
respective properties or assets is bound, and which is material to the business
of the Parent and its subsidiaries taken as a whole; (iii) other than filings
---
required under the HSR Act and filings pursuant to the EC Merger Regulation, the
UK Fair Trading Act 1973 and similar applicable competition, merger control,
antitrust or other laws, any applicable filings under federal and state
securities laws or state anti-takeover laws or filings in connection with the
maintenance of qualification to do business in other jurisdictions and any
Consents required or permitted to be made or obtained in connection with any of
the foregoing, require any Consent of any Governmental Entity, the lack of which
individually or in the aggregate would prevent or materially delay the
consummation of any of the transactions contemplated hereby; (iv) violate any
--
Laws applicable to the Purchaser or the Parent or any of their respective
assets, except for violations which individually or in the aggregate would not
materially impair the ability of the Parent or the Purchaser to consummate the
transactions contemplated hereby or (v) violate any Laws material to the
-
business of the Parent and its subsidiaries taken as a whole or any of their
respective assets that are material to the business of the Parent and its
subsidiaries taken as a whole.
5.5 Ownership of Shares. Except as set forth in Section 5.5 of the
-------------------
Purchaser Disclosure Letter, neither the Purchaser, the Parent nor any of their
respective affiliates is the beneficial owner of any Shares, or is party to, or
otherwise bound by, any agreement or arrangement regarding the voting of any
Shares.
5.6 Interim Operations of the Purchaser. The Purchaser 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.
5.7 Financing Letter. Attached to Section 5.7 of the Purchaser Disclosure
----------------
Letter is a copy of a financing letter (the "Financing Letter") from one or more
----------------
sources of financing (together with their affiliates, the "Financing Parties").
-----------------
The Financing Letter reflects the terms and conditions upon which the Financing
Parties have agreed to make financing available to the Purchaser in amounts
sufficient and on terms that would permit the Purchaser, subject to the terms
and conditions therein, to consummate the Offer, the Merger and the other
transactions contemplated hereby. As of the date of this Agreement, other than
the Financing Letter, neither the Parent nor the Purchaser has any agreement or
arrangement with any of the Financing Parties that relates to or materially
affects the financing of the Offer, the Merger or the other transactions
contemplated hereby.
5.8 Disclosure Documents. The information with respect to the Parent, the
--------------------
Purchaser and the Parent's other subsidiaries that the Parent furnishes to the
Company for
28
use in the Schedule 14D-9 or the Proxy Statement will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made therein, in light of the circumstances under which
they are made, not misleading at the time the Schedule 14D-9 or the Proxy
Statement or any amendment or supplement thereto is mailed to the stockholders
of the Company.
ARTICLE VI
COVENANTS
---------
6.1 Conduct of the Business of the Company. Except as contemplated by this
--------------------------------------
Agreement or as set forth in Section 6.1 of the Company Disclosure Letter,
during the period from the date of this Agreement to the Effective Time, the
Company and its subsidiaries will each conduct its operations according to its
ordinary course of business, and will use reasonable best efforts to preserve
intact its business organization and relationships with third parties and to
keep available the services of its officers and employees. The Company will make
its officers reasonably available to confer on a regular and frequent basis with
representatives of the Parent to report upon the status of operations. Without
limiting the generality of the foregoing, and except as otherwise expressly
contemplated by this Agreement or as set forth in Section 6.1 of the Company
Disclosure Letter, prior to the Effective Time, neither the Company nor any of
its subsidiaries will, without the prior written consent of the Parent:
(a) amend its certificate of incorporation or by-laws (or equivalent
instruments) adopt or implement any plan of consolidation, merger or
reorganization, or amend the terms of its outstanding securities;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of
additional options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any shares of capital stock of any class or any
securities convertible into shares of capital stock of any class, except as
required by any Plan or Company Stock Option Plan existing as of the date
hereof;
(c) adjust, split, combine or reclassify any shares 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;
(d) (i) create, incur or assume any indebtedness (including
-
obligations in respect of capital leases) other than (x) indebtedness in a
-
total aggregate amount of less than $1,000,000 or (y) trade indebtedness
-
incurred in the ordinary course of business; (ii) except in the ordinary
--
course of business, assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the
obligations of any person other than any
29
subsidiary of the Company; or (iii) make any loans, advances or capital
---
contributions to, or investments in, any person other than the Company or
any of the wholly-owned subsidiaries of the Company, except for loans or
advances to employees or customers in the ordinary course of business;
(e) except in the ordinary course of business, sell, transfer, lease,
license, mortgage or otherwise encumber or subject to any Encumbrance or
otherwise dispose of, any business, subsidiary, or assets (including
without limitation, receivables, leasehold interests or Intellectual
Property) that are material, individually or in the aggregate, to the
Company;
(f) make any capital expenditures in the aggregate for the Company and
its subsidiaries in excess of $1,000,000;
(g) (i) make any material Tax election, except in the ordinary course
-
of business, (ii) settle or compromise any pending or threatened suit,
--
action, Tax audit or claim in which the amount involved is greater than
$500,000 or which is material to the Company and its subsidiaries taken as
a whole, (iii) amend any Tax Return of the Company or any of its
---
subsidiaries which would result in the Company or any of its subsidiaries
incurring or increasing the cumulative Tax liability of the Company and its
subsidiaries for all Tax periods in any amount in excess of $500,000, or
(iv) change any of its methods of reporting material items of income and
--
deductions for Tax purposes from those employed in the preparation of the
Tax Returns of the Company for the taxable years ending December 31, 1999
and December 31, 2000, except as required by changes in law or regulation;
(h) waive or amend any term or condition of any confidentiality or
"standstill" or similar agreement to which the Company or any of its
subsidiaries is a party, unless the Company Board determines in good faith,
after consultation with outside counsel, that failure to do so would
constitute a breach of the Company Board's fiduciary duties to the
Company's stockholders under applicable law;
(i) other than (i) agreements which are terminable at will by the
-
Company or any of its subsidiaries without liability or (ii) entering into,
--
in the ordinary course of business, employment and consulting agreements
that provide for annual compensation on an individual basis, of no more
than $75,000, enter into or amend any legally binding employment,
severance, consulting or salary continuation agreements with any officers,
directors or employees or grant any increases in compensation or benefits
to employees other than increases to officers and employees in the ordinary
course of business of the Company and its subsidiaries;
30
(j) permit any material insurance policy naming the Company or any
subsidiary as a beneficiary or a loss payable payee to be canceled or
terminated except upon the scheduled expiration thereof, provided that such
policies are replaced upon expiration with comparable coverage not
substantially less favorable to the Company;
(k) except to the extent required by any existing collective
bargaining agreement or by the terms of written employment agreements as in
effect on the date of this Agreement, (i) increase the compensation payable
-
to or to become payable to, or pension or other fringe benefits or
perquisites to its present or former directors, employees, officers or
consultants, except for increases in the ordinary course of business in
salaries or wages of (x) present employees who are not executive officers
-
of the Company or any of its subsidiaries or (y) executive officers of the
-
Company or any of its subsidiaries not to exceed $25,000 per individual or
$200,000 in the aggregate, or (ii) accelerate the vesting, funding or
payment of any compensation payment or benefit;
(l) except as required under any existing collective bargaining
agreement or unless doing so would not, individually or in the aggregate,
result in increased liabilities or obligations on the part of the Company
and its subsidiaries in excess of $500,000, enter into or adopt any new, or
amend or renew any existing, Plan, any pension, retirement, profit or
fringe or welfare benefit plan, policy agreement or arrangement or any
collective bargaining agreement, other than as required by law;
(m) except in the ordinary course of business or as otherwise
permitted by this Section 6.1, (i) enter into any material lease, contract
-
or agreement or involving, individually or in the aggregate, obligations of
the Company and its subsidiaries in excess of $500,000, (ii) modify, amend
--
or terminate any material lease, contract or agreement to which the Company
or any of its subsidiaries is a party that involved, individually or in the
aggregate, payments or other consideration to or from the Company and its
subsidiaries in excess of $500,000 or (iii) waive, release or assign any
---
material rights or claims thereunder, having a value, individually or in
the aggregate, of more than $500,000;
(n) declare, set aside or pay any dividend or make any other
distribution or payment with respect to any Shares or other capital stock
or ownership interests (other than (A) with respect to the first and second
-
quarters of 2001 only, regular quarterly cash and stock dividends on the
Common Stock with record and payment dates consistent with past practice,
and in any case not to exceed $0.07 per share per quarter, and (B)
-
dividends and other distributions paid in the ordinary course of business
by any subsidiary to the Company or another wholly-owned subsidiary);
31
(o) directly or indirectly redeem, re-purchase or otherwise acquire
any shares of capital stock or other securities of or ownership interests
in the Company or of any of its Subsidiaries, except as required under any
Plans or Company Stock Option Plans;
(p) settle or compromise any pending or threatened Litigation, other
than (x) settlements of Litigations which involve solely the payment of
-
money (without admission of liability) not to exceed $100,000 in any one
case or $500,000 in the aggregate and (y) any Litigation by the Company or
-
any of its subsidiaries against the Parent, the Purchaser or any of the
Parent's other subsidiaries;
(q) except as required by the SEC, GAAP or applicable law, adopt any
change to any of its accounting principles, practices or methods;
(r) acquire (i) by merging or consolidating with, or by purchasing a
-
substantial portion of the assets of, or by any other manner, any
businesses or any corporations, partnerships, joint ventures, associations
or other business organizations or division thereof having, individually or
in the aggregate, a fair market value of $500,000 or more or (ii) any
--
assets that are material, individually or in the aggregate, to the Company,
except purchases in the ordinary course of business;
(s) take any action that would, or would reasonably be expected to,
(i) materially impair the ability of the Company, the Parent or the
-
Purchaser to consummate the Offer or the Merger in accordance with the
terms hereof or materially delay such consummation, (ii) result in any of
--
the representations and warranties of the Company set forth in this
Agreement that are qualified as to materiality in relation to a Material
Adverse Effect becoming untrue, or any of such representations and
warranties that are not so qualified becoming untrue in any material
respect, or (iii) result in any of the conditions to the Offer set forth in
---
Annex A or to the Merger set forth in Article VII not being satisfied; or
(t) agree or commit to do any of the foregoing.
