Exhibit 2
BUSINESS AMALGAMATION AGREEMENT
This Business Amalgamation Agreement (this "Agreement") is made the 30th
day of May, 2002 between those partners in the firm of Bacon & Xxxxxxx whose
names are set out in Schedule 1 hereto (the "Continuing Partners"); Xxxxxx
Holdings L.L.C. (an Illinois limited liability company) whose registered office
is at 100 Half Day Road, Lincolnshire, Illinois 60069, U.S.A. ("Xxxxxx"); and
Xxxxxx Associates, Inc. (a Delaware corporation) whose registered office is at
0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, X.X.X. (the "Xxxxxx Company").
RECITALS:
WHEREAS, Bacon & Xxxxxxx is a partnership of consulting actuaries whose
principal place of business is at Xx. Xxxx Xxxxx, Xxxxxx Xxxxxx Xxxx, Xxxxxx XX0
0XX;
WHEREAS, Bacon & Xxxxxxx is engaged in the business of providing Actuarial
Services and investment services (the "Business");
WHEREAS, Xxxxxx is an Illinois limited liability company and the Xxxxxx
Company is a Delaware corporation;
WHEREAS, the Original Continuing Partners and Xxxxxx entered into a certain
preliminary agreement (the "Heads of Agreement") that reflects the discussions
concerning a combination of the Business with Xxxxxx;
WHEREAS, the Heads of Agreement contemplates that the terms on which the
Business would be combined with Xxxxxx would be further negotiated and set forth
in a definitive agreement that would supersede and replace the Heads of
Agreement; and
WHEREAS, the parties wish to enter into this Agreement as such definitive
agreement;
NOW IT IS HEREBY AGREED as follows:
ARTICLE I
DEFINITIONS
1.1. In this Agreement, unless the context otherwise requires, the
following definitions have the following meanings:
"Actuarial Services" means services which are generally provided by a
qualified actuary, or which involve the giving of advice on the quantification
of financial or statistical risks.
"Additional Amount" shall have the meaning set forth in the Continuing
Partners' Service Agreements.
"Additional Bonuses" shall have the meaning set forth in the Continuing
Partners' Service Agreements.
"Additional Reward Pool" shall have the meaning set forth in the Continuing
Partners' Service Agreements.
"Adverse Claims" shall mean all of the following, whether direct or
indirect, accrued, absolute or contingent: (i) security interests, liens,
pledges, charges, escrows, options, proxies, rights of first refusal, preemptive
rights, mortgages, assignments, title retention agreements, indentures and
security agreements, (ii) voting agreements and proxies; and (iii) any other
encumbrances and restrictions of any kind, except for restrictions under
applicable securities laws.
"Agreed Form" in relation to a document means that document in the form
agreed by Xxxxx Xxxxxx, Xxxx Xxxx or X.X. Xxxxxxxx III on behalf of Xxxxxx and
by Xxxxx Xxxxxx and any one of the Management Group on behalf of the Continuing
Partners.
"Allocable Management Profit" has the meaning contained in Schedule 2.
"Assumed Liabilities" means all liabilities and obligations of Bacon &
Xxxxxxx as of the Closing (whether known or unknown, asserted or unasserted,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due
or to become due), other than the Excluded Liabilities.
"Authorized Partners" has the meaning given to it in Section 22.3.
"Bacon & Xxxxxxx" means the partnership of Bacon & Xxxxxxx constituted by
the Bacon & Xxxxxxx Partnership Deed.
"Bacon & Xxxxxxx Partnership Deed" means the Bacon & Xxxxxxx Partnership
Deed dated July 19, 1994 as amended from time to time.
"Business Information" means any information or know-how, in whatever form,
relating to the business of any party communicated at any time between the date
of the Heads of Agreement and Closing by or on behalf of any party (or any of
that party's subsidiaries or its or such subsidiary's partners, owners,
employees, agents or advisers) to any other party (or any of such other party's
subsidiaries or any partner, owner, employee, agent or adviser of such other
party or of any such subsidiary).
"Business Purchase Agreement" means an agreement substantially in the form
of Exhibit 1.
"Change of Control" with respect to Xxxxxx or the Xxxxxx Company means that
any Person or group (within the meaning of Rule 13d-5 under the Securities
Exchange Act of 1934 (the "Exchange Act") and Sections 13(d) and 14(d) of the
Exchange Act) becomes, directly or indirectly, the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act (in a single transaction or in a
related series of transactions, by way of merger, consolidation or other
business combination or otherwise), of greater than 50% of the total voting
power entitled to vote
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in the election of the executive committee of Xxxxxx or the Xxxxxx Company, as
the case may be, or any successor or other Person surviving the transaction.
"Closing" means the completion of the transactions described in Section
2.1.
"Closing Date" means the date on which the Closing occurs, to be the later
of (i) June 5, 2002, (ii) 1 business day (excluding national holidays in the
United Kingdom) after satisfaction or waiver of all conditions to Closing set
forth in Articles XVI and XVII (other than those to be satisfied on the Closing
Date) or (iii) such other date as may be agreed by Xxxxxx and the Management
Group.
"Deed of Assumption" means the agreement to be entered into substantially
in the form of Schedule 3 to the Business Purchase Agreement relating to the
annuities currently in payment to or in respect of certain retired partners of
Bacon & Xxxxxxx.
"Employee Benefit Plan" means any (a) Employee Pension Benefit Plan, (b)
Employee Welfare Benefit Plan, or (c) any other bonus, incentive, severance,
stock option, stock purchase, short-term disability plan or other material
fringe benefit plan, program or arrangement, including policies concerning
holidays, vacations and salary continuation during short absences for illness or
otherwise.
"Employee Pension Benefit Plan" means any plan, fund or program established
or maintained that provides retirement income to employees or results in a
deferral of income by employees.
"Employee Welfare Benefit Plan" means any plan, fund or program established
or maintained for the purpose of providing through the purchase of insurance or
otherwise, medical, surgical or hospital care or benefits in the event of
sickness, accident, disability, death or unemployment, or vacation benefits,
apprenticeship or other training programs or day care centers, scholarship funds
or prepaid legal services.
"Employee Trust" means the Bacon & Xxxxxxx Employee Share Trust established
by Bacon & Xxxxxxx Service Company Limited on March 28, 2002 pursuant to the
Trust Deed substantially in the form of Exhibit 2.
"Excluded Liabilities" means the following liabilities of Bacon & Xxxxxxx:
(a) the amount of any deductible applicable to any professional
indemnity insurance cover taken out by the Continuing Partners prior to
Closing but only to the extent that:
(i) such deductible applies to a liability or claim which is
known about by the Continuing Partners as at Closing; and
(ii) no accrual shall have been made for such deductible in
preparing the Closing Date Balance Sheet;
and, in any event not for any amounts in excess of such deductible.
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(b) any liability for deferred annuities for the Continuing
Partners other than any such liability as a result of or in connection
with the death or disability of any Continuing Partner;
(c) any liability for (i) income tax payable by the Continuing
Partners in respect of their own incomes and (ii) national insurance
contributions payable in respect of the Continuing Partners for a
period of time in excess of thirty (30) days prior to Closing (it
being understood that (A) any national insurance contributions payable
by Newco in respect of the Continuing Partners for their employment by
Newco post Closing shall be borne by Newco if Bacon & Xxxxxxx has
incorporated the Business and (B) any national insurance contributions
payable by the Continuing Partners following the Closing but prior to
the Xxxxxx Company IPO in excess of the amounts payable by such
Continuing Partners as partners in Bacon & Xxxxxxx shall be borne by
Newco);
(d) any liability for unused holiday entitlement of the Original
Continuing Partners in excess of the amounts set forth in Schedule B
to their Service Agreements;
(e) any liability to provide health insurance, life insurance,
pension or death benefits to the Continuing Partners other than any
such liability as a result of, or in connection with, the death or
disability of any Continuing Partner prior to the closing of the
Xxxxxx Company IPO as set forth in the Service Agreements; and
(f) any liability arising out of the conduct or operation of the
Insurance Business.
"Guidelines" means the document in the agreed form dated January 2001 and
entitled "Working Together - A Guidance Note for the Employee Benefits Division
of Bacon & Xxxxxxx and Xxxxxx Associates".
"Xxxxxx Associates" means Xxxxxx Associates L.L.C., an Illinois limited
liability company.
"Xxxxxx Company" means Xxxxxx Associates, Inc., a Delaware corporation,
which has been incorporated by Xxxxxx as the vehicle for an IPO of Xxxxxx'x
global business.
"Xxxxxx Company Shares" means, in the case of those shares to be issued to
the Continuing Partners, the shares of Class B Common Stock and Class C Common
Stock of the Xxxxxx Company or, in the case of those shares to be issued to the
Employee Share Trust, shares of Class A Common Stock of the Xxxxxx Company.
"Xxxxxx Incorporation" means the transfer of all of the membership
interests of Xxxxxx Associates from Xxxxxx to the Xxxxxx Company in
consideration for the issue by the Xxxxxx Company of its Class B Common Stock to
Xxxxxx.
"Xxxxxx Operating Agreement" means the Xxxxxx Holdings L.L.C. Operating
Agreement as amended and in force on 1st March, 2001 and as further amended from
time to time.
"Xxxxxx Owner" means a member of Xxxxxx.
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"Xxxxxx Preferred Shares" means the preferred stock of the Xxxxxx Company
having the terms set forth on Exhibit 3.
"Xxxxxx Surplus Amount" shall have the meaning set forth in the Continuing
Partners' Service Agreements.
"Xxxxxx Surplus Share" shall have the meaning set forth in the Continuing
Partners' Service Agreements.
"Incorporation" means the transfer of the Business to Newco pursuant to the
Business Purchase Agreement.
"Incorporation Date" means the date on which completion of the Business
Purchase Agreement takes place which shall be the date on which the Xxxxxx
Incorporation occurs or if the Xxxxxx Incorporation does not occur during a
business day of the Business, the first business day after the date on which the
Xxxxxx Incorporation occurs.
"Independent Valuer" means an independent international firm of chartered
accountants, with a significant presence in the US and the UK, which shall be
agreed by the parties or, in the absence of agreement within 21 days of any
party requesting the referral of any matter to them, appointed at the request of
either party by the Institute of Chartered Accountants in England and Wales.
"Insurance Business" means the former insurance consulting business of
Bacon & Xxxxxxx comprising the provision of actuarial and management consultancy
advice and software in relation to life insurance, health insurance and general
insurance which was transferred to Deloitte & Touche on April 30, 2001.
"IPO" means the consummation of the first public offering pursuant to an
effective registration statement under the Securities Act, other than on Form
S-4 or S-8 or their then equivalents or any successor form thereto, covering the
offer and sale by the Xxxxxx Company of its shares of Class A Common Stock.
"Knowledge" or words of similar meaning, (i) with respect to any Continuing
Partner or member of the Management Group means such person's actual knowledge
after reasonable inquiry, and (ii) with respect to Xxxxxx means the actual
knowledge of any member of the Xxxxxx Executive Committee after reasonable
inquiry.
"Management Group" means the Management Group of Bacon & Xxxxxxx which
consists of Xxxxxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxx Xxxxx, Xxxx Xxxxxx and Xxxxx
Xxxxxx as of the date hereof.
"Newco" shall mean Xxxxxx Bacon & Xxxxxxx an unlimited liability company
incorporated on March 18, 2002.
"Original Continuing Partners" means those Continuing Partners listed in
Part A of Schedule 1.
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"Participating Partners" means (i) those individuals who are Continuing
Partners at the date hereof and immediately prior to Incorporation; (ii) the
Employee Trust; and (iii) those individuals who are admitted as equity partners
in Bacon & Xxxxxxx after the date hereof with the written consent of Xxxxxx, in
its sole discretion.
"Parties" means (i) Xxxxxx, (ii) the Xxxxxx Company and (iii) the
Continuing Partners.
"Partnership Committee" means the Partnership Committee of Bacon & Xxxxxxx
which consists of Xxxxxxx Xxxxx, Xxxxxxxx Xxxxxxxxxxx, Xxxxxxx Xxxxxx,
Xxxx Xxxxx and Xxxxx Xxxxxx as of the date hereof.
"Retired Partner Annuity Costs" means the sum of:
(a) the total of all Buyout Amounts paid pursuant to Clause 3.1 of the
Deed of Assumption; plus
(b) the aggregate capital value of the Assumed Annuities payable to the
Continuing Annuitants (both as defined in the Deed of Assumption)
determined on the following basis:
(i) after allowing for the increase pursuant to sub-clause 4.1(a) of
the Deed of Assumption;
(ii) assuming six percent, per annum interest;
(iii) allowing for annuity increases of 2.5 per cent, per annum; and
(iv) assuming mortality in accordance with the standard tables PMA 92
and PFA 92, using the calendar year 2001; minus
(c) the sum of(pound)2.71 million.
"Securities Act" means the US Securities Act of 1933, as amended.
"Service Agreements" means the employment contracts between Newco and each
of the Original Continuing Partners substantially in the form contained in
Schedule 4, and between Newco and each of the 2002 Partners (other than the
Employee Trust) substantially in the form contained in Schedule 5 (as the case
may be) to the Business Purchase Agreement relating to the employment of these
Original Continuing Partners and 2002 Partners following Incorporation.
"Subsidiary" of a specified person means a corporation, body corporate or
other legal entity (i) at least fifty percent (50%) of whose shares or other
securities entitled to vote for the election or removal of directors (or other
managing authority), or the majority of whose voting rights is now or hereafter
controlled by such person (or a Subsidiary thereof) either directly or
indirectly; or (ii) which does not have outstanding shares or securities but
fifty percent (50%) or more of whose ownership interests representing the right
to manage such corporation or other legal entity is owned and controlled by such
person (or a Subsidiary thereof) either directly or indirectly.
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"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not, and whether or not accrued on the Financial Statements, and
including national insurance contributions.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement filed or required to be filed with any taxing
authority with respect to Taxes, including any schedule or attachment thereto,
and including any amendment thereof.
"Total Benefits Administration" means the business of Xxxxxx that
encompasses the strategy, design and implementation of outsourced benefits
administration services (defined contribution, defined benefit and health and
welfare). Total Benefits Administration also covers the strategy, design and
implementation of Xxxxxx'x XX delivery business for any individual or
combination of point solutions within that business offering, which covers
workforce administration, payroll, workforce relations, recruiting/deployment,
rewards management, learning and development, performance management and
workforce planning.
"Transition Period" means the period commencing on the date hereof and
ending on the earlier of the Closing Date or termination of this Agreement.
"2002 Partners" means those Continuing Partners listed in Part B of
Schedule 1 to this Agreement.
"UK Country Manager" means Xxxxxxx Xxxxx, or his successor determined in
accordance with Section 9.
"UK GAAP" means United Kingdom generally accepted accounting principles as
in effect from time to time.
"US GAAP" means United States generally accepted accounting principles as
in effect from time to time.
1.2. Words and expressions defined in the Xxxxxx Operating Agreement shall,
unless the context otherwise requires, have the same meanings when used herein.
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ARTICLE II
TRANSACTION STRUCTURE AND
EXCHANGE OF EQUITY INTERESTS
2.1. The Transaction.
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Subject to Section 2.2, the following shall take place in the following
order:
(a) At least one business day (excluding national holidays in the
United Kingdom) prior to the Closing Date, Xxxxxx shall cause the Xxxxxx
Incorporation to occur;
(b) On or prior to Incorporation, Bacon & Xxxxxxx shall (i) pay to
each of the Continuing Partners the estimated amount standing to the credit
of that Continuing Partner in the books of Bacon & Xxxxxxx less an amount
representing his share of the tax reserves of Bacon & Xxxxxxx, and (ii)
transfer to any person, entity or other vehicle designated by the
Partnership Committee an amount equal to the tax reserves of Bacon &
Xxxxxxx, to be held on behalf of the Continuing Partners pending settlement
of their tax liabilities;
(c) On the Incorporation Date, the Continuing Partners, Newco and the
Xxxxxx Company shall enter into and complete the Business Purchase
Agreement pursuant to which, inter alia;
(i) the benefit of the Business shall be transferred to Newco
(excluding any interest of the Continuing Partners in the assets
described in Section 11.2);
(ii) Newco shall assume the Assumed Liabilities, including,
without limitation the liability to meet certain payments payable by
Bacon & Xxxxxxx to former partners of Bacon & Xxxxxxx and their
spouses and dependants set forth in Schedule 2 to the Business
Purchase Agreement;
(iii) Newco and the Xxxxxx Company shall enter into a service
agreement with each Original Continuing Partner and each 2002 Partner
(other than the Employee Trust) in the form contained in Schedule 4 or
5 (as the case may be) to the Business Purchase Agreement governing
the terms upon which such Original Continuing Partner or 2002 Partner
will be employed by Newco; and
(iv) Newco shall issue to each Participating Partner the number
of ordinary shares in Newco set out against his name in Schedule 1 to
the Business Purchase Agreement (or such other number thereof as the
Participating Partners may agree). The Articles of Association of
Newco shall provide that the shares of Newco are not transferable to
anyone other than Xxxxxx, the Xxxxxx Company or a Continuing Partner.
(d) Prior to Closing, the Continuing Partners shall procure the
passing of a special resolution to re-register Newco as a limited company;
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(e) Upon Closing:
(i) each Participating Partner shall sell, transfer and convey to
the Xxxxxx Company all right, title and interest in and to all of the
shares in Newco held by such Participating Partner, free and clear of
all Adverse Claims;
(ii) in consideration therefor, the Xxxxxx Company shall issue
and allot to each Participating Partner, credited as fully paid, the
number of Xxxxxx Preferred Shares set out against that Participating
Partner's name in Exhibit 4 (or such other number thereof as the
Participating Partners may agree so long as the aggregate number of
Xxxxxx Preferred Shares issued by the Xxxxxx Company to Participating
Partners does not change), free and clear of all Adverse Claims; and
(iii) the Xxxxxx Company shall assume, in favor of the Continuing
Partners, all of the obligations of Xxxxxx under this Agreement and
any other agreement, document or instrument referred to herein,
executed in connection herewith, or otherwise related hereto
(collectively, the "Transaction Documents") and Xxxxxx shall be
discharged and released of all of its obligations under the
Transaction Documents.
(f) Save as provided in Section 2.2, upon the exercise by the
Participating Partners of their put right or the exercise by the Xxxxxx
Company of its call right, in each case pursuant to the terms of the Xxxxxx
Preferred Shares, and in accordance with the time frame for determining the
Exchange Consideration pursuant to Section 2.3(a), the Xxxxxx Company shall
redeem all of the Xxxxxx Preferred Shares held by the Participating
Partners in consideration for the allotment and issue to each of the
Participating Partners, free and clear of all Adverse Claims and credited
as fully paid, of that number of Xxxxxx Company Shares as equals the same
proportion of the Exchange Consideration which the number of Xxxxxx
Preferred Shares held by that Participating Partner bears to the total
number of Xxxxxx Preferred Shares issued pursuant to Section 2.1(e)(ii)
above.
2.2. Closing Prior to Anticipated IPO. If the Xxxxxx Incorporation has not
occurred on or prior to February 28, 2003, or, prior to that date, Xxxxxx
determines not to proceed with the Xxxxxx Incorporation, either Xxxxxx or the
Authorized Partners may terminate this Agreement upon written notice to the
other. Xxxxxx and the Continuing Partners shall thereafter negotiate in good
faith the means by which Xxxxxx may acquire the Business in a manner consistent
with this Agreement.
2.3. Exchange Consideration. The aggregate number of Xxxxxx Company Shares
issuable in consideration for the redemption of the Xxxxxx Preferred Shares (the
"Exchange Consideration") shall be determined as follows:
(a) Subject to Section 2.3(e), the aggregate number of Xxxxxx Company
Shares to be issued upon redemption of the Xxxxxx Preferred Shares shall be
equal to (i) the product of (pound)140,000,000 multiplied by the Exchange
Rate divided by (ii) the Xxxxxx Company Share Price. The shares issued in
exchange for the Xxxxxx Preferred Shares held by the Employee Trust shall
consist of shares of Class A Common Stock of the Xxxxxx
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Company. The shares issued in exchange for the Xxxxxx Preferred Shares held
by the Participating Partners shall consist of Class B Common Stock and
Class C Common Stock of the Xxxxxx Company in the amounts set forth on
Exhibit 4. Such amounts have been determined based on Bacon & Woodrow's
good faith estimate of the Enhanced Exit Payments of the Continuing
Partners for the most recent Bacon & Xxxxxxx fiscal year. As soon as
practicable following the Closing, Bacon & Xxxxxxx and the Xxxxxx Company
shall recalculate the Enhanced Exit Payments of the Continuing Partners
based on the actual results of operations of Bacon & Xxxxxxx for the most
recent fiscal year. To the extent such Enhanced Exit Payments as
recalculated by Bacon & Xxxxxxx and the Xxxxxx Company would result in a
greater allocation to a Continuing Partner of Class B Common Stock than the
amounts set forth on Exhibit 4, the Xxxxxx Company shall convert the shares
of Class C Common Stock held by such Continuing Partner to shares of Class
B Common Stock in accordance with the terms of the Xxxxxx Company
Certificate of Incorporation. The "Xxxxxx Company Share Price" means the
average closing price per share of Class A Common Stock of the Xxxxxx
Company on the national securities exchange or national market system on
which such shares are traded as reported by such national securities
exchange or national market system for the five (5) trading days commencing
after the twenty-fifth (25th) day following the closing date of the Xxxxxx
Company IPO. The "Exchange Rate" means the average rate of exchange of US
Dollars per Pound Sterling for the five (5) trading days commencing after
the twenty-fifth (25th) day following the closing date of the Xxxxxx
Company IPO as quoted in the Wall Street Journal.
(b) The Xxxxxx Company Shares to be distributed pursuant to paragraph
(a) above shall be delivered to the Participating Partners (subject to
reduction for the shares deposited into escrow pursuant to Section 2.4) as
promptly as practicable following determination of the aggregate number of
shares to be delivered. Such Xxxxxx Company Shares (as well as the Xxxxxx
Preferred Shares in respect of which they have been issued and any shares
held pursuant to the Escrow Agreement) shall be subject to the restrictions
on transfer, and provisions relating to surrender of such shares defined in
Exhibit 5 and which Xxxxxx undertakes will be no less favorable to the
Participating Partners than those applicable to the Xxxxxx Owners.
Accordingly, where a Continuing Partner would have been treated more
favorably under rules applicable to Xxxxxx Owners generally, or under terms
applicable generally to Xxxxxx Owners subject to conditions which the
Continuing Partner fulfills, the Continuing Partner may elect to be subject
to those rules in place of those otherwise applicable to him. The
Continuing Partners agree to execute such documents as are necessary to
effectuate those restrictions and provisions relating to surrender of the
shares (the "Share Transfer Restriction Agreements") so long as the
restrictions in such documents are no less favorable than those imposed
upon the Xxxxxx Owners and are otherwise consistent with Exhibit 5. If the
Xxxxxx Owners are permitted to sell their Xxxxxx Company Shares in the
Xxxxxx Company IPO, the Participating Partners shall be permitted to sell
their Xxxxxx Company Shares in the Xxxxxx Company IPO on terms which are no
less favorable than those which are applicable to the Xxxxxx Owners and
otherwise consistent with this Agreement; Xxxxxx and Xxxxx & Xxxxxxx shall
agree upon a mechanism by which the Participating Partners may participate
in such sale opportunity notwithstanding the fact the Exchange
Consideration has not been issued to the Participating Partners in respect
of their Xxxxxx Preferred Shares.
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(c) The aggregate number of Xxxxxx Company Shares to be allocated to the
Participating Partners (or as they shall direct) pursuant to paragraph (a) above
shall be allocated amongst the Participating Partners in the proportions in
which they held the Xxxxxx Preferred Shares (or in such other proportions as the
Participating Partners may agree so long as the aggregate number of Xxxxxx
Preferred Shares and Xxxxxx Company Shares issued by the Xxxxxx Company to the
Participating Partners does not change). Without limiting the foregoing, (i) if
any one or more of the Continuing Partners has retired from (or is no longer
active in) the Business before the Closing, the Continuing Partners may
re-allocate the Xxxxxx Company Shares amongst the Participating Partners in any
manner they so choose and (ii) in the event of the admission of partners to, or
the withdrawal of partners from, Bacon & Xxxxxxx prior to Closing, the
Continuing Partners may also re-allocate the Xxxxxx Company Shares to equitably
account for the admission or withdrawal of such partners.
(d) [Reserved]
(e) If the Closing does not occur on or prior to September 30, 2003, the
figure of(pound)140,000,000 referred to in Section 2.3(a) shall be adjusted on
the basis described in this Section 2.3(e). The Independent Valuer shall
determine (i) the consolidated income of Xxxxxx and its Subsidiaries for the
four quarters ended September 30, 2003 (the "Baseline Net Income"), and (ii) the
consolidated pre-tax net income of Xxxxxx and its Subsidiaries for the last four
full quarters prior to the Closing (the "Pre-Closing Net Income"), in each case
in accordance with US GAAP but excluding items characterized as "extraordinary
items" under US GAAP. The(pound)140,000,000 referred to in Section 2.3(a) shall
be multiplied by a fraction equal to the Pre-Closing Net Income divided by the
Baseline Net Income. If after September 30, 2002, but prior to Closing, Xxxxxx
or any of its Subsidiaries effects any material acquisition, disposal or other
transaction which has a material effect on the assets available to produce the
consolidated pre-tax net income of Xxxxxx then the Independent Valuer shall make
such adjustments to his calculations under this Section 2.3(e) as shall be just
and equitable to rebase the calculation following such acquisition, disposal or
other transaction so as to remove from the calculation any distortion caused by
that acquisition, disposal or other transaction but to take into account any
rate of increase or reduction in pre-tax net income both before and after it.
The Independent Valuer shall be an expert and not an arbitrator. The Independent
Valuer shall be instructed to produce his report initially in draft for
discussion by the parties prior to finalization thereof. However, in the absence
of any agreement between Xxxxxx and the Authorized Partners to the contrary
within 6 weeks following receipt by the parties of the draft report either party
shall be entitled to instruct the Independent Valuer to finalize his report
which shall, in the absence of manifest error, be final and binding on the
parties. The foregoing provisions of this Section 2.3(e) shall apply only if the
Closing occurs on or prior to September 30, 2013.
(f) If prior to the Closing Xxxxxx consummates a Sale Transaction (defined
below), the Continuing Partners shall receive Sale Consideration (defined below)
at the Closing having a value equal to (i) (pound)140,000,000 plus (ii) ten
percent (10%) of the aggregate Sale Consideration payable to the holders of
common stock of the Xxxxxx Company (or if the Xxxxxx Incorporation shall not
have occurred, payable to the Xxxxxx
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Owners in respect of the business conducted by Xxxxxx Associates) in
the Sale Transaction in excess of $2.6 billion.
If following the Closing but prior to the Xxxxxx Company IPO, Xxxxxx
consummates a Sale Transaction, the Continuing Partners shall receive
additional Sale Consideration having a value equal to ten percent
(10%) of the aggregate Sale Consideration payable to the holders of
common stock of the Xxxxxx Company in the Sale Transaction in excess
of $2.6 billion. Such additional consideration shall be paid to the
Continuing Partners at the closing of the Sale Transaction.
The term "Sale Transaction" means (i) the sale of all or substantially
all of the assets of the Xxxxxx Company on a consolidated basis to an
unrelated person or entity or (ii) a sale of stock, merger,
reorganization consolidation or other transaction, regardless of how
structured, in which the holders of the Xxxxxx Company's outstanding
voting power immediately prior to such transaction do not own a
majority of the outstanding voting power of the surviving or resulting
entity immediately upon completion of such transaction, excluding the
Xxxxxx Company IPO. The term "Sale Consideration" means the
securities, cash or other property in any combination thereof,
receivable in respect of the Xxxxxx Company Shares in the Sale
Transaction.
(g) If an Enhanced Exit Payment (as defined in the Service
Agreements of the Original Continuing Partners) becomes payable to an
Original Continuing Partner by Newco under his Service Agreement
within two (2) years prior to the closing of the Xxxxxx Company IPO,
the Exchange Consideration will be reduced by the amount of such
Enhanced Exit Payment.
2.4. Escrow. Notwithstanding Section 2.3, six percent (6%) of the Xxxxxx
Preferred Shares otherwise deliverable to the Participating Partners shall be
delivered to an escrow agent acceptable to Xxxxxx and the Continuing Partners
(the "Escrow Agent") to be held to support the obligations of the Participating
Partners pursuant to this Agreement and released pursuant to the terms of an
escrow agreement substantially in the form of Exhibit 6 (the "Escrow
Agreement"), dated the Closing Date, by and among the Xxxxxx Company, the
Continuing Partners (or their representative) and the Escrow Agent (such shares
being referred to as the "Escrow Shares"). Upon the closing of a Sale
Transaction pursuant to Section 2.3(f), that portion of the Sale Consideration
as shall have been paid or is payable in respect of those Xxxxxx Preferred
Shares or Xxxxxx Company Shares held pursuant to the Escrow Agreement (or if the
Xxxxxx Incorporation shall not have occurred at the time of the Sale
Transaction, Sale Consideration having a value equal to (pound)8,400,000) shall
remain in an escrow account and held to support the obligations of the
Participating Partners hereunder pursuant to an escrow agreement on
substantially similar terms as the Escrow Agreement.
2.5. Closing. The Closing shall take place on the Closing Date at the
offices of XxXxxxxxx, Will & Xxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000, or at such other place as may be agreed upon by Xxxxxx and the Authorized
Partners. If it occurs, the Closing shall be deemed to take place as of the
opening of business (Chicago time) on the Closing Date.