6.2 Access to Information. From the date hereof to the Effective Time, but
---------------------
subject to applicable confidentiality agreements creating obligations to others
and excluding information provided to the Company Board with respect to this
Agreement and the transactions contemplated hereby, the Company shall, shall
cause its subsidiaries, officers, directors and employees to, and shall use its
reasonable best efforts to cause its auditors and other agents to, afford the
officers, employees, auditors and other agents of the Parent, and
representatives of and advisors to financing sources, reasonable access during
normal business hours to its officers, employees, agents, properties, offices,
plants and other facilities and to all books, records (including, without
limitation, Tax returns and work papers of the Company's independent auditors)
and contracts, and shall furnish
32
the Parent and such financing sources with all financial, operating and other
data and information as the Parent, through its officers, employees or agents,
or such financing sources may from time to time reasonably request. The Company
will promptly furnish to the Parent, at the Parent's expense and subject to the
Confidentiality Agreement, a copy of each material document filed or received by
it pursuant to the Federal, state, local, and foreign securities laws or Tax
laws or any Environmental Laws, and of such other documents as the Parent may
reasonably request. Notwithstanding termination of this Agreement, the terms of
the Confidentiality Agreement shall apply to all information that is furnished
under this Agreement by the Company or its agents to the Parent, the Purchaser
or any agent thereof. In addition, notwithstanding anything to the contrary in
this Section 6.2 or elsewhere in this Agreement, neither the Company nor any of
its subsidiaries, officers, directors, employees, auditors, agents,
representative or advisors shall have any obligation to provide to the Parent or
the Purchaser or any of their representatives or advisors any information (i)
-
regarding litigation or other legal proceedings between the Company or any of
its subsidiaries, on the one hand, and the Parent, the Purchaser or any of their
affiliates, on the other hand or (ii) regarding the matters set forth in Section
--
6.2 of the Company Disclosure Letter.
6.3 Stockholder Approvals.
---------------------
(a) If required by applicable law in connection with the consummation of
the Merger, as soon as practicable following the purchase of the Shares pursuant
to the Offer, the Company, acting through the Company Board shall, in accordance
with applicable law, take all steps necessary to duly call, set a record date
for, give notice of, convene and hold a meeting of its stockholders (the
"Company Stockholder Meeting") as soon as practicable for the purpose of
---------------------------
adopting and approving this Agreement and the transactions contemplated hereby.
At such meeting, the Parent and the Purchaser will each vote, or cause to be
voted, all Shares acquired in the Offer or otherwise beneficially owned by it or
any of its subsidiaries on the record date for such meeting, in favor of the
approval and adoption of this Agreement and the transactions contemplated
hereby.
(b) The Company shall, if required by law in connection with the
consummation of the Merger, as soon as practicable following the expiration of
the Offer, prepare and file a preliminary proxy statement or, if permitted by
applicable law, including the Exchange Act, an information statement that
complies with Regulation 14C thereunder (in either case, the "Proxy Statement")
---------------
with the SEC, and shall use all reasonable efforts to obtain and furnish the
information required to be included by it in the Proxy Statement and, after
consultation with the Parent, to respond promptly to any comments made by the
SEC or its staff with respect to the Proxy Statement and any preliminary version
thereof and cause the Proxy Statement to be mailed to its stockholders as
promptly as practicable after responding to all such comments to the
satisfaction of the SEC and its staff. The Company shall give the Parent and its
counsel the opportunity to review the Proxy Statement and all amendments and
supplements thereto, prior to their being filed with the SEC. The Company will
notify Parent
33
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 the Parent with copies
of all correspondence between the Company and 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. The Proxy Statement will contain the recommendations of
the Company Board as set forth in Section 1.2(a), except to the extent that the
Company Board shall have withdrawn or modified its approval or recommendation of
this Agreement or the Merger in accordance with Section 6.7(b), and the Company
Board will use all reasonable efforts to obtain the Company Stockholder
Approval. If at any time prior to the Company Stockholder Meeting there shall
occur any event that should be set forth in an amendment or supplement to the
Proxy Statement, the Company will promptly prepare and mail to its shareholders
such an amendment or supplement.
(c) The Company agrees that none of the information included or
incorporated by reference in the Proxy Statement or otherwise supplied by the
Company to its stockholders, including any amendments to any of the foregoing,
will be false or misleading with respect to any material fact or will 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; provided, that the foregoing shall not apply to
--------
information supplied by or on behalf of Parent or the Purchaser specifically for
inclusion or incorporation by reference in any such document.
(d) Notwithstanding the foregoing, if after the expiration of the Offer the
Purchaser shall be the owner of at least 90 percent of the outstanding Shares,
the parties hereto shall, at the request of the Parent or the Purchaser, take
all necessary and appropriate action to cause the Merger to become effective, as
soon as practicable after the expiration of the Offer and compliance with any
applicable rules of the SEC, without a meeting of shareholders of the Company,
if practicable, in accordance with Section 253 of the DGCL.
6.4 Reasonable Best Efforts. Subject to the terms and conditions provided
-----------------------
in this Agreement, each of the parties hereto agrees to use all its reasonable
best efforts to take, or cause to be taken, promptly all action, and to do, or
cause to be done, promptly all things necessary, proper or advisable to fulfill
and perform its obligations hereunder, to ensure that the conditions set forth
in Annex A hereto and Article VII hereof are satisfied, and otherwise to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement, including using its reasonable best
efforts (i) to obtain all necessary Consents, (ii) to effect all necessary
- --
registrations and filings, subject, however, to any approval of the Merger by
the stockholders of the Company required by law, and (iii) to obtain the
---
Required Stockholder Approvals.
34
6.5 Certain Filings, Consents and Arrangements. The Parent, the Purchaser
------------------------------------------
and the Company shall use their reasonable best efforts (i) to make promptly any
-
required submissions under the HSR Act, the EC Merger Regulation, the UK Fair
Trading Act 1973 and any other applicable competition, merger control or similar
law with respect to the Merger and the transactions contemplated by this
Agreement, and (ii) to obtain those Consents identified in Section 5.4 of the
--
Purchaser Disclosure Letter. Each of the Company, the Parent and the Purchaser
shall use its respective reasonable best efforts to obtain all Consents as are
required to be obtained from other parties to loan agreements or other Contracts
material to its respective business in connection with the consummation of the
Merger, including without limitation, in the case of the Company, those filings
and Consents identified on Section 4.6 of the Company Disclosure Letter.
6.6 Public Announcements. The Parent and the Company will consult with each
--------------------
other before issuing any press release or otherwise making any public statements
with respect to the Offer or the Merger and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or by obligations pursuant to any listing agreement with
any securities exchange.