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2.6. Deliveries by Xxxxxx. At the Closing, Xxxxxx shall deliver or cause to
be delivered, the following:
(a) the Xxxxxx Preferred Shares in accordance with Section 2.1;
(b) a certificate of Xxxxxx and the Xxxxxx Company certifying as to
the continued accuracy of the representations and warranties and compliance
with covenants as required by Section 17.1 and as to the absence of any
professional indemnity claim described in Section 19.1(c);
(c) the legal opinion of XxXxxxxxx, Will & Xxxxx, substantially in the
form attached as Exhibit 7;
(d) a Deed of Substitute Guarantee in the form attached as Exhibit 8
hereto with respect to the Continuing Partners' guarantees of the leases
for the premises located at Xxxxxxxx 0, Xxxx 0, Xxxx Xxxxxx Xxxxxx, Xxxxxx
XX0;
(e) a Deed of Indemnity in the form attached as Exhibit 9 hereto in
respect of the guarantee obligations of the Continuing Partners relating to
Xxxxxxxx Xxxxx, Xxxxxx Xxxx, Xxxxx, Xxxxxx; and
(f) such other instruments or documents as may be necessary or
reasonably appropriate to carry out the Closing.
2.7. Deliveries by Continuing Partners. At the Closing, the Continuing
Partners shall deliver or cause to be delivered to Xxxxxx and the Xxxxxx Company
the following:
(a) duly executed share transfers in favor of the Xxxxxx Company in
respect of the whole of the issued share capital of Newco together with
share certificates in the names of the Participating Partners in respect
thereof, and, to the extent requested by the Xxxxxx Company, evidence of
the resignation or removal of directors (other than nominees to remain on
the board of Newco pursuant to Section 9.5) and the company secretary of
Newco and its Subsidiaries, as of the Closing;
(b) a certificate of Bacon & Xxxxxxx certifying as to the continued
accuracy of the representations and warranties (on the basis that
references to Bacon & Xxxxxxx shall be treated as references to Newco) and
compliance with covenants as required by Section 16.1 and as to the absence
of any professional indemnity claim described in Section 19.1(c);
(c) the legal opinion of Xxxxxxxxx and May, substantially in the form
attached as Exhibit 10;
(d) a certificate of the Authorized Partners certifying that the
Service Agreements have been executed and delivered by each Continuing
Partner; and
(e) such other instruments or documents as may be necessary or
reasonably appropriate to carry out the Closing.
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2.8. Closing Agreements. At the Closing, the appropriate parties shall
execute, acknowledge and deliver the following:
(a) a Share Transfer Restriction Agreement consistent with Section
2.3(b) and Exhibit 5 executed and delivered by the Xxxxxx Company and each
Participating Partner;
(b) a Lock-Up Agreement in a form consistent with Exhibit 5 agreed to
between Xxxxxx and the underwriters in connection with the Xxxxxx Company
IPO executed and delivered by Xxxxxx and each Participating Partner;
(c) the Escrow Agreement; and
(d) such other instruments or documents as may be necessary or
reasonably appropriate to effect the Closing.
2.9. Closing Date Balance Sheet.
(a) Within one hundred twenty (120) days following the Closing Date,
the Participating Partners shall prepare a balance sheet of Bacon & Xxxxxxx
as at the close of business (London time) on May 31, 2002 (the "Closing
Date Balance Sheet"). The Closing Date Balance Sheet shall be prepared in
the following manner:
(i) The Closing Date Balance Sheet shall be prepared in
accordance with the accounting principles currently utilized by Bacon
& Xxxxxxx.
(ii) The Closing Date Balance Sheet shall exclude any Excluded
Liabilities and any assets retained by the Continuing Partners
pursuant to Article XI.
(iii) The Closing Date Balance Sheet shall reflect appropriate
accruals for any amounts likely to be borne by Bacon & Xxxxxxx or the
Continuing Partners in respect of professional indemnity claims known
about by the Continuing Partners prior to the date of the Closing Date
Balance Sheet as a result of (A) deductibles in Bacon & Woodrow's
insurance with respect to such claims that have not already been paid
and (B) any claims known prior to the date of the Closing Date Balance
Sheet reasonably expected prior to the date of the Closing Date
Balance Sheet to exceed applicable coverages or with respect to which
coverage is reasonably expected to be denied (to the extent payments
have not already been made by Bacon & Xxxxxxx to reflect such events).
(iv) The Closing Date Balance Sheet shall reflect appropriate
accruals for such legal fees and other transaction expenses of Bacon &
Xxxxxxx in connection with the transactions contemplated hereby
(including the stamp duty payable by the Continuing Partners pursuant
to Section 2.11) as are to be borne by it, excluding any amount to be
borne by Xxxxxx or the Xxxxxx Company as agreed herein.
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(v) With respect to preparation of the Closing Date Balance
Sheet and the calculation of Closing Net Worth, except as
expressly provided in Section 2.9(a)(ii) and (a)(vi), no change
in accounting principles will be made from those previously
utilized by Bacon & Xxxxxxx. For purposes of the preceding
sentence, "change in accounting principles" includes all changes
in accounting principles, policies, practices, procedures or
methodologies with respect to financial statements, their
classification or their display (unless required by objective
changes in underlying events or circumstances).
(vi) With respect to preparation of the Closing Date Balance
Sheet, the Xxxxxx Company and Bacon & Xxxxxxx shall identify and
agree upon which items of work in progress are collectable. Work
in progress which the Xxxxxx Company and Bacon & Xxxxxxx agree is
collectable will be reflected at its full realizable value on the
Closing Date Balance Sheet. To the extent the Xxxxxx Company and
Bacon & Xxxxxxx disagree as to whether work in progress is
collectable, such work in progress shall not be reflected on the
Closing Date Balance Sheet, but if and when such amounts are
subsequently recovered, the Xxxxxx Company shall pay such amounts
to the Participating Partners. Collections will be applied to the
oldest outstanding amounts except where designated by the payor
to apply to a particular invoice.
(b) The Participating Partners shall procure that Xxxxx & Xxxxxxxxxx shall
audit such balance sheet and confirm that it was prepared in accordance with the
foregoing principles, subject to customary exceptions and language utilized by
accounting firms.
(c) "Closing Net Worth" shall mean the net worth of Bacon & Xxxxxxx as
reflected on the Closing Date Balance Sheet.
(d) In connection with the Closing Date Balance Sheet, from and after
Closing, the Participating Partners shall provide the Xxxxxx Company and its
representatives with reasonable access to all records and work papers necessary
to compute and verify the Closing Date Balance Sheet. The Closing Date Balance
Sheet as delivered to the Xxxxxx Company shall be final and binding on the
parties for purposes of this Agreement unless, within ninety (90) days after
delivery to the Xxxxxx Company, the Xxxxxx Company shall deliver to the
Authorized Partners a "Dispute Notice" indicating disagreement with the Closing
Date Balance Sheet and summarizing the items in dispute. The Dispute Notice may
only be delivered to the extent that (i) the Closing Balance Sheet was not
prepared in the manner contemplated by this Section 2.9 or (ii) mathematical
errors were made in preparation of the Closing Date Balance Sheet. After
delivery of a Dispute Notice, the Xxxxxx Company and the Authorized Partners
shall promptly negotiate in good faith with respect to the subject of the
Dispute Notice, and if they are unable to reach an agreement within thirty (30)
business days after delivery to the Authorized Partners of the Dispute Notice,
the dispute shall be submitted to the Independent Auditor (as hereinafter
defined). If Xxxxxx and the Authorized Partners are unable to agree whether a
Dispute Notice was delivered in accordance with this Section 2.9(d), the
Independent Auditor shall determine whether the Dispute Notice was delivered in
accordance herewith. The Independent Auditor shall be directed to issue a final
and binding decision within thirty (30) days of
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submission of the Dispute Notice to the Independent Auditor, as to the
issues of disagreement referred to in the Dispute Notice and not
resolved by the parties. The Closing Date Balance Sheet as so adjusted
by agreement or by the Independent Auditor if required, shall be final
and binding on the parties.
(e) The "Independent Auditor" shall mean the London office of
Ernst & Young. The fees and expenses of the Independent Auditor
retained as a result of any dispute related to any statement shall be
equitably allocated by the Independent Auditor. The full force and
effect of the representations and warranties shall in no way be
diminished by any adjustments pursuant to the Closing Date Balance
Sheet.
2.10. Adjustment to Net Worth. To the extent the Closing Date Balance Sheet
reflects a negative Closing Net Worth, the Participating Partners shall pay the
Xxxxxx Company an amount in cash equal to the negative Closing Net Worth within
five (5) days after the final determination of the Closing Date Balance Sheet.
To the extent the Closing Date Balance Sheet reflects a positive Closing Net
Worth, the Xxxxxx Company shall pay to the Participating Partners (in the
proportions directed by the Partnership Committee), in the aggregate, an amount
in cash equal to the positive Closing Net Worth within five (5) days after the
final determination of the Closing Date Balance Sheet. Following final
determination of the Closing Date Balance Sheet in accordance with Section 2.9
and the Closing Net Worth in accordance with this Section, no further Closing
Net Worth adjustments (or indemnification for a liability to the extent such
liability was accounted for in the calculation of Closing Net Worth) shall be
made.
2.11. Stamp Duty. The one-half percent (1/2%) stamp duty in connection with
the transfer of Newco Shares by the Continuing Partners to the Xxxxxx Company
shall be shared equally between the Xxxxxx Company, on the one hand, and the
Continuing Partners, on the other hand. If Xxxxxx or the Xxxxxx Company shall
require or request a transaction structure that results in a stamp duty in
excess of the foregoing one-half percent (1/2%) stamp duty, the Xxxxxx Company
shall be responsible for the incremental stamp duty.
2.12 Financial Information. Bacon & Xxxxxxx shall prepare and deliver to
Xxxxxx audited and unaudited financial statements for the applicable period for
the Business that would be required to be included in a registration statement
on Form S-1 filed by the Xxxxxx Company with the Securities and Exchange
Commission (the "S-1 Financial Statements"). Bacon & Xxxxxxx shall have its
outside public accountants audit those S-1 Financial Statements which the rules
and regulations of the Securities and Exchange Commission require to be audited
in connection with the Registration Statement on Form S-1 to be filed by the
Xxxxxx Company and deliver the same to Xxxxxx. In connection with the use of the
S-1 Financial Statements or other financial statements in a registration
statement of the Xxxxxx Company, Bacon & Xxxxxxx shall use its reasonable
efforts to obtain such consents from its outside public accountants as may be
necessary for the Xxxxxx Company to so use such financial statements and shall
use its reasonable efforts to obtain comfort letters as are customary under
applicable accounting standards or as may be required by underwriters in
connection with the Xxxxxx Company IPO. Xxxxxx and Bacon & Xxxxxxx shall
cooperate in all reasonable respects in the preparation of the S-1 Financial
Statement. The Continuing Partners shall be responsible for Bacon & Woodrow's
customary year-end accountants' review fees. The additional costs and expenses
incurred by Bacon & Xxxxxxx in connection with the preparation of the S-1
Financial Statement shall be
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shared equally between the Xxxxxx Company, on the one hand, and the Continuing
Partners, on the other hand.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
CONCERNING BACON & XXXXXXX
Subject to the limitations on liability contained in this Agreement,
including without limitation Sections 18.4 and 24.11, the Continuing Partners
represent and warrant to Xxxxxx and the Xxxxxx Company that (i) the statements
contained in this Article III are correct and complete as of the date of this
Agreement, except as set forth in the Bacon & Xxxxxxx disclosure schedule
accompanying this Agreement (the "B&W Disclosure Schedule") and (ii) the
statements contained in this Article III will be correct and complete in all
material respects as of the Closing Date, except as set forth in a Bacon &
Xxxxxxx disclosure schedule delivered to the Xxxxxx Company on behalf of the
Continuing Partners at Closing as set forth in Section 16.1 (the "B&W Closing
Disclosure Schedule"). The B&W Disclosure Schedule and B&W Closing Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Agreement. However, any information
described under any paragraph of the B & W Disclosure Schedule or B&W Closing
Disclosure Schedule shall apply to such other paragraphs as to which it is
reasonably apparent from the disclosure that it applies. All references to Bacon
& Xxxxxxx shall include its Subsidiaries. As of the Closing, all references to
Bacon & Xxxxxxx shall include Newco (except where the context clearly indicates
a reference only to Bacon & Xxxxxxx).
3.1. Organization.
(a) Bacon & Xxxxxxx is a validly existing partnership for the purposes
of the Partnership Act of 1890 constituted by the Bacon & Xxxxxxx
Partnership Deed under the laws of England. Each Subsidiary of Bacon &
Xxxxxxx is duly incorporated and validly existing under the laws of its
jurisdiction of incorporation. As of the Closing, Newco will be a company
duly incorporated and validly existing under the laws of England.
(b) Bacon & Xxxxxxx is, and as of the Closing Newco will be, duly
qualified and licensed to do business as now carried on by it in each
jurisdiction in which it is established. Bacon & Xxxxxxx has full power and
authority and all licenses, permits and authorizations necessary to carry
on the Business and to own and use the properties owned and used by it in
the Business. Bacon & Xxxxxxx has made available to Xxxxxx a correct and
complete copy of its Partnership Deed (as amended to date). The Continuing
Partners are not in default under or in violation of any provision of the
Partnership Deed nor has the conduct of the Business resulted in any such
violation or default, in either case to an extent which is materially
prejudicial to the Business.
3.2. Capitalization.
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(a) The percentages in which the Continuing Partners and the Employee
Trust share ownership reward under the Partnership Deed are set forth in
Section 3.2 of the B&W Disclosure Schedule which sets forth all of the
ownership or equity interests in Bacon & Xxxxxxx. Section 3.2 of the B&W
Disclosure Schedule shall be updated as of the Closing to reflect the
authorized and issued share capital of Newco.
(b) As of the date hereof, (i) all of the issued and outstanding
ownership interests of Bacon & Xxxxxxx are held by the persons set forth in
Section 3.2 of the B&W Disclosure Schedule; (ii) there is no outstanding
offer of equity partnership made by Bacon & Xxxxxxx to any person other
than the Continuing Partners and the Employee Trust; and (iii) there are no
outstanding or authorized profit participation or similar rights with
respect to Bacon & Xxxxxxx other than as set forth in Section 3.2 of the
B&W Disclosure Schedule.
(c) As of the Closing, all of the issued and outstanding shares of
Newco will have been duly authorized, validly issued and fully paid, and
will be held beneficially and of record by the Participating Partners. As
of the Closing, there will be no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require Newco to
issue, sell, or otherwise cause to become outstanding any of its equity
interests. As of the Closing, there will be no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights
with respect to Newco, save in respect of the shares therein held by the
Employee Trust.
3.3. Authorization. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby by the Continuing Partners
has been duly authorized and approved by all necessary partnership action.