6.7 No Solicitation.
---------------
(a) The Company and its subsidiaries shall, and shall direct and cause
their respective officers, directors, employees, representatives and agents to,
immediately cease all activities, discussions or negotiations, if any, with any
parties other than the Purchaser and the Parent conducted prior to the date
hereof with respect to an Acquisition Proposal and, to the extent within its
power and consistent with any confidentiality or similar agreements, to recover
or cause to be destroyed all information concerning the Company and its
subsidiaries in the possession of such parties and their affiliates,
representatives and advisers. The Company and its subsidiaries shall not, and
shall not authorize or permit any of their respective officers, directors or
employees or any investment banker, financial advisor, attorney, accountant or
other representative retained by it to, directly or indirectly, (i) solicit,
-
initiate or encourage (including by way of furnishing non-public information),
or take any other action to facilitate, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, an
Acquisition Proposal or (ii) participate in any discussions or negotiations
--
regarding an Acquisition Proposal; provided, however, that if, at any time prior
-------- -------
to the adoption of this Agreement by the holders of Common Stock, a majority of
the Company Board determines in good faith, after consultation with outside
legal counsel of nationally-recognized standing ("Outside Counsel"), that
---------------
failure to do so would or could reasonably be expected to constitute a breach of
its fiduciary duties to the Company's stockholders under applicable law, the
Company, subject to compliance with Section 6.7(c), response to an Acquisition
Proposal that (I) was unsolicited or that did not otherwise result from a breach
-
of this Section 6.7(a), and (II) constitutes a Superior Proposal, may (x)
-- -
furnish non-public information with respect to the Company and its subsidiaries
to the party who made such Acquisition Proposal pursuant to a confidentiality
agreement substantially in
35
the form of the Confidentiality Agreement (including the standstill provisions),
(y) participate in negotiations regarding such Acquisition Proposal and (z) take
- -
any of the actions set forth in Section 6.7(b) hereof in accordance with the
terms thereof. For purposes of this Agreement, "Acquisition Proposal" means (A)
-------------------- -
any proposal or offer from any person relating to any direct or indirect
acquisition or purchase of 20% or more of the assets of the Company or any of
its subsidiaries or the direct or indirect acquisition or purchase of 20% or
more of the outstanding shares of any class of outstanding equity securities of
the Company or any of its subsidiaries (except as may be explicitly permitted by
this Agreement), (B) any tender offer or exchange offer that if consummated
-
would result in any person beneficially owning 20% or more of any class of
equity securities of the Company or any of its subsidiaries, or (C) any merger,
-
consolidation, business combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries, other than, in each case, the transactions
contemplated by this Agreement. For purposes of this Agreement, a "Superior
--------
Proposal" means any bona fide written proposal submitted to the Company or
--------
Company Board by a third party to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, all or substantially all of
the voting power of the Common Stock of, or all or substantially all of the
assets of, the Company and its subsidiaries which the Company Board determines
in good faith after (i) taking into account all relevant factors, facts and
-
circumstances including without limitation (x) the respective terms, conditions
-
and structure of the transaction contemplated by this Agreement and the
transaction contemplated by such written proposal, including without limitation,
pricing terms, the type of consideration, financing conditions and
contingencies, regulatory conditions and impediments, other conditions,
termination rights, break-up or similar fees, expense reimbursement obligations
and the timing of the closing of the transaction, (y) the likelihood that each
-
such transaction will be consummated and (z) any changes to the terms of this
-
Agreement which as of the time of determination had been proposed by the Parent
or the Purchaser, and (ii) consulting with a financial advisor of nationally
--
recognized standing, is more favorable to the Company's stockholders than the
Offer and the Merger.
(b) Neither the Company Board nor any committee thereof shall (i) withdraw
-
or modify, or propose to withdraw or modify, in a manner adverse to the Parent
or the Purchaser, the approval or recommendation by such Company Board or such
committee of this Agreement, the Offer or the Merger, (ii) approve or recommend,
--
or propose to approve or recommend, an Acquisition Proposal or (iii) cause the
---
Company to enter into any letter of intent, agreement in principle, acquisition
agreement or other agreement (an "Acquisition Agreement") with respect to an
---------------------
Acquisition Proposal unless, in each case, (A) the Company Board shall have (x)
- -
complied with this Section 6.7 and (y) determined in good faith, after
-
consultation with Outside Counsel, that failure to do so would or could
reasonably be expected to constitute a breach of its fiduciary duties to the
Company's stockholders under applicable law, (B) the Company simultaneously
-
therewith terminates this Agreement pursuant to Section 8.1(e)(iv) and (C) no
-
such action
36
is taken earlier than the second full business day following the Parent's
receipt of written notice of the intention of the Company Board to do so.
(c) The Company shall promptly (but in any event within one business day)
advise the Parent and the Purchaser orally and in writing of any Acquisition
Proposal or any inquiry regarding the making of an Acquisition Proposal
including any request for information, the material terms and conditions of such
request, Acquisition Proposal or inquiry and the identity of the person making
such request, Acquisition Proposal or inquiry. The Company will, to the extent
reasonably practicable, keep the Parent and the Purchaser informed of the status
and details (including amendments or proposed amendments) of any such request,
Acquisition Proposal or inquiry.
(d) Nothing contained in this Section 6.7 shall prohibit the Company from
at any time taking and disclosing to its stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure
to the Company's stockholders if, in the good faith judgment of the Company
Board, after consultation with Outside Counsel, failure so to disclose would
constitute a breach of its fiduciary duties to the Company's stockholders under
applicable law; provided, however, neither the Company nor its Board of
-------- -------
Directors nor any committee thereof shall, except as permitted by Section
6.7(b), withdraw or modify, or propose to withdraw or modify, its position with
respect to the Merger or this Agreement or approve or recommend, or propose to
approve or recommend, an Acquisition Proposal; provided, further, that the
-------- -------
taking of a position by the Company pursuant to Rule 14e-2(a)(2) or (3) of the
Exchange Act in respect of an Acquisition Proposal shall not be deemed a
withdrawal, a modification or a proposal to do either, of its position with
respect to the Merger for purposes hereof.
6.8 Indemnification, Exculpation and Insurance.
------------------------------------------
(a) The parties hereto agree that all rights to indemnification and
exculpation from liabilities for acts or omissions occurring at or prior to the
Effective Time now existing in favor of the current or former directors or
officers of the Company and its subsidiaries as provided in their respective
articles of incorporation or by-laws (or similar organizational documents) shall
be assumed by the Surviving Corporation in the Merger, without further action,
at the Effective Time and shall survive the Merger and shall continue in full
force and effect in accordance with their terms for a period of not less than
six years from the Effective Time.
(b) For not less than six years after the Effective Time, the Parent shall
maintain in effect the Company's current directors' and officers' liability
insurance policy covering each person currently covered by such policy for acts
and omissions occurring prior to the Effective Time on terms with respect to
coverage and amounts that are no less favorable in any material respect to such
directors and officers than those of such policy as in effect on the date of
this Agreement; provided, however, that (i) the Parent may substitute therefor
-------- ------- -
policies of a reputable insurance company the material terms of which,
37
including coverage and amounts, are no less favorable in any material respect to
such directors and officers than the insurance coverage otherwise required by
this Section 6.8(b) and (ii) in no event shall the Parent and its subsidiaries
--
be required to pay annual aggregate premiums for insurance under this Section
6.8(b) in excess of 150% of the annual aggregate premiums currently paid by the
Company in respect of such coverage (the "Current Annual Premium"); provided
---------------------- --------
further, however, that the Parent shall nevertheless be obligated to provide
------- -------
such coverage as may be obtained for 150% of the Current Annual Premium. The
Company represents that the Current Annual Premium does not exceed $750,000.
(c) In the event that the Parent, the Surviving Corporation or any of their
successors or assigns (i) consolidates with or merges into any other person and
-
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all of its
--
properties and assets to any person, then, and in each such case, proper
provision will be made so that the successors and assigns of the Parent or the
Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 6.8. In the event the Surviving Corporation transfers any
material portion of its assets, in a single transaction or in a series of
transactions, the Parent will either guarantee the indemnification obligations
referred to in Section 6.8(a) or take such other action to insure that the
ability of the Surviving Corporation, legal and financial, to satisfy such
indemnification obligations will not be diminished in any material respect.
(d) The provisions of this Section 6.8 are for the benefit of, and will be
enforceable by, each indemnified party and his or her heirs.