3.4. Noncontravention. Except as set forth in Section 3.4 of the B&W
Disclosure Schedule, neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby will (i) violate
any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, or other restriction of any government, governmental agency, or
court to which Bacon & Xxxxxxx is subject, or any provision of the Partnership
Deed of Bacon & Xxxxxxx or (ii) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
Bacon & Xxxxxxx is a party or by which Bacon & Xxxxxxx is bound or to which any
of their assets is subject (or result in the imposition of any lien, charge or
encumbrance upon any of its assets). Except as set forth in Section 3.4 of the
B&W Disclosure Schedule, Bacon & Xxxxxxx does not need to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the parties to consummate the
transactions contemplated by this Agreement.
3.5. Broker's Fees. Neither Bacon & Xxxxxxx nor any Continuing Partner has
any liability or obligation to pay any fees, expenses, or commissions to any
broker or finder as a finder's fee or commission with respect to the
transactions contemplated by this Agreement.
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3.6. Title to Assets. Bacon & Xxxxxxx has good and marketable title to, or
a valid leasehold interest in, the properties and assets used in the Business or
shown on the balance sheet of the Business as of September 30, 2001 (the "Most
Recent B&W Balance Sheet") or acquired after the date thereof, free and clear of
all liens, charges and encumbrances. As of the Closing, Newco will have good and
marketable title to, or a valid leasehold interest in, the properties and assets
set forth on the Closing Date Balance Sheet. Bacon & Xxxxxxx owns or leases all
buildings, machinery, equipment and other tangible assets presently used by it
in the conduct of the Business. Such property and assets constitute all tangible
property and tangible assets necessary to conduct the Business.
3.7. Subsidiaries. Section 3.7 of the B&W Disclosure Schedule sets forth
for each Subsidiary of Bacon & Xxxxxxx (i) its name and jurisdiction of
incorporation, and (ii) the number of authorized and issued shares, the names of
the record owners thereof, and the number of shares held by each such holder.
Except as set forth in Section 3.7 of the B&W Disclosure Schedule, Bacon &
Xxxxxxx does not own stock or have any equity investment or other interest in,
does not have the right to acquire any such interest, and does not control,
directly or indirectly, any corporation, association, partnership, joint venture
or other entity. All of the authorized and issued shares of each Subsidiary have
been duly authorized and are validly issued, fully paid shares. Bacon & Xxxxxxx
owns beneficially all of the outstanding shares of each Subsidiary, free and
clear of any Adverse Claims. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require Bacon & Xxxxxxx to
sell, transfer, or otherwise dispose of any shares of any Subsidiary or that
could require any Subsidiary to issue, sell, or otherwise cause to become
outstanding any of its own shares. There are no outstanding stock appreciation,
phantom stock, profit participation, or similar rights with respect to any
Subsidiary. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of any capital stock of any
Subsidiary. Bacon & Xxxxxxx does not control, directly or indirectly, nor has
any direct or indirect equity participation in any corporation, partnership,
trust, or other business association which is not a Subsidiary of Bacon &
Xxxxxxx. Xxxxx & Xxxxxxx will make available to Xxxxxx on request complete
copies of the formation documents of each such entity.
3.8. Financial Statements. Section 3.8 of the B&W Disclosure Schedule
discloses the following financial statements (collectively, the "B&W Financial
Statements"): (i) unaudited combined balance sheet and statement of income as of
and for the fiscal year ended April 30, 2001 (the "Most Recent B&W Fiscal Year
End") for Bacon & Xxxxxxx, (ii) unaudited balance sheet and statement of income
as of and for the five (5) months ended September 30, 2001 (the "Most Recent B&W
Fiscal Month End") for Bacon & Xxxxxxx (the "Most Recent B&W Financial
Statements"), and (iii) pro forma unaudited combined balance sheet and statement
of income as of and for the fiscal year ended April 30, 2001 for the Business
(excluding the Insurance Business). The B&W Financial Statements have been
prepared on the basis described therein and to the best of the Knowledge and
belief of the Management Group, do not contain any material inaccuracy;
provided, however, that the Most Recent B&W Financial Statements are subject to
normal year-end adjustments and lack footnotes.
3.9 Events Subsequent to Most Recent B&W Fiscal Year End. Except as set
forth in Section 3.9 of the B&W Disclosure Schedule, since the Most Recent B&W
Fiscal Year End,
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there has not been any material adverse effect on the Business taken as a whole.
Without limiting the generality of the foregoing, since the Most Recent B&W
Fiscal Year End:
(a) Bacon & Xxxxxxx has not sold, leased, transferred, or assigned any
of its assets, tangible or intangible, other than in the ordinary course of
business;
(b) Bacon & Xxxxxxx has not entered into any agreement, contract,
lease, or license (or series of related agreements, contracts, leases, or
licenses) either involving consideration in excess of (pound)500,000 per
annum or, except as to agreements described in other clauses of this
Section 3.9, being material and outside the ordinary course of business;
(c) no party (including Bacon & Xxxxxxx) has accelerated, terminated,
or cancelled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, or licenses) involving consideration
in excess of (pound)500,000 per annum to which Bacon & Xxxxxxx is a party
or by which it is bound;
(d) Bacon & Xxxxxxx has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of, any other person (or
series of related capital investments, loans, or acquisitions) either
involving more than (pound)1,000,000 or outside the ordinary course of
business;
(e) Bacon & Xxxxxxx has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation involving more than
(pound)1,000,000;
(f) Bacon & Xxxxxxx has not received written notice that it is the
subject of any investigation or disciplinary action under the UK Financial
Services Xxx 0000, as amended (the "Financial Services Act");
(g) the Continuing Partners have not amended the Bacon & Xxxxxxx
Partnership Deed;
(h) Bacon & Xxxxxxx has not granted any increase in the compensation
or made any other change in employment terms of any of its employees
outside the ordinary course of business; and
(i) Bacon & Xxxxxxx has not committed to any of the foregoing.
3.10. Legal Compliance. Except as set forth in Schedule 3.10 of the B&W
Disclosure Schedule, Bacon & Xxxxxxx has complied with all applicable laws
(including rules, regulations, codes, injunctions, judgments, orders, decrees)
and rulings of federal, state, local, and foreign governments (and all agencies
thereof) to which it is subject, including, without limitation, the Financial
Services Act and comparable laws to which it is subject in foreign
jurisdictions. No action, suit, proceeding, hearing, complaint, claim, demand,
notice or investigation has been notified in writing to Bacon & Xxxxxxx, or to
the Knowledge of the Management Group, threatened against Bacon & Xxxxxxx
alleging any failure to comply with such laws and rulings.
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3.11. Tax Matters. Except as set forth in Section 3.11 of the B&W
-----------
Disclosure Schedule:
(a) Bacon & Xxxxxxx has filed all Tax Returns it was required to
file. All such Tax Returns were correct and complete in all material
respects. All Taxes owed by Bacon & Xxxxxxx (whether or not shown on any
Tax Return) have been paid. Bacon & Xxxxxxx currently is not the
beneficiary of any extension of time within which to file any Tax Return.
No claim is currently pending by an authority in a jurisdiction where Bacon
& Xxxxxxx does not file Tax Returns that Bacon & Xxxxxxx is or may be
subject to taxation by that jurisdiction. There are no Adverse Claims on
any of the assets of Bacon & Xxxxxxx that arose in connection with any
failure (or alleged failure) to pay any Tax.
(b) Bacon & Xxxxxxx has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third
party.
(c) No member of the Management Group (having made inquiry of any
partner or employees responsible for Tax matters) expects any authority to
assess any additional Taxes for any period for which Tax Returns have been
filed. There is no dispute or claim concerning any Tax Liability of Bacon &
Xxxxxxx either (A) claimed or raised by any authority in writing or (B) as
to which any member of the Management Group (having made inquiry of any
partner or employees responsible for Tax matters) has Knowledge based upon
personal contact with any agent of such authority.
(d) Bacon & Xxxxxxx has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
3.12. Real Property.
-------------
(a) Bacon & Xxxxxxx owns no freehold property.
(b) Section 3.12 of the B&W Disclosure Schedule lists and describes
briefly all real property leased or subleased to Bacon & Xxxxxxx or its
Subsidiaries and currently used in the conduct of its business. Bacon &
Xxxxxxx will make available to Xxxxxx upon request correct and complete
copies of the leases and subleases listed in Section 3.12 of the B&W
Disclosure Schedule (as amended to date). With respect to each lease and
sublease listed in 3.12 of the B&W Disclosure Schedule: (i) the lease or
sublease is legal, valid, binding, and in full force and effect, (ii) no
party is in breach or default under the lease or sublease, and no event has
occurred which, with notice or lapse of time, would constitute a breach or
default which in each case is likely to result in a forfeiture of the lease
in question.
3.13. Intellectual Property. Section 3.13 of the B&W Disclosure Schedule
---------------------
contains a complete and correct list of all registered patents, patent rights
and trademarks and applications for any of the foregoing owned by Bacon &
Xxxxxxx. Section 3.13 of the B&W Disclosure Schedule also contains a complete
and correct list of all written licenses and other agreements
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relating to any of the foregoing. With respect to the foregoing items of
intellectual property, except as described in Section 3.13 of the B&W Disclosure
Schedule:
(a) Bacon & Xxxxxxx is the sole and exclusive owner and has the sole
and exclusive right to use the same in the conduct of its business;
(b) no written notice has been received by Bacon & Xxxxxxx that any
proceedings have been instituted, are pending or threatened, and no written
claim has been received by Bacon & Xxxxxxx which challenges any rights in
respect thereof or the validity or enforceability thereof;
(c) to the Knowledge of the Management Group, none of the aforesaid
infringes upon or otherwise violates the rights of others or is being
infringed upon by others, and none is subject to any outstanding order,
decree, judgment, stipulation or charge;
(d) no written licenses, sublicenses or agreements pertaining to any
of the aforesaid have been granted by Bacon & Xxxxxxx;
(e) Bacon & Xxxxxxx has not received any written notice of
interference or infringement of any of the foregoing;
(f) all trademark and copyright registrations are currently in force;
(g) there are no royalty or other payment obligations associated with
Bacon & Woodrow's use of the foregoing items of intellectual property; and
(h) there are no Adverse Claims on any of the foregoing.
3.14. Software. Section 3.14 of the B&W Disclosure Schedule sets forth an
--------
accurate and complete list of all the Bacon & Xxxxxxx Software (as defined
below) owned, licensed or otherwise used by Bacon & Xxxxxxx. Xxxxx & Xxxxxxx has
all right, title and interest in, or a valid license to use, all Bacon & Xxxxxxx
Software necessary for the conduct of the Business. Section 3.14 of the Bacon &
Xxxxxxx Disclosure Schedule identifies or describes (i) Bacon & Xxxxxxx Software
which is owned by Bacon & Xxxxxxx; and (ii) Bacon & Xxxxxxx Software which is
licensed to Bacon & Xxxxxxx by third parties. Bacon & Xxxxxxx owns all right,
title and interest in the Bacon & Xxxxxxx Software that is not designated as
licensed free and clear of any liens, encumbrances, restrictions, or legal or
equitable claims of others. "Bacon & Xxxxxxx Software" means all electronic data
processing systems, information systems, computer software programs, program
specifications, charts, procedures, source codes, object codes, input data,
routines, data bases and report layouts and formats, record file layouts,
diagrams, functional specifications and narrative descriptions, flow charts and
other related material and documentation and rights thereto which is proprietary
to Bacon & Xxxxxxx or material to the operation of the Business (other than
licenses of software that is generally commercially available).
3.15. Contracts. Section 3.15 of the B&W Disclosure Schedule lists the
---------
following contracts and other agreements to which Bacon & Xxxxxxx is a party or
by which it is bound, other than such agreements among Bacon & Xxxxxxx and its
Subsidiaries or the financial
-22-
consequences of which are reflected in the B&W Financial Statements as of and
for the fiscal year ended April 30, 2001, (the "Bacon & Xxxxxxx Contracts"):
(a) any agreement with a client or a supplier that involves turnover
or expense in excess of (Pounds)1,000,000 per annum;
(b) any agreement for the lease of personal property to or from any
person providing for lease payments in excess of (Pounds)500,000 per annum;
(c) any agreement for the lease of real property;
(d) any agreement constituting a partnership or joint venture;
(e) any agreement under which it has created, incurred, assumed, or
guaranteed any indebtedness for borrowed money, or any capitalized lease
obligation, in excess of (Pounds)500,000 or under which it has imposed an
Adverse Claim on any material amount of its assets, tangible or intangible;
(f) any agreement concerning exclusivity or non-competition;
(g) any profit sharing, option, equity purchase, equity appreciation,
deferred compensation, severance, or other plan or arrangement for the
benefit of its current or former partners, associates, and employees (other
than the Employee Trust);
(h) any collective bargaining agreement or other agreement or
arrangement with any trade union, staff association, staff works council or
other organization;
(i) any agreement for the employment or services of any individual on
a full-time, part-time, consulting, self-employed or other basis providing
annual compensation in excess of (Pounds)100,000;
(j) any agreement under which it has advanced or loaned any material
amount to any of its partners, associates, and employees;
(k) any license involving consideration in excess of (Pounds)500,000
per annum;
(l) any agreement involving consideration in excess of
(Pounds)500,000 not terminable by Bacon & Xxxxxxx on less than six (6)
months' notice; and
(m) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of (Pounds)1,000,000.
Bacon & Xxxxxxx will make available to Xxxxxx upon request a correct and
complete copy of each written agreement listed in Section 3.15 of the B&W
Disclosure Schedule (as amended to date) and a written summary setting forth the
terms and conditions of each oral agreement referred to in Section 3.15 of the
B&W Disclosure Schedule. With respect to each such agreement, including those
agreements with respect to which the financial consequences are reflected in the
B&W Financial Statements as of and for the fiscal year ended April 30, 2001:
-23-
(i) the agreement is legal, valid, binding, and in full force and effect; (ii)
no party is in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (iii) to the Knowledge
of the Management Group, no party has repudiated any provision of the agreement.
3.16. Annuities. Except as set forth in Section 3.16 of the B&W Disclosure
---------
Schedule, Bacon & Xxxxxxx has no obligation to make to any Continuing Partner or
former partner of Bacon & Xxxxxxx any payments under any annuity contract.
3.17. Powers of Attorney. There are no outstanding powers of attorney
------------------
executed on behalf of Bacon & Xxxxxxx.
3.18. Insurance. With respect to each insurance policy (including policies
---------
providing professional liability, property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which Bacon & Xxxxxxx
is currently a party, a named insured, or otherwise the beneficiary of coverage,
to the Knowledge of the Management Group, the policy is legal, valid, binding,
enforceable, and in full force and effect.
3.19. Litigation. Section 3.19 of the B&W Disclosure Schedule sets forth
----------
each instance in which Bacon & Xxxxxxx (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party or, to
the Knowledge of the Management Group, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator. None of the actions, suits,
proceedings, hearings, and investigations set forth in Section 3.19 of the B&W
Disclosure Schedule is likely to result in a material adverse effect on Bacon &
Xxxxxxx. No member of the Management Group has received notice of any
investigation threatened or contemplated by any foreign, federal, state or local
governmental or regulatory authority.