6.9 Employees and Employee Benefit Plans. From and for a period of twelve
------------------------------------
months after the Effective Time, the Parent will cause the Surviving Corporation
and its subsidiaries to maintain employee compensation policies and benefit
plans for their respective employees that, in the aggregate, are substantially
similar to either, in the discretion of the Parent, (i) the compensation
-
policies and Plans of the Company and its subsidiaries as of the date hereof, or
(ii) those provided by the Parent and its affiliates to similarly situated
--
employees employed by companies in substantially similar businesses to that
engaged in by the Company. From and after the Effective Time, the Parent will
and will cause the Surviving Corporation and its subsidiaries to honor, in
accordance with their terms, the employment, severance, indemnification or
similar agreements between the Company and its subsidiaries and certain
employees (the "Employment Agreements") and each and every Plan. To the extent
---------------------
that employees of the Surviving Corporation or its subsidiaries become eligible
to participate in any employee benefit plan of the Parent or any of its
affiliates after the Effective Time, the Parent shall cause to be recognized
thereunder the service of such employees with the Company or its subsidiaries
completed prior to the Effective Time for all purposes of eligibility to
participate and vesting in its benefit plans (but not for purposes of benefit
accrual). If any employee is terminated following the purchase of Shares
pursuant to the Offer, the employee shall be paid for his
38
accrued but unused vacation time for periods prior to the Effective Time. Any
benefit plan which provides medical, dental or life insurance benefits after the
Effective Time to any individual who was an employee of the Company or its
subsidiaries (or a dependent thereof) shall, with respect to such individuals,
waive any waiting periods and any pre-existing conditions and actively-at-work
exclusions applicable to such individuals and shall provide that any expenses
incurred on or before the Effective Time by such individuals shall be taken into
account under such plans for purposes of satisfying applicable deductible or
coinsurance provisions.
6.10 Notification of Certain Matters. The Company will give prompt notice
-------------------------------
orally and in writing to the Parent and the Purchaser, and the Parent and the
Purchaser will give prompt notice to the Company, of the occurrence or non-
occurrence of any event likely to cause (a) any representation or warranty
-
contained in this Agreement which is qualified by materiality or by reference to
a Material Adverse Effect to be untrue or inaccurate in any respect or any
representation or warranty which is not so qualified to be untrue or inaccurate
in any material respect, (b) any failure of the Company, or of the Parent or the
-
Purchaser, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied under this Agreement, (c) a
-
Material Adverse Effect on such party, or (d) any of the conditions specified in
-
Annex A or Article VIII to fail to be satisfied, provided that the delivery of
any notice pursuant to this Section 6.10 will not limit or otherwise affect the
representations, warranties, covenants or agreements of the parties, the
conditions to the obligations of the parties hereunder or the remedies available
under this Agreement to the party receiving such notice.
6.11 Anti-takeover Statutes. The Company shall use its best efforts to
----------------------
ensure that no state takeover statute or similar law becomes applicable to the
Merger or the other transactions contemplated hereby. If any "fair price,"
"moratorium," "control share acquisition" or other form of anti-takeover statute
is or shall become applicable to the Offer, Merger or other transactions
contemplated hereby, the Company and the members of the Company Board shall
grant such approvals and, subject to the Company's rights under Section 6.7,
take such actions as are necessary (including, without limitation, amending the
Offer) so that the Offer, Merger and other transactions contemplated hereby may
be consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of any such anti-takeover
statute on the transactions contemplated hereby.
6.12 Stockholder Litigation. The Company shall consult with the Parent and
----------------------
keep the Parent regularly apprised as to the status of any stockholder
litigation against the Company and/or its directors and officers, whether or not
relating to the transactions contemplated by this Agreement, and shall not enter
into any settlement of any such stockholder litigation without the consent of
the Parent.
39
6.13 Availability of Witnesses. This Company will use its reasonable best
-------------------------
efforts to procure that any employee of the Company that is a potential key
witness in any matter disclosed in Section 4.8 of the Company Disclosure Letter
will enter into a severance agreement containing the provision set forth in
Section 6.13 of the Company Disclosure Letter hereto prior to any proposed
termination of such person's employment with the Company (regardless of whether
such termination is proposed by the Company or by such employee).
6.14 Execution of Financing Documentation. The Parent and the Purchaser
------------------------------------
shall use their respective reasonable best efforts to ensure that on or before
May 6, 2001 (the "Financing Documentation Deadline"), they shall have entered
--------------------------------
into a definitive loan or credit agreement or facility providing for financing
of the type contemplated by the Financing Letter (the "Financing
---------
Documentation"); provided, however, that this Section 6.14 shall not require the
------------- -------- -------
Parent or the Purchaser to enter into Financing Documentation with terms or
conditions materially more burdensome to the Parent and the Purchaser than those
contained in the Financing Letter. The Parent shall keep the Company apprised
about, and shall promptly respond to the Company's reasonable inquiries
regarding, the status of the negotiations and preparation of the Financing
Documentation and shall provide the Company and its counsel with copies of
substantially final drafts and execution copies of the Financing Documentation.
6.15 Obtaining Stockholder Approvals. The Parent and the Purchaser shall
-------------------------------
use their respective reasonable best efforts to ensure that on or before April
23, 2001 (the "Stockholder Approval Deadline"), they shall have obtained
-----------------------------
irrevocable agreements to vote in favor of the matters referred to in clause (i)
-
of Section 5.3 hereof from stockholders representing a sufficient number of
shares to pass the Required Stockholder Approvals. The Parent agrees to take, or
cause its affiliates to take, any and all actions necessary under Section 251
and Section 253 of the DGCL in order to consummate the Offer, the Merger and the
other transactions contemplated hereby, including, without limitation, voting in
favor of the Merger.
6.16 Repayment of Company Indebtedness. The Company agrees (i) to cooperate
--------------------------------- -
reasonably with the Parent and the Purchaser in obtaining financing for the
Offer and the Merger, including without limitation, providing (subject to
customary confidentiality arrangements reasonably satisfactory to the Company)
the Financing Parties and any other prospective finance provider with such
information as such Financing Party or other prospective finance provider may
reasonably request, and (ii) to use its reasonable best efforts to effect the
--
repayment, without penalty, of all of the Company's existing indebtedness upon
or prior to the consummation of the Offer, using the proceeds of facilities
available to Parent and its subsidiaries for such purpose; provided that nothing
--------
in this Section 6.16 shall require the Company or any of its subsidiaries to
take any action that could have a material adverse effect upon the business,
financial condition, results of operations or assets of the Company or any such
40
subsidiary in the event that the transactions contemplated hereby shall not be
consummated.
6.17 Stay of Litigation. Upon execution of this Agreement, the parties
------------------
shall immediately take, and shall cause their respective affiliates and the
officers, directors and employees of themselves and their affiliates to take,
all actions, including the filing of all motions and stipulations, that shall be
necessary to obtain entry of the stay orders attached hereto as Exhibit A.
6.18 Further Assurances. At and after the Effective Time, the officers and
------------------
directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of the Company or the Purchaser, any deeds,
bills of sale, assignments or assurances and to take and do, in the name of and
on behalf of the Company or the Purchaser, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the Surviving Corporation as
a result of, or in connection with, the Merger.
ARTICLE VII
CLOSING CONDITIONS
------------------
7.1 Conditions to the Obligations of the Parent, the Purchaser and the
------------------------------------------------------------------
Company. The respective obligations of each party to effect the Merger shall be
-------
subject to the satisfaction or waiver at or prior to the Effective Time of the
following conditions:
(a) The Purchaser shall have purchased all Shares duly tendered and not
withdrawn pursuant to the terms of the Offer and subject to the terms thereof,
provided that the obligation of the Parent and the Purchaser to effect the
--------
Merger shall not be conditioned on the fulfillment of the condition set forth in
this subsection (a) if the failure of the Purchaser to purchase the Shares
pursuant to the Offer shall have constituted a breach of the Offer or of this
Agreement.
(b) There shall not be in effect any statute, rule or regulation enacted,
promulgated or deemed applicable by any Governmental Entity of competent
jurisdiction that prevents the consummation of the Merger or makes such
consummation illegal, and no temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Merger shall be in effect, provided that the party seeking to avoid its
--------
obligations pursuant to this Section 7.1(b) shall have used its reasonable best
efforts to prevent the entry of any such injunction or other order and to appeal
as promptly as possible any injunction or other order that may be entered.
41
(c) If required under applicable law, this Agreement shall have been
approved and adopted by the affirmative vote of the holders of the requisite
number of Shares in accordance with the Constituent Documents of the Company and
the DGCL.