3.20. Employees. Bacon & Xxxxxxx has paid or made provision for the payment
---------
of all salaries and wages accrued to or for the benefit of its employees and has
complied with all applicable laws, rules, and regulations relating to the
employment of labor, including those relating to wages, hours, collective
bargaining, the payment and withholding of Taxes, and the Employment
Obligations. Bacon & Xxxxxxx is not a party to any collective bargaining
agreement or other agreement or arrangement (whether in writing or by custom and
practice) with any trade union, staff association, staff works council or other
organization of employees. Except as set forth in Section 3.20 of the B&W
Disclosure Schedule, Bacon & Xxxxxxx is not obligated to provide more than
twelve (12) months' notice prior to the termination of the employment of any
employee nor is any employee entitled to severance payments in excess of twelve
(12) months' salary upon termination of employment. Except as set forth in
Section 3.20 of the B&W Disclosure Schedule, Bacon & Xxxxxxx has not introduced
any redundancy scheme in which payments greater than statutory redundancy
payments are payable. Bacon & Xxxxxxx is in compliance with all applicable laws
and regulations respecting labor, employment, fair employment practices, terms
and conditions of employment, and wages and hours. Except as set forth in
Section 3.20 of the B&W Disclosure Schedule there is no current, written, or
unresolved material labor grievance brought by any of the employees of Bacon &
-24-
Xxxxxxx and no material proceeding is pending or, to the Knowledge of the
Management Group, threatened, and no claim therefor has been asserted. To the
Knowledge of the Management Group, there is no inquiry or investigation
existing, pending or threatened into Bacon & Xxxxxxx by the Equal Opportunities
Commission or the Commission for Racial Equality or Disability Rights Commission
or other similar authority. There are no claims in respect of the Employment
Obligations pending, or to the Knowledge of the Management Group, threatened
relating to Bacon & Xxxxxxx.
For purposes of this Section 3.20, "Employment Obligations" means (i) any
obligation under the Sex Discrimination Xxx 0000, Equal Pay Xxx 0000, Race
Relations Xxx 0000, Disability Discrimination Xxx 0000, Employment Rights Xxx
0000, Working Time Regulations 1998, National Minimum Wage Xxx 0000, Treaty of
Rome or any applicable EU directive or recommendation, Public Xxxxxxxx
Xxxxxxxxxx Xxx 0000, Transfer of Undertakings (Protection of Employment)
Regulations 1981, as each of the same may be amended from time to time, (ii) any
obligation to pay statutory or contractual redundancy payments, (iii) any
obligation to any trade union, staff association, staff works council or other
organization of employees, or (iv) any obligation pursuant to or in connection
with contracts of employment.
3.21. Employee Benefits. Section 3.21 of the B&W Disclosure Schedule lists
-----------------
each Employee Benefit Plan that Bacon & Xxxxxxx maintains or to which Bacon &
Xxxxxxx contributes with respect to its employees. Each such Employee Benefit
Plan (and each related trust, insurance contract, or fund) complies in form and
in operation with the requirements of all applicable laws. All reports and
descriptions have been filed with the appropriate governmental authority to the
extent required. All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to each
such Employee Benefit Plan which is an Employee Pension Benefit Plan. All
premiums or other payments which are due have been paid with respect to each
such Employee Benefit Plan which is an Employee Welfare Benefit Plan. Bacon &
Xxxxxxx will, upon written request, deliver to Xxxxxx correct and complete
copies of the plan documents and summary plan descriptions, governmental
reports, and all related trust agreements, insurance contracts, and other
funding agreements which implement each such Employee Benefit Plan.
3.22. Clients. Section 3.22 of the B&W Disclosure Schedule sets forth an
-------
accurate, correct and complete list of the 20 largest clients of Bacon & Xxxxxxx
(determined on the basis of revenues from services rendered) and the revenues
associated therewith for the fiscal year ended April 30, 2001.
3.23. Sale of Insurance Business. Bacon & Xxxxxxx has made available to
--------------------------
Xxxxxx accurate, correct and complete copies of all transaction documents
effecting the sale of the Insurance Business to Deloitte & Touche pursuant to
the Demerger and Business Transfer Agreement.
3.24. Certain Transactions. Since April 30, 2001, Bacon & Xxxxxxx has not
--------------------
engaged in any of the following types of transactions involving an amount in
excess of $1 million (or its equivalent in another currency) unless such
transactions have been accounted for by Bacon & Xxxxxxx in a manner notified to
it by Xxxxxx as being consistent with US GAAP: (i) barter or other non-monetary
transactions, (ii) business combinations, (iii) investment in any financial
-25-
instruments, (iv) capitalization of any intangible assets, (v) capitalization of
any interest costs, (vi) any research and development, (vii) investment in any
marketable securities, (viii) issuance of any capital instruments, (ix)
obtaining of any government grants or (x) participation in any employee equity
option plan.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
CONCERNING THE CONTINUING PARTNERS
Subject to the limitations on liability contained in this Agreement, including
without limitation Sections 18.4 and 24.11, each Continuing Partner represents
and warrants to Xxxxxx and the Xxxxxx Company as to such Continuing Partner
only, and not as to any other Continuing Partner, that the statements contained
in this Article IV are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date.
4.1. Authorization. The Continuing Partner has full power and authority to
-------------
execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligations of the
Continuing Partner, enforceable in accordance with its terms and conditions.
4.2. Noncontravention. Neither the execution and the delivery of this
----------------
Agreement, nor the consummation of the transactions contemplated hereby will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, or other restriction of any government, governmental
agency, or court to which the Continuing Partner is subject or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Continuing Partner is a party or
by which the Continuing Partner is bound or to which any of its assets is
subject (or result in the imposition of any lien charge or encumbrance upon any
of its assets). The Continuing Partner does not need to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for him to perform his obligations
under this Agreement.
4.3. Equity Interests. The schedule of ownership rewards set forth in
----------------
Section 3.2 of the B&W Disclosure Schedule shows opposite the name of the
Continuing Partner the extent of such Continuing Partner's percentage share of
ownership reward in Bacon & Xxxxxxx which such Continuing Partner holds free and
clear of any Adverse Claims (except as set forth in the Bacon & Xxxxxxx
Partnership Deed). As of the Closing, the Continuing Partner will hold of record
and own beneficially the shares in Newco set forth next to his name in Section
3.2 of the B&W Disclosure Schedule (as updated as of the Closing in accordance
with Section 3.2 or Section 2.3(c)) free and clear of any Adverse Claims, and
the Continuing Partner will hold no other equity interests in Newco or options,
warrants, purchase rights, conversion rights, subscription rights, exchange
rights or other rights with respect to such equity interests. Except as set
forth in the Bacon & Xxxxxxx Partnership Deed, the Continuing Partner is not a
party to any option, warrant, purchase right, or other contract or commitment
that could require the Continuing Partner to sell, transfer, or otherwise
dispose of any equity interests in Bacon & Xxxxxxx.
-26-
4.4. Investment Representation.
-------------------------
(a) The Continuing Partner acknowledges that the Xxxxxx Preferred
Shares (and the Xxxxxx Company Shares issuable in exchange therefor) may
not be registered under the Securities Act, or the securities laws of any
state or other regulatory body and such shares are being offered and sold
in reliance upon federal and state exemptions. The Continuing Partner
represents that, save as contemplated by this Agreement, he is acquiring
the Xxxxxx Preferred Shares (and the Xxxxxx Company Shares issuable in
exchange therefor) for his own account with the present intention of
holding such securities for investment purposes and not with a view to or
for sale in connection with any public distribution of such securities in
violation of any federal or state securities laws. The Continuing Partner
is a sophisticated investor, familiar with the business of Xxxxxx so that
he is capable of evaluating the merits and risks of his investment in the
Xxxxxx Preferred Shares (and the Xxxxxx Company Shares issuable in exchange
therefor). The Continuing Partner has had the opportunity to investigate on
his own the business of Xxxxxx and the management and financial affairs of
Xxxxxx and has had the opportunity to review the results of Xxxxxx'x
operations.
(b) The Continuing Partner is an "accredited investor" under the
Securities Act in that (i) the Continuing Partner had an individual income
in excess of $200,000 in each of the two most recent years or joint income
with his spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current
year or (ii) the Continuing Partner's individual net worth, or joint net
worth with his spouse, exceeds $1,000,000.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
CONCERNING XXXXXX AND THE XXXXXX COMPANY
Subject to the limitations on liability contained in this Agreement, including
without limitation Section 18.4, Xxxxxx and the Xxxxxx Company represent and
warrant to the Continuing Partners that (i) the statements contained in this
Article V are correct and complete as of the date of this Agreement, except as
set forth in the Xxxxxx disclosure schedule accompanying this Agreement (the
"Xxxxxx Disclosure Schedule"), and (ii) the statements contained in this Article
V will be correct and complete in all material respects as of the Closing Date,
except as set forth in a Xxxxxx disclosure schedule delivered to the Continuing
Partners at the Closing as set forth in Section 17.1 (the "Xxxxxx Closing
Disclosure Schedule"). The Xxxxxx Disclosure Schedule and the Xxxxxx Closing
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Agreement, however, any information
disclosed under any paragraph of the Xxxxxx Disclosure Schedule or the Xxxxxx
Closing Disclosure Schedule shall apply to such other paragraphs as to which it
is reasonably apparent from the disclosure that it applies. All references to
Xxxxxx shall include Xxxxxx, the Xxxxxx Company, Xxxxxx Associates and their
respective Subsidiaries (except where the context clearly indicates a reference
only to Xxxxxx or the Xxxxxx Company).
-27-
5.1. Organization. Xxxxxx is a limited liability company duly organized,
------------
validly existing, and in good standing under the laws of the state of Illinois.
Each Subsidiary of Xxxxxx is duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation. The Xxxxxx Company is
a corporation duly organized, validly existing and in good standing under the
laws of the state of Delaware. Each of Xxxxxx and the Xxxxxx Company is duly
authorized to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required. Each of Xxxxxx and the Xxxxxx
Company has full power and authority and all licenses, permits, and
authorizations necessary to carry on its businesses and to own and use the
properties owned and used by it in the conduct of its business. Xxxxxx has made
available to Bacon & Xxxxxxx correct and complete copies of its Articles of
Organization and its Limited Liability Company Operating Agreement (as amended
to date). The Xxxxxx Company has made available to Bacon & Xxxxxxx correct and
complete copies of its Certificate of Incorporation and Bylaws, which are
attached hereto as Exhibits 11 and 12, respectively. Xxxxxx is not in default
----------- --
under or in violation of any provision of its Articles of Organization or its
Limited Liability Company Operating Agreement. The Xxxxxx Company is not in
violation of any provision of its Certificate of Incorporation or Bylaws.
5.2. Capitalization. The aggregate outstanding ownership interests of
--------------
Xxxxxx are set forth in Section 5.2 of the Xxxxxx Disclosure Schedule. Section
5.2 of the Xxxxxx Disclosure Schedule shall be updated as of the Closing to
reflect the aggregate outstanding ownership interests of the Xxxxxx Company as
of the Closing. There are no outstanding options, warrants, purchase rights, or
subscription rights that could require Xxxxxx to issue, sell or otherwise cause
to become outstanding any of its ownership interests. There are no outstanding
or authorized profit participation or similar rights with respect to Xxxxxx
other than as set forth in Section 5.2 of the Xxxxxx Disclosure Schedule. Except
as set forth in Section 5.2 of the Xxxxxx Disclosure Schedule, there are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the equity interests of Xxxxxx. All of the outstanding shares of
the Xxxxxx Company are held by Xxxxxx.
5.3. Authorization. Each of Xxxxxx and the Xxxxxx Company has full power
-------------
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby by each of Xxxxxx
and the Xxxxxx Company has been duly authorized and approved by all necessary
limited liability company action and corporate action, respectively. This
Agreement constitutes the valid and legally binding obligation of each of Xxxxxx
and the Xxxxxx Company, enforceable in accordance with its terms and conditions.
5.4. Noncontravention. Neither the execution and the delivery of this
----------------
Agreement, nor the consummation of the transactions contemplated hereby will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, or other restriction of any government, governmental
agency, or court to which Xxxxxx or the Xxxxxx Company is subject, or any
provision of Xxxxxx'x Articles of Organization or Limited Liability Company
Operating Agreement or the Xxxxxx Company's Certificate of Incorporation or
Bylaws, or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
Xxxxxx is a party or by which Xxxxxx or the Xxxxxx Company is bound or to which
any of its assets is subject (or result in the
-28-
imposition of any lien, charge or encumbrance upon any of its assets).
Except as set forth in Section 5.4 of the Xxxxxx Disclosure Schedule, neither
Xxxxxx nor the Xxxxxx Company needs to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order for the parties to consummate the transactions
contemplated by this Agreement.
5.5. Broker's Fees. Xxxxxx has no liability or obligation to pay any fees,
-------------
expenses, or commissions to any broker or finder as a finder's fee or commission
with respect to the transactions contemplated by this Agreement.
5.6. Title to Assets. Xxxxxx has good and marketable title to, or a valid
---------------
leasehold interest in, the properties and assets used in its business or shown
on its balance sheet as of September 30, 2001 (the "Most Recent Xxxxxx Balance
Sheet") or acquired after the date thereof, free and clear of all liens, charges
and encumbrances. Such property and assets constitute all property and assets
necessary to conduct its business as presently conducted. Xxxxxx owns or leases
all buildings, machinery, equipment and other tangible assets presently used by
it in the conduct of its business. Such property and assets constitute all
tangible property and tangible assets necessary to conduct its business as
presently conducted.
5.7. Subsidiaries. Section 5.7 of the Xxxxxx Disclosure Schedule sets forth
------------
for each Subsidiary of Xxxxxx (i) its name and jurisdiction of incorporation,
and (ii) the number of authorized and issued shares, the names of the record
owners thereof, and the number of shares held by each such holder. Except as set
forth in Section 5.7 of the Xxxxxx Disclosure Schedule, Xxxxxx does not own
stock or have any equity investment or other interest in, does not have the
right to acquire any such interest, and does not control, directly or
indirectly, any corporation, association, partnership, joint venture or other
entity. All of the authorized and issued shares of each Subsidiary have been
duly authorized and are validly issued, fully paid shares. Xxxxxx owns
beneficially all of the outstanding shares of each Subsidiary, free and clear of
any Adverse Claims. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require Xxxxxx to sell, transfer, or
otherwise dispose of any shares of any Subsidiary or that could require any
Subsidiary to issue, sell, or otherwise cause to become outstanding any of its
own shares. There are no outstanding stock appreciation, phantom stock, profit
participation, or similar rights with respect to any Subsidiary. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of any capital stock of any Subsidiary. Xxxxxx does not control,
directly or indirectly, nor has any direct or indirect equity participation in
any corporation, partnership, trust, or other business association which is not
a Subsidiary of Xxxxxx.
5.8. Financial Statements. Section 5.8 of the Xxxxxx Disclosure Schedule
--------------------
contains the following financial statements (collectively, the "Financial
Statements"): (i) audited combined balance sheet and statement of income as of
and for the fiscal year ended September 30, 2001 (the "Most Recent Xxxxxx Fiscal
Year End") for Xxxxxx, and (ii) unaudited balance sheet and statements of income
as of and for the three (3) months ended December 31, 2001 (the "Most Recent
Xxxxxx Fiscal Month End") for Xxxxxx (the "Most Recent Financial Statements").
The Financial Statements (including the notes thereto) have been prepared on the
basis described therein and to the best of the Knowledge and belief of Xxxxxx do
not contain any material inaccuracy; provided, however, that the Most Recent
-------- -------
Financial Statements are subject to normal
-29-
year end adjustments and lack footnotes. Section 5.8 of the Xxxxxx Disclosure
Schedule sets forth a pro forma balance sheet of the Xxxxxx Company at the time
of the Xxxxxx Company IPO prepared in accordance with Xxxxxx management's good
faith assumptions and estimates as of the date hereof.
5.9. Events Subsequent to Most Recent Xxxxxx Fiscal Year End. Except as set
-------------------------------------------------------
forth in Section 5.9 of the Xxxxxx Disclosure Schedule, since the Most Recent
Xxxxxx Fiscal Year End, there has not been any material adverse effect on
Xxxxxx. Without limiting the generality of the foregoing, except with respect to
transactions among Xxxxxx and its Subsidiaries, since the Most Recent Xxxxxx
Fiscal Year End:
(a) except with respect to real estate assets, Xxxxxx has not sold,
leased, transferred, or assigned any of its assets, tangible or intangible,
other than in the ordinary course of business;
(b) except with respect to contracts pertaining to Total Benefits
Administration, Xxxxxx has not entered into any agreement, contract, lease,
or license (or series of related agreements, contracts, leases, or
licenses) either involving consideration in excess of $7,500,000 per annum
or being material and outside the ordinary course of business;
(c) Xxxxxx has not entered into any contracts pertaining to Total
Benefits Administration involving consideration in excess of $10,000,000
per annum;
(d) except with respect to real estate assets, indebtedness for
borrowed money and, as to agreements described in other clauses of this
Section 5.9, subject to the thresholds set forth in those clauses, Xxxxxx
has not entered into any agreement which is material and outside the
ordinary course of business;
(e) except with respect to contracts pertaining to Total Benefits
Administration, no party (including Xxxxxx) has accelerated, terminated,
modified, or cancelled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, or licenses) involving
consideration in excess of $7,500,000 per annum to which Xxxxxx is a party
or by which it is bound;
(f) except with respect to real estate assets, Xxxxxx has not made
any capital investment in, any loan to, or any acquisition of the
securities or assets of, any other person (or series of related capital
investments, loans, or acquisitions) either involving more than $7,500,000
or outside the ordinary course of business;
(g) Xxxxxx has not issued any note, bond or other debt security or
created, incurred, assumed or guaranteed any indebtedness for borrowed
money or capitalized any lease obligation involving more than $7,500,000;
(h) Xxxxxx has not received written notice that it is the subject of
any material investigation or disciplinary action by any governmental
authority;
-30-
(i) Xxxxxx has not granted any increase in the compensation or made
any other change in employment terms of any of its employees outside the
ordinary course of business;
(j) a default has not occurred under any of Xxxxxx'x agreements
with its lenders or otherwise with respect to any indebtedness for borrowed
money which default has resulted in, or if uncured with the passage of time
will result in, a right to accelerate such indebtedness; and
(k) Xxxxxx has not committed to any of the foregoing.
5.10. Legal Compliance. Xxxxxx has complied with all applicable laws
----------------
(including rules, regulations, codes, injunctions, judgments, orders, decrees)
and rulings of federal, state, local, and foreign governments (and all agencies
thereof) to which it is subject. No action, suit, proceeding, hearing,
complaint, claim, demand, notice or investigation has been notified in writing
to Xxxxxx, or to the Knowledge of Xxxxxx, threatened against Xxxxxx alleging any
failure to comply with such laws and rulings.
5.11. Tax Matters. Except as set forth in Section 5.11 of the Xxxxxx
-----------
Disclosure Schedule:
(a) Xxxxxx has filed all Tax Returns it was required to file. All
such Tax Returns were correct and complete in all material respects. All
Taxes owed by Xxxxxx (whether or not shown on any Tax Return) have been
paid. Xxxxxx currently is not the beneficiary of any extension of time
within which to file any Tax Return. No claim is currently pending by an
authority in a jurisdiction where Xxxxxx does not file Tax Returns that
Xxxxxx is or may be subject to taxation by that jurisdiction. There are no
Adverse Claims on any of the assets of Xxxxxx that arose in connection with
any failure (or alleged failure) to pay any Tax.
(b) Xxxxxx has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(c) Xxxxxx does not expect any authority to assess any additional
Taxes for any period for which Tax Returns have been filed. There is no
dispute or claim concerning any Tax Liability of Xxxxxx either (A) claimed
or raised by any authority in writing or (B) as to which Xxxxxx has
knowledge based upon personal contact with any agent of such authority.
(d) Xxxxxx has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment
or deficiency.
5.12. Real Property.
-------------
(a) With respect to each parcel of real property owned by Xxxxxx or
leased by Xxxxxx and used in the conduct of its business: (i) Xxxxxx or a
Subsidiary thereof has good and marketable title to the parcel of real
property, free and clear of any Adverse Claim, except for installments of
special assessments not yet delinquent and recorded
-31-
easements, covenants, and other restrictions which are not violated by and
do not impair the current use of the property subject thereto, (ii) there
are no pending or threatened condemnation proceedings, lawsuits, or
administrative actions relating to the property or other matters affecting
adversely the current use, occupancy or value thereof; and (iii) all
facilities have received all approvals of governmental and local
governmental authorities (including licenses and permits) required in
connection with the ownership or operation thereof as owned and operated by
Xxxxxx and have been operated and maintained in accordance with applicable
laws, rules, and regulations.
(b) With respect to each lease and sublease relating to real
property leased or subleased by Xxxxxx and used in the conduct of its
business: (i) the lease or sublease is legal, valid, binding, and in full
force and effect, (ii) no party is in breach or default under the lease or
sublease, and no event has occurred which, with notice or lapse of time,
would constitute a breach or default which in either case is likely to give
rise to a forfeiture of the lease in question.
5.13. Intellectual Property. With respect to the registered patents, patent
---------------------
rights and trademarks and applications for any of the foregoing owned by Xxxxxx,
except as described in Section 5.13 of the Xxxxxx Disclosure Schedule:
(a) Xxxxxx is the sole and exclusive owner and has the sole and
exclusive right to use the same in the conduct of its business;
(b) no written notice has been received by Xxxxxx that any
proceedings have been instituted, are pending or threatened, and no written
claim has been received by Xxxxxx which challenge any rights in respect
thereto or the validity or enforceability thereof;
(c) to the Knowledge of Xxxxxx, none of the aforesaid infringes
upon or otherwise violates the rights of others or is being infringed upon
by others, and none is subject to any outstanding order, decree, judgment,
stipulation or charge;
(d) no written licenses, sublicenses or agreements pertaining to
any of the aforesaid have been granted by Xxxxxx;
(e) Xxxxxx has not received any written notice of interference or
infringement of any of the foregoing;
(f) all trademark and copyright registrations are currently in
force;
(g) there are no royalty or other payment obligations associated
with Xxxxxx'x use of the foregoing items of intellectual property; and
(h) there are no Adverse Claims on any of the foregoing.
5.14. Software. Xxxxxx has all right, title and interest in, or a valid
--------
license to use, all Xxxxxx Software necessary for the conduct of its business.
Xxxxxx owns all right, title and interest in the Xxxxxx Software that is not
designated as licensed, free and clear of any liens, encumbrances, restrictions,
or legal or equitable claims of others. "Xxxxxx Software" means all
-32-
electronic data processing systems, information systems, computer software
programs, program specifications, charts, procedures, source codes, object
codes, input data, routines, data bases and report layouts and formats, record
file layouts, diagrams, functional specifications and narrative descriptions,
flow charts and other related material and documentation and any and all
licenses and copies thereof and rights thereto which is proprietary to Xxxxxx or
material to the operation of its business (other than licenses of software that
is generally commercially available).
5.15. Contracts. Section 5.15 of the Xxxxxx Disclosure Schedule lists the
---------
following contracts and other agreements to which Xxxxxx is a party or by which
it is bound, other than such agreements among Xxxxxx and its Subsidiaries or the
financial consequences of which are reflected in the Xxxxxx Financial Statements
as of and for the fiscal year ended September 30, 2001 (the "Xxxxxx Contracts"):
(a) any agreement with a client or supplier that involves revenue
or expense in excess of $7,500,000 per annum, other than agreements
pertaining to Total Benefits Administration;
(b) any agreement with a client pertaining to Total Benefits
Administration that involves revenue in excess of $10,000,000 per annum;
(c) any agreement for the lease of personal property to or from
any person providing for lease payments in excess of $7,500,000 per annum;
(d) any agreement for the lease of real property;
(e) any agreement constituting a partnership or joint venture;
(f) any agreement under which it has created, incurred, assumed or
guaranteed any indebtedness for borrowed money, or any capitalized lease
obligation in excess of $7,500,000 or under which it has imposed an Adverse
Claim on any material amount of its assets, tangible or intangible;
(g) any agreement concerning exclusivity or non-competition;
(h) any profit sharing, option, equity purchase, equity
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former partners, associates,
and employees;
(i) any collective bargaining agreement or other agreement or
arrangement with any trade union, staff association, staff works council or
other organization;
(j) any agreement under which it has advanced or loaned any
material amount to any of its partners, associates, and employees;
(k) any license involving consideration in excess of $7,500,000
per annum; and
(l) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $7,500,000.
-00-
Xxxxxx will make available to Bacon & Xxxxxxx upon request a correct and
complete copy of each written agreement listed in Section 5.15 of the Xxxxxx
Disclosure Schedule (as amended to date) and a written summary setting forth the
terms and conditions of each oral agreement referred to in Section 5.15 of the
Xxxxxx Disclosure Schedule. With respect to each such agreement, including those
agreements with respect to which the financial consequences are reflected in the
Xxxxxx Financial Statements as of and for the fiscal year ended September 30,
2001: (i) the agreement is legal, valid, binding, and in full force and effect;
(ii) no party is in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the agreement; and (iii) no
party has repudiated any provision of the agreement.
5.16. Insurance. With respect to each insurance policy (including policies
---------
providing professional liability, property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which Xxxxxx is
currently a party, a named insured, or otherwise the beneficiary of coverage, to
the Knowledge of Xxxxxx, the policy is legal, valid, binding, enforceable, and
in full force and effect.
5.17. Litigation. Section 5.17 of the Xxxxxx Disclosure Schedule sets forth
----------
each instance in which Xxxxxx (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or, to the
Knowledge of Xxxxxx, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the actions, suits, proceedings,
hearings, and investigations set forth in Section 5.17 of the Xxxxxx Disclosure
Schedule is likely to result in a material adverse effect on Xxxxxx. Xxxxxx has
not received notice of any investigation threatened or contemplated by any
foreign, federal, state or local governmental or regulatory authority.
5.18. Employees. Xxxxxx has paid or made provision for the payment of all
---------
salaries and wages accrued to or for the benefit of its employees and has
complied with all applicable laws, rules, and regulations relating to the
employment of labor, including those relating to wages, hours, collective
bargaining, and the payment and withholding of Taxes (collectively, the "Xxxxxx
Employment Obligations"). Xxxxxx is not a party to any collective bargaining
agreement or other agreement or arrangement (whether in writing or by custom and
practice) with any trade union, staff association, staff works council or other
organization of employees. Except as set forth in Schedule 5.18 of the Xxxxxx
Disclosure Schedule, Xxxxxx is in compliance with all applicable laws and
regulations respecting labor, employment, fair employment practices, terms and
conditions of employment, and wages and hours. Except as set forth in Schedule
5.18 of the Xxxxxx Disclosure Schedule, there is no current, written, or
unresolved labor grievance material to Xxxxxx as a whole brought by any of the
employees of Xxxxxx and no proceeding material to Xxxxxx as a whole is pending,
or to the Knowledge of Xxxxxx, threatened, and no claim therefor has been
asserted. Except as set forth on Schedule 5.18 of the Xxxxxx Disclosure
Schedule, to the Knowledge of Xxxxxx, there is no inquiry or investigation
existing, pending or threatened into Xxxxxx by the Equal Employment Opportunity
Commission, the Commission for Racial Equality, the Commission for Disability
Rights or any other similar authority. There are no claims in respect of the
Xxxxxx Employment Obligations pending, or to the Knowledge of Xxxxxx, threatened
relating to Xxxxxx.
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5.19. Employee Benefits. Each Employee Benefit Plan that Xxxxxx maintains
-----------------
or to which Xxxxxx contributes with respect to its employees (and each related
trust, insurance contract, or fund) complies in form and in operation with the
requirements of all applicable laws. All required reports and descriptions have
been filed with the appropriate governmental authority or distributed to
employees to each Employee Benefit Plan. All contributions (including all
employer contributions and employee salary reduction contributions) which are
due have been paid to each such Employee Benefit Plan which is an Employee
Pension Benefit Plan. All premiums or other payments which are due have been
paid with respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan. Xxxxxx will, upon written request, deliver to Bacon &
Xxxxxxx correct and complete copies of the plan documents and summary plan
descriptions, governmental reports, and all related trust agreements, insurance
contracts, and other funding agreements which implement each such Employee
Benefit Plan.
5.20. Clients. Section 5.20 of the Xxxxxx Disclosure Schedule sets forth an
-------
accurate, correct and complete list of the 20 largest clients of Xxxxxx
Associates (determined on the basis of revenues from services rendered) and the
revenues of Xxxxxx associated therewith for the fiscal year ended September 30,
2001.
ARTICLE VI
TRANSITION PERIOD; COVENANTS OF THE PARTIES
6.1. General. During the Transition Period, the parties shall continue as
-------
separate contracting entities and neither party shall hold itself out as an
agent or partner of the other, except as expressly agreed between the parties
during the Transition Period, nor do or permit to be done any act or make or
permit to be made any statement or representation which might cause any third
party to believe that either party acts as agent or partner of the other or is
otherwise liable for the acts or omissions of the other.
6.2. [Reserved].