(d) The waiting periods (and any extension thereof) applicable to the
transactions contemplated hereunder under the HSR Act and any applicable
competition, merger control, antitrust or other regulatory laws shall have been
terminated or shall have expired and any necessary Consents with respect to such
transactions under any such laws (including, without limitation, Consents under
the EC Merger Regulation, the UK Fair Trading Act 1973 and the Consent of the UK
Personal Investment Authority) shall have been obtained (the "Competition and
---------------
Regulatory Law Condition").
------------------------
7.2 Conditions to the Obligations of the Parent and the Purchaser. The
-------------------------------------------------------------
obligations of the Parent and the Purchaser to consummate the Merger are subject
to the Company's performance at or before the Effective Time of its obligations
under Section 1.3(a).
ARTICLE VIII
TERMINATION AND ABANDONMENT
---------------------------
8.1 Termination. This Agreement may be terminated, and the offer and the
-----------
Merger contemplated hereby may be abandoned, at any time prior to the Effective
Time, whether before or after approval by the stockholders of the Company:
(a) by mutual consent of the Parent and the Company;
(b) by any of the Parent, the Purchaser or the Company if at least that
number of Shares required by the Minimum Condition to be tendered shall not have
been purchased in the Offer on or before July 31, 2001, provided that the right
--------
to terminate this Agreement pursuant to this Section 8.1(b) shall not be
available to any party whose failure to fulfill any material obligation under
this Agreement in all material respects has been the cause of, or resulted in,
the failure of the Offer or the Merger, as the case may be, to occur on or
before the aforesaid date;
(c) by any of the Parent, the Purchaser or the Company if the Offer shall
expire or terminate in accordance with its terms without any Shares having been
purchased thereunder and, in the case of termination by the Parent or the
Purchaser, the Purchaser shall not have been required by the terms of the Offer
or this Agreement to purchase any Shares pursuant to the Offer;
(d) by any of the Parent, the Purchaser or the Company (by action of the
Continuing Directors only following the purchase of Shares pursuant to the
Offer), if any Governmental Entity of competent jurisdiction shall have issued
an order, decree or
42
ruling or taken any other action (which order, decree, ruling or other action
the parties hereto shall use their best efforts to lift) restraining,
permanently enjoining or otherwise prohibiting the consummation of the Offer or
the Merger, and such order, decree, ruling or other action shall have become
final and non-appealable;
(e) by the Company:
(i) if the Parent or the Purchaser shall have failed to commence the
Offer or failed to pay for Shares pursuant to the Offer in each case in
accordance with Section 1.1(a), provided that (in the case of failure to
--------
pay for Shares) the conditions to the Offer set forth in Annex A shall have
been satisfied or either the Parent or the Purchaser has used their
reasonable best efforts to ensure that such conditions have been or can be
satisfied and provided further that the Company may not terminate this
-------- -------
Agreement pursuant to this Section 8.1(e)(i) if the Company is at such time
in breach of its obligations under this Agreement such as to cause a
Material Adverse Effect;
(ii) if any of the respective representations and warranties of the
Parent or the Purchaser that are qualified as to materiality shall not have
been true and correct or any such representations and warranties that are
not so qualified shall not have been true and correct in all material
respects, in each case as of the date when made or deemed made, which
failure to be true and correct or true and correct in all material respects
is not reasonably capable of being cured by the reasonable best efforts of
the Parent or the Purchaser within 30 days of the receipt by the Parent of
written notice thereof;
(iii) if the Parent or the Purchaser shall have failed to perform in
any material respect any obligation or to comply in any material respect
with any agreement or covenant applicable thereto to be performed or
complied with by it prior to the time of determination which failure is not
reasonably capable of being cured by the reasonable best efforts of the
Parent or the Purchaser within 30 days of the receipt by the Parent of
written notice thereof; or
(iv) if the Company takes any of the actions described in Section
6.7(b), provided, that the Company has complied with the provisions of
--------
Sections 6.7(b) and (c);
(v) if (A) on or before the Financing Documentation Deadline, the
-
Parent and the Purchaser shall have failed to enter into the Financing
Documentation, (B) the amount of financing available to the Purchaser under
-
the Financing Documentation shall be insufficient to consummate the Offer,
the Merger and the other transactions contemplated hereby, (C)
-
43
the Financing Documentation contains conditions which make the consummation
of the Offer, the Merger and the other transactions contemplated hereby
materially less likely than would be the case if the Financing
Documentation contained only those conditions described in the Financing
Letter or (D) as of the Financing Documentation Deadline, (x) the Financing
- -
Documentation shall not be in full force and effect or any party thereto
shall be in material breach or default thereunder or (y) the Parent or the
-
Purchaser shall have received any written or oral notice from the Financing
Parties that the Financing Parties do not intend to provide the financing
contemplated by the Financing Documentation (it being understood and agreed
that the Parent shall promptly notify the Company of the Parent's receipt
of any such notice); provided, however, that the Company can only exercise
-------- -------
its right of termination pursuant to this Section 8.1(e)(v) during the
three business day period immediately following the date of the Financing
Documentation Deadline (the "Financing Termination Period").
----------------------------
(f) by the Parent or the Purchaser:
(i) if the Offer has expired and, pursuant to Section 1.1 hereof, the
Purchaser is neither required to accept and pay for the Shares tendered
into the Offer nor extend the expiration date of the Offer or if any of the
events or circumstances set forth in Annex A hereto shall have occurred and
shall not be reasonably capable of being cured by the reasonable best
efforts of the parties hereto prior to the last date to which the Parent
and the Purchaser are required to extend the Offer pursuant to Section 1.1;
(ii) if due to an occurrence, not resulting from a breach by the
Parent or the Purchaser of their obligations hereunder, which makes it
impossible to satisfy any of the conditions set forth in Annex A hereto,
the Parent or the Purchaser shall have failed to commence the Offer on or
prior to ten business days following the date of the initial public
announcement of the Offer;
(iii) if prior to the purchase of Shares pursuant to the Offer, the
Company shall have breached any representation, warranty, covenant or other
agreement contained in this Agreement which (A) would give rise to the
-
failure of a condition set forth in paragraph (d) or (e) of Annex A hereto
and (B) cannot be or has not been cured, in all material respects, within
-
30 days after the giving of written notice to the Company;
(iv) if, whether or not permitted to do so, the Company shall have
taken any of the actions described in Section 6.7(b) or if the Company
Board shall have resolved to take any such action.
44
(v) if prior to the purchase of Shares pursuant to the Offer, the
Purchaser has failed to satisfy the Financing Condition; provided that
--------
neither the Parent nor the Purchaser may terminate this Agreement pursuant
to this Section 8.1(f)(v) until after the expiration of the Financing
Termination Period; and provided further, that the Purchaser may not
-------- -------
terminate this Agreement pursuant to this Section 8.1(f)(v) during any
extension of the Offer made at the request of the Company pursuant to
Section 1.1(a).
(g) by any of the Parent, the Purchaser or the Company if on or before the
Stockholder Approval Deadline, the Parent and the Purchaser shall have failed to
obtain irrevocable agreements sufficient to obtain the Required Stockholder
Approvals.
8.2 Procedure and Effect of Termination. In the event of termination and
-----------------------------------
abandonment of the Merger by the Parent, the Purchaser or the Company pursuant
to Section 8.1, written notice thereof shall forthwith be given to the other
parties hereto, and this Agreement shall terminate and the Merger shall be
abandoned, without further action by any of the parties hereto. The Purchaser
agrees that any termination by the Parent shall be conclusively binding upon it,
whether given expressly on its behalf or not, and the Company shall have no
further obligation with respect to it. If this Agreement is terminated as
provided herein, no party hereto shall have any liability or further obligation
to any other party to this Agreement, provided that any termination shall be
without prejudice to the rights of any party hereto arising out of breach by any
other party of any covenant or agreement contained in this Agreement, and
provided, further, that the obligations set forth in the last sentence of
Section 1.2(c), the last sentence of Section 6.2 and this Article VIII and
Article X shall in any event survive any termination.
8.3 Fees and Expenses.
-----------------
(a) Except as otherwise provided herein and as provided below in this
Section 8.3, all fees and expenses incurred in connection with the Offer, the
Merger, this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such fees or expenses, whether or not the Offer or the
Merger is consummated. Transfer, sales, stamp and other similar Taxes directly
or indirectly incurred as a result of the transactions contemplated by this
Agreement shall be paid by the Company.
(b) The Company shall promptly reimburse the Parent, or cause the Parent to
be reimbursed, for all Parent Expenses, up to a maximum of $1.5 million, if this
Agreement is terminated (x) by the Parent or the Purchaser pursuant to Section
-
8.1(f)(iv) or (y) by the Company pursuant to Section 8.1(e)(iv). For the
-
purposes of this Agreement, the term "Parent Expenses" means all documented
---------------
reasonable out-of-pocket expenses incurred by the Parent and its affiliates in
connection with or arising out of the Offer, the Merger, this Agreement and the
transactions contemplated hereby (including, without limitation, amounts paid or
payable to investment bankers, lead banks, dealer-managers and information
agents, fees and expenses of counsel, accountants and
45
consultants, commitment fees, underwriting fees and all printing and mailing
costs), so long as such expenses are incurred prior to the termination hereof.
(c) The Company shall promptly pay, or cause to be paid, to the Parent a
fee equal to $4.5 million (the "Termination Fee"), payable in same day funds, if
---------------
this Agreement is terminated (x) by the Parent or the Purchaser pursuant to
-
Section 8.1(f)(iv) or (y) by the Company pursuant to Section 8.1(e)(iv) and, in
-
either case, the Company, within six months of such termination enters an
Acquisition Agreement with a party other than the Parent, the Purchaser or any
of their affiliates pursuant to which an Acquisition Proposal is consummated. In
addition, whenever a Termination Fee is paid to the Parent, the Company shall
promptly reimburse the Parent, or cause the Parent to be reimbursed, for all
Parent Expenses not already reimbursed pursuant to Section 8.3(b), up to a
maximum of $2.7 million.
(d) If the Company exercises its right of termination pursuant to Section
8.1(e)(v), the Parent shall promptly reimburse the Company for all Company
Expenses, up to a maximum of $750,000. If any of the Parent, the Purchaser or
the Company exercise its right of termination pursuant to Section 8.1(g), the
Parent shall promptly reimburse the Company for all Company Expenses, up to a
maximum of $250,000. For the purposes of this Agreement, the term "Company
-------
Expenses" means all documented reasonable out-of-pocket expenses incurred by the
--------
Company and its affiliates in connection with or arising out of the Offer, the
Merger, this Agreement and the transactions contemplated hereby (including,
without limitation, fees and expenses of counsel, accountants and consultants
and all printing and mailing costs), so long as such expenses are incurred
following to the date of this Agreement but prior to the termination hereof.
(e) Any Termination Fee and reimbursement of Parent Expenses shall be paid
by wire transfer of same day funds to an account designated by the Parent within
two Business Days after a demand for payment by the Parent following termination
of this Agreement, provided that in the event of a termination of the Agreement
under Section 8.1(e)(iv), the Termination Fee and reimbursement of Parent
Expenses shall be paid as therein provided as a condition to the effectiveness
of such termination.
(f) Each of the Parent, the Purchaser and the Company acknowledges that the
agreements contained in this Section 8.3 are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
the Purchaser, the Parent and the Company would not enter this Agreement;
accordingly, the Company agrees that in the event that the Company shall fail to
pay any Parent Expenses or the Termination Fee when due, and the Parent agrees
that in the event the Parent shall fail to pay any Company Expenses when due,
Parent Expenses, the Termination Fee or the Company Expenses, whichever may be
due, shall be deemed to include the costs and expenses actually incurred or
accrued by the Parent and the Purchaser, or by the Company as the case may be,
(including, without limitation, fees and expenses of
46
counsel) in connection with the collection under and enforcement of this Section
8.3, together with interest on such unpaid Parent Expenses, Termination Fee or
Company Expenses, commencing on the date that such Parent Expenses, Termination
Fee or Company Expenses became due, at a rate equal to the rate of interest
publicly announced by Citibank, N.A., from time to time, in the City of New
York, as such bank's Base Rate plus 1.00%.
ARTICLE IX
FINANCING CONDITION
-------------------
9.1 Financing Condition. The Company acknowledges and agrees that the
-------------------
obligation of the Purchaser and the Parent to consummate the Offer is subject
to, in addition to the other Offer Conditions set forth in Annex A, the
Purchaser obtaining sufficient financing on terms and conditions satisfactory to
the Purchaser to enable consummation of the Offer and the Merger (the "Financing
---------
Condition"). Purchaser agrees to use its good faith, reasonable best efforts to
---------
satisfy the Financing Condition.
ARTICLE X
MISCELLANEOUS
-------------
10.1 Amendment and Modification. Subject to applicable law and to the
--------------------------
provisions of Section 1.3(c), this Agreement may be amended, modified or
supplemented only by written agreement of the Parent, the Purchaser and the
Company at any time prior to the Effective Time with respect to any of the terms
contained herein, provided that after the Company Stockholder Approval has been
obtained, no such amendment or modification shall be made that reduces the
amount or changes the form of the Merger Consideration or otherwise materially
and adversely affects the rights of the Company's stockholders hereunder,
without the further approval of such stockholders.
10.2 Procedure for Termination, Amendment, Extension or Waiver. A
---------------------------------------------------------
termination of this Agreement pursuant to Section 8.1, an amendment of this
Agreement pursuant to Section 10.1 or a waiver pursuant to Section 10.3 shall,
in order to be effective, require in the case of the Parent, the Purchaser or
the Company, action by its board of directors or the duly authorized designee of
its board of directors; provided, however, that in the event that the
Purchaser's designees are appointed or elected to the Company Board as provided
in Section 1.3, after the acceptance for payment of Shares pursuant to the Offer
and prior to the Effective Time, the affirmative vote of a majority of the
Continuing Directors 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, including, without limitation, the
Company's rights under Section 6.7 hereof, (iii) extend the time for performance
---
of the Parent's and the
47
Purchaser's respective obligations, (iv) take any action to amend or otherwise
--
modify the Company's Constituent Documents, or (v) take any action that would
-
adversely affect the rights of the stockholders of the Company or the holders of
Options with respect to the transactions contemplated hereby.
10.3 Waiver of Compliance; Consents. Any failure of the Parent or the
------------------------------
Purchaser, on the one hand, or the Company, on the other hand, to comply with
any obligation, covenant, agreement or condition herein may be waived or the
time for performance of any of the obligations of any of the parties by the
Company, the Parent or the Purchaser, respectively, extended only by a written
instrument signed by the party granting such waiver or extension (and, in the
case of the Company, approved in accordance with the provisions of Section
1.3(c), if applicable), but such waiver, extension or failure to insist upon
strict compliance with such obligation, covenant, agreement or condition shall
not operate as a waiver of, extension with respect to or estoppel with respect
to, any subsequent or other failure. Whenever this Agreement requires or permits
consent by or on behalf of any party hereto, such consent, waiver or extension
shall be given in writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section 10.3. The Purchaser hereby
agrees that any consent or waiver of compliance or extension of time for
performance given by the Parent hereunder shall be conclusively binding upon it,
whether given expressly on its behalf or not.
10.4 Nonsurvival 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.
10.5 Disclosure Letter. The Company Disclosure Letter and the Purchaser
-----------------
Disclosure Letter are hereby incorporated in this Agreement and made a part of
this Agreement for all purposes as if fully set forth in this Agreement. No
disclosure in the Company Disclosure Letter or the Purchaser Disclosure Letter
shall be deemed to be an admission or representation as to the materiality of
the item so disclosed.
10.6 Notices. Any notice required to be given hereunder shall be sufficient
-------
if in writing and sent by facsimile transmission (with a confirmatory copy sent
by overnight courier), by courier service (with proof of service), hand delivery
or certified or registered mail (return receipt requested and first-class
postage prepaid), addressed as follows:
48
If to the Purchaser or the Parent: If to the Company:
Xxxxxxxx Xxxxx Group PLC X.X. Xxxxxx Holdings, Inc.
00 Xxxxxxxxxxx 000 Xxxxx Xxxxx
Xxxxxx XX0X 0XX Suite 4500
United Kingdom Xxxxxx, Xxxxx 00000
X.X.X.
Telephone: 00 00 0000 0000 Telephone: 0 000 000 0000
Facsimile: 44 20 7578 7001 Facsimile: 1 214 756 7001
Attention: Xxxxxxx X. Xxxxxx, Group Attention: Xxxxxx X'Xxxxx
Legal Counsel General Counsel
With a copy to: With a copy to:
Debevoise & Xxxxxxxx Fried Xxxxx Xxxxxx Xxxxxxx and
International Financial Centre Xxxxxxxx
Tower 42 One New York Plaza
Old Broad Street New York, New York 10004
Xxxxxx XX0X 0XX X.X.X.