6.3. Interim Conduct of the Business. During the Transition Period, the
-------------------------------
Continuing Partners shall cause Bacon & Xxxxxxx to use all reasonable efforts to
preserve and maintain the Business and operate the Business substantially
consistent with past practice and in the ordinary course of business in all
material respects, except as specifically provided herein. Without limiting the
generality of the foregoing, except (i) as otherwise required or contemplated
hereby or (ii) with respect to clauses (a), (b), (g) and (h) below, as would not
reasonably be expected to result in a material adverse effect on the Business,
taken as a whole or (iii) as agreed to in writing by Xxxxxx, during the
Transition Period, the Continuing Partners shall cause Bacon & Xxxxxxx to:
(a) not breach any obligations under any of the Bacon & Xxxxxxx
Contracts;
(b) not enter into, amend or terminate or agree to enter into, amend
or terminate any Employee Benefit Plan or any employment, bonus, severance
or retirement contract or arrangement, nor increase or agree to increase
any salary or other form of compensation or benefits payable or to become
payable to any employee, except to
-35-
establish the Employee Trust or in the ordinary course of business
consistent with past practice;
(c) not admit any new equity partners in Bacon & Xxxxxxx;
(d) not increase the amounts payable under any outstanding annuity
obligations other than in accordance with their terms (or as provided in
the Deed of Assumption);
(e) not enter into, amend or terminate, or agree to enter into, amend
or terminate, any B&W Contract involving consideration in excess
of (Pounds)1,000,000;
(f) use reasonable efforts to maintain its books, accounts and records
in the usual, regular and ordinary manner on a basis consistent with past
practice;
(g) not sell, lease or otherwise dispose of or agree to sell, lease or
otherwise dispose of, any assets other than those set forth in Article XI
with a value in excess of (Pounds)500,000; and
(h) not purchase, acquire or lease or agree or commit to purchase,
acquire or lease any asset for an amount in excess of (Pounds)500,000.
The Continuing Partners shall cause Bacon & Xxxxxxx and Newco to not make any
distribution after May 31, 2002. During the Transition Period, the Authorized
Partners shall confer on a regular and frequent basis with one or more
designated representatives of Xxxxxx to report on the general status of on-going
operations of the Business and to promptly notify Xxxxxx of any event of which
they become aware that would reasonably be expected to cause any representation
or warranty herein to become false and shall keep Xxxxxx reasonably informed of
such events.
6.4. Xxxxxx Covenants. During the Transition Period, Xxxxxx shall use all
----------------
reasonable efforts to preserve and maintain its business and operate its
business substantially consistent with past practice and in the ordinary course
of business, except as specifically provided herein. Without limiting the
generality of the foregoing, except (i) as otherwise required or contemplated
hereby or (ii) with respect to clauses (a), (b), (e) and (f) below, as would not
reasonably be expected to result in a material adverse effect on Xxxxxx or (iii)
as agreed to in writing by the Authorized Partners, during the Transition Period
Xxxxxx and Xxxxxx Associates shall:
(a) not breach any obligations under any of the Xxxxxx Contracts;
(b) not enter into, amend or terminate or agree to enter into, amend
or terminate any Employee Benefit Plan or any employment, bonus, severance
or retirement contract or arrangement, nor increase or agree to increase
any salary or other form of compensation or benefits payable or to become
payable to any employee, except in the ordinary course of business
consistent with past practice;
(c) except with respect to contracts pertaining to Total Benefits
Administration, not enter into, amend or terminate, or agree to enter into,
amend or terminate, any Xxxxxx Contract involving consideration in excess
of $7,500,000;
-36-
(d) use reasonable efforts to maintain its books, accounts and records
in the usual, regular and ordinary manner on a basis consistent with past
practice, except for such modifications that may be necessary or desirable
in connection with the Xxxxxx Company IPO;
(e) except with respect to real estate assets, not sell, lease or
otherwise dispose of or agree to sell, lease or otherwise dispose of, any
assets with a value in excess of $7,500,000; and
(f) except with respect to real estate assets, not purchase, acquire
or lease or agree to commit to purchase, acquire or lease any asset for an
amount in excess of $7,500,000.
During the Transition Period, Xxxxxx shall xxxxxx on a regular and frequent
basis with one or more designated representatives of the Continuing Partners to
report on the general status of on-going operations of Xxxxxx and Xxxxxx
Associates and to promptly notify the Continuing Partners of any event that
would reasonably be expected to cause any representation or warranty herein to
become false and shall keep the Continuing Partners reasonably informed of such
events.
Xxxxxx hereby undertakes in the terms set forth on Schedule 3.
6.5. Continuing Partner Covenants. During the Transition Period, each
----------------------------
Continuing Partner agrees, as to himself or herself but not as to any other
Continuing Partner:
(a) not to sell, transfer or convey any interest in Bacon & Xxxxxxx or
Newco except, (i) in accordance with the Bacon & Xxxxxxx Partnership Deed,
and (ii) upon a Continuing Partner's death, disability or retirement or
otherwise ceasing to be a partner;
(b) to keep his partnership interest in Bacon & Xxxxxxx and his shares
in Newco free and clear of all Adverse Claims;
(c) to take such actions as are necessary to effect Incorporation
following the Xxxxxx Incorporation as contemplated by Section 2.1;
(d) not during the Transition Period to (and to instruct the officers,
representatives, agents and advisors of Bacon & Xxxxxxx not to) solicit,
encourage or negotiate any proposal from or with, or supply information to
or engage in discussions with, persons other than Xxxxxx or its
representatives with respect to, or in connection with, the acquisition of
the business of Bacon & Xxxxxxx or Newco, taken as a whole, regardless of
how such acquisition is structured.
6.6. Consummation.
------------
(a) Subject to the terms and conditions provided herein, each
Continuing Partner agrees, as to himself or herself but not as to any other
Continuing Partner, to use all reasonable efforts to take, or cause to be
taken all actions and to do, or cause to be done all things necessary,
proper or advisable under applicable laws and regulations to consummate and
use reasonable efforts to make effective the transactions contemplated by
this Agreement in accordance with its terms. No Continuing Partner shall
-37-
intentionally take any action inconsistent with its obligations hereunder
or which would hinder or delay the consummation of the transactions
contemplated hereby.
(b) Subject to the terms and conditions provided herein, Xxxxxx
agrees to use all reasonable efforts to take, or cause to be taken all
actions and to do, or cause to be done all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement in accordance
with its terms. Xxxxxx shall not take any action inconsistent with its
obligations hereunder or which would hinder or delay the consummation of
the transactions contemplated hereby.
6.7. Cooperation with Regulatory Filings. Xxxxxx and the Continuing
-----------------------------------
Partners shall cooperate in preparing any regulatory filings or notifications to
governmental authorities necessary to consummate the transactions contemplated
hereby.
6.8. Press Release. No press release or other public announcement
-------------
related to this Agreement or the transactions contemplated hereby will be issued
by any party hereto without the prior approval of the other party, except that
any party may make such public disclosure, which it believes in good faith to be
required by law or by the requirements of any regulatory body or applicable
securities exchange upon delivering prior notice to the other party hereto and
providing the other party with an opportunity to comment thereon.
6.9. Access and Rights of Inspection; Financial Information. Each
------------------------------------------------------
Continuing Partner shall, as to himself or herself but not as to any other
Continuing Partner, upon request by Xxxxxx furnish to Xxxxxx or Xxxxxx'x
professional advisers such information, documentation and access to personnel of
the Business as Xxxxxx shall reasonably require in order to satisfy itself prior
to Closing as to compliance by the Continuing Partners of their obligations
hereunder and satisfaction of any conditions to Closing. Each Continuing Partner
shall, as to himself or herself but not as to any other Continuing Partner,
cooperate with Xxxxxx as may be reasonably requested by Xxxxxx, in connection
with the due diligence efforts of the underwriters in the Xxxxxx Company IPO.
6.10. Secondment of Employees. Any secondment of employees, Xxxxxx
-----------------------
Owners or Continuing Partners from one party to another during the Transition
Period shall be made on and subject to the standard terms of secondment set out
in Schedule 4 to the Heads of Agreement, subject to such variations thereto as
may be agreed in writing between Xxxxxx and the Management Group. Except as
otherwise expressly agreed in writing, it is not the intention of the parties
that the employment of any employee shall transfer from either party to the
other prior to Closing under the Transfer of Undertakings (Protection of
Employment) Regulations (as amended) or otherwise.
6.11. Guidelines and Promotion of Business. During the Transition
------------------------------------
Period, the parties shall comply with the Guidelines. No variation to the
Guidelines shall be agreed without the prior written consent of Xxxxxx and the
Authorized Partners. Subject to Sections 6.1 and 6.2, Xxxxxx on the one hand,
and Bacon & Xxxxxxx and the Continuing Partners on the other hand, each agree to
actively promote the business of the other party during the Transition Period.
-38-
6.12. Certain Transactions.
--------------------
(a) During the Transition Period, Bacon & Xxxxxxx shall not, and
the Continuing Partners shall cause Bacon & Xxxxxxx not to, engage in any
of the following types of transactions unless such transactions are
accounted for by Bacon & Xxxxxxx involving an amount in excess of $1
million (or its equivalent in another currency) in a manner notified by
Xxxxxx as being consistent with US GAAP: (i) barter or other non-monetary
transactions, (ii) any business combinations, (iii) investment in any
financial instruments, (iv) capitalization of any intangible assets, (v)
capitalization of any interest costs, (vi) any research and development,
(vii) investment in any marketable securities, (viii) issue of any
capital instruments, (ix) obtaining any government grants or (x)
participation in any employee equity option plans.
(b) No Continuing Partner shall take any action except as
requested in writing by Xxxxxx that would result in the imposition of
U.K. stamp duty in connection with the transfer of Newco shares in excess
of one-half percent (1/2%) of the consideration obtained for them.
(c) Bacon & Xxxxxxx shall not, and the Continuing Partners shall
cause Bacon & Xxxxxxx not to, deliver this Agreement to any person to
whom such delivery would constitute a violation of Section 21 of the
Financial Services and Markets Act (2000).
6.13. Powers of Attorney with Respect to Newco Shares. Each Continuing
-----------------------------------------------
Partner hereby irrevocably and unconditionally appoints the Xxxxxx Company with
effect on and from the Closing as his attorney with full xxxxxx of substitution
in his name and for him and on his behalf (and to the complete exclusion of any
rights he may have in such regard) lawfully to exercise all voting and other
rights and receive all the benefits and entitlements which may now or at any
time hereafter attach to his Newco shares or any of the Newco shares registered
in his name (whether alone or jointly with any other person) and to transfer and
deal with such shares, rights, benefits and entitlements and execute such
documents under hand or as a deed and do such acts and things in connection with
the foregoing as the Xxxxxx Company shall from time to time think fit in all
respects as if the Xxxxxx Company were the absolute legal and beneficial owner
thereof. The powers of attorney granted in this Section are given by way of
security for the due performance by each Continuing Partner of his obligations
thereby contemplated.
ARTICLE VII
CORPORATE GOVERNANCE - BACON & XXXXXXX
7.1. Bacon & Xxxxxxx Partnership Deed. Pending Incorporation, the
--------------------------------
business of the Continuing Partners will be governed by the Bacon & Xxxxxxx
Partnership Deed, as amended from time to time. Pending Incorporation, the
Continuing Partners shall not amend or modify the Bacon & Xxxxxxx Partnership
Deed in a manner which is likely to materially prejudice the interests of Xxxxxx
under this Agreement without the prior written consent of Xxxxxx, except as
contemplated by this Agreement. The Continuing Partners shall promptly notify
Xxxxxx of any amendment or modification to the Bacon & Xxxxxxx Partnership Deed.
The provisions of the
-39-
Bacon & Xxxxxxx Partnership Deed and the Articles of Association of Newco shall
govern the terms upon which, inter alia, Continuing Partners may retire or
otherwise cease to be a partner during the Transition Period. Any Continuing
Partner who ceases to be a partner prior to the Closing shall thereupon cease to
have any rights or obligations under this Agreement (other than obligations
under Article XXIV).
7.2. New Partners. The parties acknowledge that no person shall become a
------------
Continuing Partner under the Agreement except with the prior written consent of
Xxxxxx.
7.3. Salary Increases. Pending Incorporation, the Continuing Partners
----------------
shall consult with Xxxxxx prior to making any annual increase in excess of eight
percent to any of the levels of Base Salary contained in Part 1 of Schedule 3 to
the Bacon & Xxxxxxx Partnership Deed.
7.4. Xxxxxx Designees. Subject to Section 9.5, the Continuing Partners
----------------
shall take all actions necessary to elect or appoint Xxxxxx'x designees as the
directors and officers of Newco and its Subsidiaries following the Closing.
ARTICLE VIII
CORPORATE GOVERNANCE - XXXXXX
8.1. Xxxxxx Operating Agreement. During the Transition Period, Xxxxxx
--------------------------
shall not amend or modify its Articles of Organization or the Xxxxxx Operating
Agreement, and the Xxxxxx Company shall not amend or modify its Certificate of
Incorporation, Bylaws or the terms of the Xxxxxx Preferred Shares, in each case,
in a manner which is likely to materially prejudice the interests of any
Continuing Partner under this Agreement without the prior written consent of the
Management Group; provided, that the foregoing shall not restrict Xxxxxx from
--------
effecting a transaction or adopting a plan pursuant to Section 13 of the Xxxxxx
Operating Agreement. Xxxxxx shall promptly notify the Continuing Partners of any
amendment or modification thereto during the Transition Period.
8.2. Access and Rights of Inspection; Financial Information. Xxxxxx shall
------------------------------------------------------
upon request by Bacon & Xxxxxxx xxxxxxx to Xxxxx & Xxxxxxx or Xxxxx & Xxxxxxx'x
professional advisers such information, documentation and access to personnel as
Bacon & Xxxxxxx shall reasonably require in order to satisfy itself prior to
Closing as to compliance by Xxxxxx of its obligations hereunder and satisfaction
of any conditions to Closing.
8.3. Bacon & Woodrow's Designees. Xxxxxx shall take all actions necessary
---------------------------
to elect or appoint the Continuing Partner's designees to those certain
positions contemplated in Sections 9.1 through 9.5.
ARTICLE IX
MANAGEMENT PARTICIPATION
9.1. UK Country Manager. The Xxxxxx Leadership Council (formerly known as
------------------
the Xxxxxx Management Council) currently consists of 20 persons. For a period of
not less than three years following Closing, one seat on the Xxxxxx Leadership
Council (or a successor
-40-
committee having similar responsibilities or authority) shall be occupied by the
UK Country Manager. For a period of not less than three years following Closing,
the position of UK Country Manager shall be held by a person appointed by a
resolution passed by a simple majority of the Continuing Partners who shall then
be employed by Newco (or an affiliate thereof) voting thereon. The UK Country
Manager shall throughout such three year period continue to be responsible for
recommending the Basic Salary to be allocated to each Continuing Partner within
the business of Xxxxxx carried on in the United Kingdom. If the size of the
Xxxxxx Leadership Council (or any successor thereto) is enlarged, Xxxxxx agrees
that the Continuing Partners' right to nominate additional seats on the Xxxxxx
Leadership Council (or any successor thereto) shall be proportionate (rounding
to the nearest whole number) to the number of seats previously nominated by the
Continuing Partners under this Section 9.1.