Xxxxxx Xxxxxxx
Telephone: 00 00 0000 0000 Telephone: 0 000 000 0000
Facsimile: 44 20 7588 4180 Facsimile: 1 212 859 4000
Attention: Xxxxxx X. Xxxxxx, Esq. Attention: Xxxxxxx Xxxxxxx, Esq./
Xxxxxx X. Xxxxxxxxxxx, Esq.
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date and time
of the confirmation of such telecommunication or the receipt of such personal
delivery or mailing. In addition, such notice shall be deemed delivered as of
the date communicated orally to the relevant person set forth above, provided
--------
that messages of any kind shall not constitute valid notice, and provided
--------
further that such oral communication shall constitute valid notice only if, and
-------
only to the extent that, it is followed within six hours by a written
confirmation sent to the appropriate party by facsimile transmission.
10.7 Assignment; Parties in Interest. This Agreement and all of the
-------------------------------
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but 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 the Purchaser may assign to the Parent or any other
direct or indirect wholly-owned subsidiary of the Parent any and all rights and
obligations of the Purchaser under this Agreement or the Purchaser's right to
purchase Shares pursuant to the Offer, provided that any such assignment will
not relieve the Parent or the Purchaser from any of its obligations under
49
this Agreement). Except for Section 1.3(c) which is intended for the benefit of
the Company's stockholders other than the Parent and its affiliates, and Section
6.8, which is intended for the benefit of the current former directors and
officers of the Company, this Agreement is not intended to confer upon any other
person except the parties hereto any rights or remedies under or by reason of
this Agreement.
10.8 Specific Performance. 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 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, this being in addition to any other remedy to which they
are entitled at law or in equity.
10.9 Governing Law. This Agreement shall be governed by the laws of the
-------------
State of Delaware (regardless of the laws that might otherwise govern under
applicable principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect, performance and remedies.
Each of the parties hereto irrevocably consents to the jurisdiction of any state
or federal court within the State of Delaware in connection with any matter
based upon or arising out of this Agreement or the matters contemplated herein,
agrees that process may be served upon it in any manner authorized by the laws
the State of Delaware for such persons and waives and covenants not to assert or
plead any objection which it might otherwise have to such jurisdiction or such
process.
10.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.11 Entire Agreement. This Agreement, including the annexes and the
----------------
exhibits and schedules to this Agreement, and the Confidentiality Agreement (as
amended through the date hereof), embody the entire agreement and understanding
of the parties hereto in respect of the subject matter contained herein and
supersede all prior agreements and the understandings between the parties with
respect to such subject matter.
10.12 Investigations. No action taken pursuant to this Agreement,
--------------
including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained in this Agreement.
10.13 Severability. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or
50
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
10.14 Interpretation; Definitions.
---------------------------
(a) The article and section headings contained in this Agreement are solely
for the purpose of reference, are not part of the agreement of the parties and
shall not in any way affect the meaning or interpretation of this Agreement.
Unless the context otherwise requires, words describing the singular number
shall include the plural and vice versa, and words denoting any gender shall
include all genders. Wherever 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, (i) the term "person" shall
-
mean and include an individual, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof; (ii) the term "business day" means any day on which commercial
--
banks are open for business in New York, New York other than a Saturday, Sunday
or a day observed as a holiday in New York, New York under the laws of the State
of New York or the federal laws of the United States; (iii) the terms
---
"affiliate" and "associate" shall have the meanings set forth in Rule l2b-2 of
the General Rules and Regulations promulgated under the Exchange Act, (iv) the
--
term "ordinary course of business" shall mean the ordinary course of business
consistent with past practices; (v) the term "subsidiary" of any specified
-
corporation shall mean any corporation of which the outstanding securities
having ordinary voting power to elect a majority of the board of directors are
directly or indirectly owned by such specified corporation; (vi) the phrase "to
--
the knowledge" of any specified corporation shall refer to the actual knowledge
of the directors or senior officers (including the general counsel or principal
legal officer) of such corporation, after due inquiry.
(b) The following terms shall have the following meanings ascribed to them:
"Company Stock Option Plans" means (i) the Company's Employee Stock
-------------------------- -
Purchase Plan, (ii) the Company's 1993 Stock Incentive Plan, (iii) the Company's
-- ---
1997 Stock Incentive Plan, (iv) the Company's Directors' Stock Option Plan, (v)
-- -
the K2 Technologies, Inc. 1994 Stock Plan, (vi) the K2 Technologies, Inc. 1996
--
Stock Option Plan, (vii) the K2 Technologies, Inc. 1998 Key Person Stock Option
---
Plan and (viii) the Company's 2000, Stock Incentive Plan.
----
"Consent" means, with respect to any person, any consent, approval, waiver,
-------
clearance decision or authorization of, such person.
"Confidentiality Agreement" means the Confidentiality Agreement, dated
-------------------------
November 28, 2000, between the Parent and the Company.
51
"EC Merger Regulation" shall mean Regulation 4064/899/EC concerning the
--------------------
control of concentrations between undertakings adopted by the Council of
European Communities on December 21, 1989 as amended.
"Environmental Law" means any foreign, federal, state or local law,
-----------------
statute, regulation, rule, ordinance, decree, or any other requirement of law
(including common law) regulating or relating to the protection of human health
and safety or the environment, including, but not limited to, laws relating to
releases or threatened releases of Hazardous Materials into the environment.
"GAAP" means United States generally accepted accounting principles.
----
"Hazardous Materials" means any substance or material that is classified or
-------------------
regulated as "hazardous" or "toxic" pursuant to any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls, petroleum
and urea-formaldehyde insulation.
"Permits" means all federal, state, local and foreign franchises,
-------
approvals, authorizations, franchises, licenses, orders, registrations,
certificates, filings, variances, notices and other similar permits or rights
obtained from any Governmental Entity, including, without limitation, all
Permits required to conduct insurance or reinsurance brokerage business in any
jurisdiction in which the Company or any of its subsidiaries conducts such
business.
"Permitted Lien" means (a) Encumbrances securing Taxes, assessments,
-------------- -
governmental charges or levies, all of which are not yet due and payable or as
to which adequate reserves have been established that are included in the most
recent consolidated financial statements included in the Company Reports and
that may thereafter be paid without penalty (unless such penalty has been
adequately reserved for), (b) mechanics', carriers', workmen's, repairmen's, and
-
other similar Encumbrances incurred in the ordinary course of business, or (c)
-
such other liens which, individually and in the aggregate, do not and would not
materially detract from the value of the property and assets of the Company and
its subsidiaries taken as a whole or materially interfere with the use thereof.
"Tax" means any tax, assessment or other governmental charge imposed by any
---
federal, state, provincial, local government or other political subdivision or
agency thereof, including any income, alternative minimum, accumulated earnings,
personal holding company, franchise, capital stock, profits, windfall profits,
gross receipts, sales, use, value added, transfer, registration, stamp, premium,
excise, customs duties, severance, real property, personal property, ad valorem,
occupancy, license, occupation, employment, payroll, social security,
disability, unemployment, workers' compensation, withholding, estimated or other
similar tax, assessment or other governmental charge, including penalties,
interest and additions thereto.
52
"Tax Return" means any return, report or similar statement required to be
----------
filed with respect to any Tax (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
DEFINITIONS
-----------
Defined Term Section Reference
------------ -----------------
Acquisition Agreement 6.7(b)
Acquisition Proposal 6.7(a)
Agreement Preamble
By-laws 2.5(b)
Certificates 3.2(a)
Certificate of Incorporation 2.5(a)
Certificate of Merger 2.3
Class Meeting 5.3
Closing Date 2.2
Code 4.10(b)
Common Stock Recitals
Company Preamble
Company Board 1.2(a)
Company Disclosure Letter 4.3
Company Expenses 8.3(d)
Company Licensed Intellectual 4.18(c)
Property
Company Owned Intellectual Property 4.18(b)
Company Reports 4.7
Company Stockholder Approval 4.15
Company Stockholder Meeting 6.3(a)
Company Stock Option Plans 10.14(b)
Competition and Regulatory Law 7.1(d)
Condition
Confidentiality Agreement 10.14(b)
Consent 10.14(b)
Constituent Documents 4.1
Continuing Director 1.3(a)
Contract 4.6
Current Annual Premium 6.8(b)
DGCL 2.1
Dissenting Shares 3.1(d)
Dissenting Stockholder 3.1(d)
EC Merger Regulation 10.14(b)
Effective Time 2.3
Employment Agreements 6.9(ii)
Encumbrances 4.5
Environmental Law 10.14(b)
53
ERISA 4.11(c)
ERISA Affiliate 4.11(c)
Exchange Act 1.2(b)
Exchange Fund 3.2(a)
Extraordinary General Meeting 5.3
Financing Condition 9.1
Financing Documentation 6.14
Financing Documentation Deadline 6.14
Financing Termination Period 8.1(e)(v)
Financing Letter 5.7
Financing Parties 5.7
GAAP 10.14(b)
Governmental Entity 4.3
Hazardous Material 10.14(b)
HSR Act 4.6
Information Statement 1.3(b)
Intellectual Property 4.18
Key Employee Contracts 4.22
Laws 4.3
Lazard Freres 4.12
Litigation 4.8
Material Adverse Effect 4.1
Material Contract 4.16
Merger Preamble
Merger Agreement Recitals
Merger Consideration 3.1(c)
Minimum Condition 1.1(a)
Offer Recitals
Offer Documents 1.1(b)
Offer Price Recitals
Offer to Purchase 1.1(b)
Option 3.1(e)
Option Consideration 3.1(e)
Outside Counsel 6.7(a)
Parent Preamble
Parent Expenses 8.3(c)
Paying Agent 3.2(a)
PBGC 4.11(c)
Permits 10.14(b)
Permitted Lien 10.14(b)
Plan 4.11(a)
Preferred Stock 4.4
Preferred Stockholder Consent 5.2
Proxy Statement 6.3(b)
54
Purchaser Preamble
Purchaser Designees 1.3(c)
Purchaser Disclosure Letter 5.2
Regulatory Filings 4.6
Required Stockholder Approvals 5.3
Rights Agreement 4.20
Schedule TO 1.1(b)
Schedule 14D-9 1.2(b)
SEC 1.1(a)
Securities Act 4.7
Shares Recitals
Stockholder Approval Deadline 6.15
Superior Proposal 6.7(a)
Surviving Corporation 2.1
Tax 10.14(b)
Tax Return 10.14(b)
Termination Fee 8.3(c)
55
IN WITNESS WHEREOF, the Parent, the Purchaser and the Company have
caused this Agreement to be signed by their respective duly authorized officers
as of the date first above written.
XXXXXXXX XXXXX GROUP PLC
By_______________________
Name:
Title:
BARREL ACQUISITION CORPORATION
By_______________________
Name:
Title:
X.X. XXXXXX HOLDINGS, INC.
By_______________________
Name:
Title:
56
ANNEX A
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CONDITIONS TO THE OFFER
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Agreement and Plan of Merger (the "Agreement") of
---------
which this Annex A is a part.
Notwithstanding any other provision of the Offer, the Purchaser shall not
be required to accept for payment, or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to the Purchaser's obligation to pay for or return tendered Shares promptly
after the termination or withdrawal of the Offer), to pay for any Shares not
theretofore accepted for payment or paid for, and the Purchaser (subject to any
such applicable rules and regulations of the SEC) may delay the acceptance for
payment of or the payment for any tendered Shares and (except as provided in the
Agreement) amend or terminate the Offer as to such Shares not theretofore
accepted for payment or paid for if (i) the Minimum Condition has not been
-
satisfied or waived, (ii) the Competition and Regulatory Law Condition has not
--
been satisfied, (iii) the Financing Condition has not been satisfied (provided,
---
however, that the Purchaser shall not be allowed to terminate the Offer pursuant
to this clause (iii) prior to the expiration of the Financing Termination
Period), (iv) the Required Stockholder Approvals have not been passed at an
--
Extraordinary General Meeting (or an adjournment thereof) and at any Class
Meetings which may be required of the Parent, or (v) if at any time on or after
-
the date of the Merger Agreement and at or before the time that the Shares are
accepted for payment any of the following conditions exists and is continuing:
(a) there shall have been instituted or be pending any action, suit or
proceeding by or on behalf of any Governmental Entity that has a reasonable
likelihood of success (i) challenging or seeking to make illegal, delay beyond
-
July 31, 2001 or otherwise directly or indirectly prohibit the making of the
Offer, the acceptance for payment of any Shares by the Parent or the Purchaser,
or the consummation of the Merger or (ii) seeking to require divestiture by the
--
Parent or the Purchaser of any Shares; or
(b) there has been any statute, rule, regulation, injunction, order or
decree, enacted, enforced, promulgated, issued or deemed applicable to the Offer
or the Merger, by any Governmental Entity that results in any of the
consequences referred to in clauses (i) and (ii) of paragraph (a) above; or
(c) the Agreement shall have been terminated in accordance with its
terms or any event shall have occurred which gives the Parent or the Purchaser
the right to terminate the Agreement or not consummate the Merger; or
A-1
(d) (i) any representation or warranty of the Company contained in the
Agreement (disregarding all qualifications and exceptions contained therein
relating to materiality or Material Adverse Effect or any similar standard or
qualification), shall not be true in any respect that, individually or in the
aggregate (when taken together with all other representations and warranties
that are not true and correct), has had or would reasonably be likely to have a
Material Adverse Effect, as of the date of determination, as if made at and as
of such time (except to the extent that any such representation or warranty, by
its terms, is expressly limited to a specific date, in which case such
representation or warranty shall not be true and correct as of such date),
provided that such breaches are incapable of being cured or have not been cured
prior to the initial expiration date for the Offer (or such later date upon
which the Offer shall expire in accordance with Section 1.1(a) of the
Agreement); or
(e) the Company shall have failed to perform or comply with, any of
its obligations, covenants or agreements contained in the Agreement, and such
failure, either individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect, provided that such failures to
perform are incapable of being cured or have not been cured prior to the initial
expiration date for the Offer (or such later date upon which the Offer shall
expire in accordance with Section 1.1(a) of the Agreement); or
(f) there shall have occurred (i) any general suspension of trading
-
in, or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market in the United States or the United Kingdom
(other than a shortening of trading hours or any coordinated trading halt
triggered solely as a result of a specified increase or decrease in a market
index), (ii) a declaration of a banking moratorium or any suspension of payments
--
in respect of banks in the United States or the United Kingdom, (iii) a
---
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States or the United
Kingdom or (iv) in the case of any of the foregoing existing at the time of the
--
execution of the Agreement, a material acceleration or worsening thereof; or
(g) the Board of Directors of the Company or any committee thereof,
(i) shall have withdrawn or modified in a manner adverse to the Parent or the
-
Purchaser (including by amendment of the Schedule 14D-9) its approval or
recommendation of the Offer, the Merger or the Agreement or (ii) shall have
--
resolved to do any of the foregoing;
(h) the Company or any of its subsidiaries (or the Company Board of
Directors, or any committee thereof) shall have approved, recommended,
authorized, or proposed any Acquisition Proposal, or shall have resolved to do
any of the foregoing; or
(i) there shall have occurred and be continuing any event occurrence,
development or state of circumstances that, either individually or in the
aggregate, has had or is reasonably likely to have, a Material Adverse Effect
provided that such Material Adverse Effect is incapable of being cured or has
not been cured prior to the initial
A-2
expiration date for the Offer (or such later date upon which the Offer shall
expire in accordance with Section 1.1(a) of this Agreement);
which, in the good faith reasonable judgment of the Purchaser with respect to
each and every matter referred to above and regardless of the circumstances
(including any action or inaction by the Purchaser or any of its affiliates not
inconsistent with the terms hereof) giving rise to any such condition, makes it
inadvisable to proceed with the Offer or with such acceptance for payment of or
payment for Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of the Purchaser and may
be asserted or may (except for the Minimum Condition) be waived by the Purchaser
in whole or in part at any time and from time to time in its sole discretion.
The failure by the Purchaser 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 other 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. Any determination by the Parent or the Purchaser to terminate the
Offer will be final and binding, but shall not affect any rights of any party
under the Agreement. Notwithstanding the fact that the Parent and the Purchaser
reserve the right to assert the failure of a condition following acceptance for
payment but prior to payment in order to delay payment or cancel their
obligation to pay for properly tendered Shares, the Parent and the Purchaser
will either promptly pay for such Shares or promptly return such Shares. Should
the Offer be terminated pursuant to the foregoing provisions, all tendered
Shares not theretofore accepted for payment pursuant thereto shall forthwith be
returned to the tendering shareholders.
A-3