9.2. Executive Committee. The Xxxxxx Executive Committee currently
-------------------
consists of eleven (11) voting members. For a period of not less than three
years following Closing, at least one seat on the Xxxxxx Executive Committee
(and any successor committee having similar responsibilities or authority) shall
be occupied by a Continuing Partner nominated for the purpose by a resolution
passed by a simple majority of the Continuing Partners who shall then be
employed by Newco (or an affiliate thereof) voting thereon. If the size of the
Xxxxxx Executive Committee (or any successor thereto) is enlarged, Xxxxxx agrees
that the Continuing Partners' right to nominate additional seats on the Xxxxxx
Executive Committee (or any successor thereto) shall be proportionate (rounding
to the nearest whole number) to the number of seats previously nominated by the
Continuing Partners under this Section 9.2. The member of the Xxxxxx Executive
Committee nominated by the Continuing Partners shall be nominated at the next
annual election for membership on the Xxxxxx Executive Committee after the
Closing or, if sooner, when a vacancy is created thereon after the Closing. For
the avoidance of doubt it is acknowledged that nothing in this Article IX shall
entitle the Continuing Partners to nominate any representative to the board of
directors (or any committee thereof) of Xxxxxx or of the Xxxxxx Company
following any IPO of the Xxxxxx Company.
9.3. Xxxxxx Investment Practice. For a period of not less than three
--------------------------
years following Closing, the global leader of the Xxxxxx Investment Practice
shall be a person approved by a resolution passed by a simple majority of the
Continuing Partners who shall then be employed by Newco (or an affiliate
thereof) voting thereon.
9.4. European Board. The European Board currently consists of eleven (11)
--------------
persons. For a period of not less than three years following Closing, at least
two seats on the European Board (or a successor committee having similar
responsibilities or authority) shall be occupied by persons approved by
resolutions passed by a simple majority of the Continuing Partners who shall
then be employed by Newco (or an affiliate thereof) voting thereon. If the size
of the European Board (or any successor thereto) is enlarged, Xxxxxx agrees that
the Continuing Partners' right to nominate additional seats on the European
Board (or any successor thereto) shall be proportionate (rounding to the nearest
whole number) to the number of seats previously nominated by the Continuing
Partners under this Section 9.4.
9.5. Newco Board. For a period of not less than three years following
-----------
Closing, at least two seats on the Newco Board shall be occupied by persons
approved by resolutions passed by a simple majority of the Continuing Partners
who shall then be employed by Newco (or an affiliate
-41-
thereof) voting thereon. If the size of the Newco Board (or any successor
thereto) is enlarged, Xxxxxx agrees that the Continuing Partners' right to
nominate additional seats on the Newco Board (or any successor thereto) shall be
proportionate (rounding to the nearest whole number) to the number of seats
previously nominated by the Continuing Partners under this Section 9.5.
9.6. Attendance at Xxxxxx Meetings. Subject to Section 9.8, during the
-----------------------------
Transition Period and until the Continuing Partners' nominee is first appointed
to the Xxxxxx Executive Committee pursuant to Section 9.2, one Continuing
Partner nominated for the purpose by the others shall be provided with all
materials sent to members of the Xxxxxx Executive Committee (including, without
limitation, all materials sent to such members generally in relation to Xxxxxx'x
business) and shall be entitled to attend all meetings thereof in a non-voting
capacity and another Continuing Partner so nominated shall be provided with all
materials sent to members of the Xxxxxx Leadership Council and shall be entitled
to attend all meetings of such Council in a non-voting capacity. Subject to
Section 9.8, during the Transition Period, the global head of investment of
Bacon & Xxxxxxx shall be provided with all papers sent to members of the Xxxxxx
Global Council and shall be entitled to attend all meetings thereof in a
non-voting capacity. Subject to Section 9.8, during the Transition Period, two
Continuing Partners shall be provided with all materials sent to members of the
Xxxxxx European Board and shall be entitled to attend all meetings thereof in a
non-voting capacity.
9.7. Attendance at Bacon & Xxxxxxx Meetings. Subject to Section 9.8,
--------------------------------------
during the Transition Period, Xxxxxx shall be provided with all materials sent
to Continuing Partners generally in relation to their business and:
(a) any two of the Chairman, Chief Executive and European Region
Manager of Xxxxxx (or their designees) shall be entitled to attend all
full Bacon & Xxxxxxx partners' meetings; and
(b) any one of such persons shall be entitled to attend all meetings
of the Partnership Committee,
in each case in a non-voting capacity.
9.8. Right to Exclude from Meetings. Notwithstanding anything herein to
------------------------------
the contrary, no party shall prior to Closing be required to disclose to any
representative of the other any information which relates to any negotiations
between the parties or which is otherwise regarded as confidential to that party
and any representative of one party attending a meeting of any body of the other
party may be excluded from any part of any meeting which discusses such
negotiations or any such confidential matter. It is acknowledged that the Xxxxxx
representatives referred to in Section 9.7 will not be present during any
discussions relating to the Demerger and Business Transfer Agreement, the
Insurance Partners (as defined in that agreement) or any matter relating to the
individual circumstances of any Continuing Partner or former partner of Bacon &
Xxxxxxx.
9.9. Additional Committees. For a period of not less than three years
---------------------
following Closing the Continuing Partners' right to nominate a Continuing
Partner to the Xxxxxx Executive Committee in Section 9.2 shall also apply to the
committee established by the Xxxxxx Company board of directors to succeed to the
responsibilities of the Xxxxxx Leadership Council.
-42-
ARTICLE X
[RESERVED]
ARTICLE XI
DIVESTITURE
11.1. Divestiture of Bacon & Xxxxxxx Businesses. During the Transition
-----------------------------------------
Period, the Continuing Partners shall have due regard to, and shall discuss with
Xxxxxx in good faith, any proposal made by Xxxxxx that the Continuing Partners
should seek to dispose of the pensions and associated products mis-selling
review and calculation business carried on in the Compliance Consulting Unit of
Bacon & Xxxxxxx. Should the Continuing Partners decide to dispose of that
business (or if either party should decide to dispose of any other major
division of its business) prior to Closing the parties shall enter into
negotiations to agree to such amendments, if any, to the financial arrangements
described in this Agreement as shall be appropriate to reflect the effect of
such disposal on the relative values of the parties' businesses.
11.2. Xxxxx, Xxxxxxx & xx Xxxxx; Xxxxx & Xxxxxxx France. The Continuing
-------------------------------------------------
Partners will retain their interest in the Trinidad firm of Xxxxx, Xxxxxxx & xx
Xxxxx and the French firm of Bacon & Xxxxxxx France and any liability in
connection therewith shall be an Excluded Liability (including without
limitation the indemnification obligations of the Continuing Partners). For the
avoidance of doubt, the Continuing Partners' Interest in Xxxxx, Xxxxxxx & xx
Xxxxx and Xxxxx & Xxxxxxx France shall not be transferred to Newco. In the event
the Continuing Partners sell or transfer their interest in Xxxxx, Xxxxxxx & xx
Xxxxx or Xxxxx & Xxxxxxx France the Exchange Consideration shall not be reduced.
ARTICLE XII
DEMERGER COSTS
12.1. General. As a contribution to the Continuing Partners' costs of the
-------
demerger of Bacon & Xxxxxxx, Xxxxxx shall make additional payments to the
Continuing Partners in the manner set forth on Schedule 2.
ARTICLE XIII
BACON & XXXXXXX ANNUITIES
13.1. Retirement Annuities.
--------------------
(a) Upon the Incorporation Date, the Continuing Partners, Newco and
the Xxxxxx Company shall enter into the Deed of Assumption in the form of
Schedule 3 to the Business Purchase Agreement in respect of retirement
annuities currently in payment or to become payable in the future to
certain former partners of Bacon & Xxxxxxx or their spouses or dependants.
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(b) None of the Continuing Partners has any right to receive
retirement annuity payments pursuant to the Bacon & Xxxxxxx
Partnership Deed (except for provisions relating to death in service
or retirement as a result of ill-health or disability prior to the
closing of the Xxxxxx Company IPO).
13.2. Undertakings under Demerger Agreement. The Continuing Partners
-------------------------------------
have agreed with Deloitte & Touche and the Insurance Partners (as defined in the
Demerger and Business Transfer Agreement dated 20th December, 2002 among the
then Partners of Bacon & Xxxxxxx and Deloitte & Touche (the "Demerger
Agreement")) that upon execution and delivery of the Deed of Assumption referred
to in Section 13.1(a), such Insurance Partners will be released from their
obligation under sub-clause 18.2(B) of the Demerger Agreement to contribute to
the cost of funding annuity payments to former partners of Bacon & Xxxxxxx and
that Deloitte & Touche will be released from their obligation to guarantee the
performance by the Insurance Partners of that obligation, in return for a
payment by Deloitte & Touche to Newco of the sum of (pound)2.71 million.
13.3. Retired Partner Annuities. (a) The parties agree that the
-------------------------
Retired Partner Annuity Costs shall be borne as follows:
(i) as to the first(pound)16.49 million, by the Xxxxxx
Company or Newco; and
(ii) as to any amount thereof exceeding(pound)16.49 million
but not exceeding(pound)17 million, by the Continuing Partners.
(b) Any amount to be borne by the Continuing Partners pursuant
to Section 13.3(a) shall be allocated among them in the proportions in
which they are to receive Xxxxxx Preferred Shares pursuant to Section
2.1(e)(ii) (or such other proportions as they shall agree).
(c) In the event that the Continuing Partners are required to
bear any amount of the Retired Partner Annuity Costs under Section
13.3(a)(ii), the Continuing Partners shall be credited as having borne
(pound)60,000 of such amount already as a result of having borne
certain expenses prior to the date hereof.
(d) Any amount to be borne by the Continuing Partners pursuant
to Section 13.3(a) shall be satisfied in such manner as the Authorised
Partners shall consider to be most beneficial to the Continuing
Partners having regard to tax efficiency and any other factors.
ARTICLE XIV
SERVICE AGREEMENTS
14.1. Xxxxxx undertakes to the Original Continuing Partners to
procure that Newco will distribute among the Original Continuing Partners in
each year:
(i) the whole of the Additional Amount by way of Additional
Bonuses under paragraph 1.1(b) of Schedule A to the Original
Continuing Partners' Service Agreements;
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(ii) (until the IPO Date) the whole of the Additional Reward
Pool by way of Additional Reward under paragraph 1.1(c) of Schedule A
to the Original Continuing Partners' Service Agreements; and
(iii) (until the IPO Date) the whole of the Xxxxxx Surplus Amount
by way of Xxxxxx Surplus Share under paragraph 1.1(d) of Schedule A to
the Original Continuing Partners' Service Agreements.
ARTICLE XV
USE OF NAMES
15.1. General.
-------
(a) Without prejudice to Section 15.1(b), during the Transition
Period the Continuing Partners shall carry on business under the name
Bacon & Xxxxxxx.
(b) To the extent permitted under Section 6.1, the parties may
publish during the Transition Period marketing and promotional
literature and letterheading employing the joint name of "Xxxxxx Bacon
& Xxxxxxx" with effect from such date as the parties shall agree, but
all letterheading shall make clear to third parties the party on
behalf of which the relevant communication is made, and shall comply
with all applicable laws and regulations.
(c) Neither party shall, prior to Closing, issue to clients,
suppliers, employees or any other group of persons generally, any
marketing or promotional literature or other communication under, or
employing, the name "Xxxxxx Bacon & Xxxxxxx", or any combination of
the names "Xxxxxx" and "Bacon & Xxxxxxx", except with the prior
written approval of Xxxxxx and the Authorized Partners.
15.2. Name License. The parties acknowledge they have entered into a
------------
Name License in respect of the use of the name "Xxxxxx Xxxxx & Xxxxxxx" which
shall remain in full force and effect.
15.3. Use of Name in Other Territories. The Continuing Partners shall
--------------------------------
use reasonable efforts to ensure that the use of the name "Bacon & Xxxxxxx" by
them or any subsidiary company of Bacon & Xxxxxxx in any territory does not
cause confusion with any existing business which Xxxxxx may have in such
territory, insofar as it is within their control having regard to the terms of
any applicable licensing agreements.
ARTICLE XVI
CONDITIONS PRECEDENT TO OBLIGATIONS
OF XXXXXX AND THE XXXXXX COMPANY
Each and all of the obligations of Xxxxxx and the Xxxxxx Company to
consummate the transactions contemplated by this Agreement are subject to
fulfillment prior to or at the Closing of the following conditions:
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16.1. Accuracy of Representations and Warranties; Performance of
----------------------------------------------------------
Covenants. The representations and warranties of Bacon & Xxxxxxx and the
---------
Continuing Partners contained herein being true and correct in all material
respects as of the date hereof (except as disclosed in the B&W Disclosure
Schedule) and as of the Closing as if made on the Closing Date (except as
disclosed in the B&W Closing Disclosure Schedule). Bacon & Xxxxxxx and the
Continuing Partners shall have performed all of the obligations and complied in
all material respects with all of the covenants required to be performed or
complied with by any Continuing Partner or Bacon & Xxxxxxx at or prior to the
Closing on the basis that references to Bacon & Xxxxxxx shall be treated as
references to Newco where appropriate. The Management Group shall have delivered
the B&W Closing Disclosure Schedule and a certificate confirming the matters in
each of the foregoing sentences as of the Closing Date; provided, that the B&W
Closing Disclosure Schedule may only disclose facts or circumstances arising
after the date hereof which would cause any representations or warranties to be
incorrect and, if such developments individually or in the aggregate would be
reasonably likely to result in a material adverse effect on the Business,
neither Xxxxxx nor the Xxxxxx Company shall be obligated to consummate the
transactions contemplated hereby (it being understood that if Xxxxxx and the
Xxxxxx Company close the transactions contemplated hereby closes after delivery
of the B&W Closing Disclosure Schedule and the aforementioned certificate, then
Xxxxxx and the Xxxxxx Company shall have no recourse for matters set forth
therein).
16.2. No Pending Action. No action or proceeding before any court or
-----------------
governmental body shall be pending wherein an unfavorable judgment, decree or
order would prevent the carrying out of this Agreement or any of the
transactions contemplated hereby, declare unlawful the transactions contemplated
by this Agreement or cause such transactions to be rescinded or prevent Newco,
Xxxxxx or the Xxxxxx Company from operating the Business as currently conducted.
16.3. Continuing Partners. The number of Continuing Partners who are
-------------------
engaged by the Business on a full-time basis at the Closing shall be not less
than thirty (30) less any deceased Continuing Partners.
16.4. Incorporation. The Incorporation shall have occurred.
-------------
ARTICLE XVII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF BACON & XXXXXXX AND CONTINUING PARTNERS
Each and all of the obligations of Bacon & Xxxxxxx and the Continuing
Partners to consummate the transactions contemplated by this Agreement are
subject to fulfillment prior to or at the Closing of the following conditions:
17.1 Accuracy of Representations and Warranties; Performance of
----------------------------------------------------------
Covenants. The representations and warranties of Xxxxxx and the Xxxxxx Company
---------
contained herein being true and correct in all material respects as of the date
hereof (except as disclosed in the Xxxxxx Disclosure Schedule) and as of the
Closing as if made on the Closing Date (except as disclosed in the Xxxxxx
Closing Disclosure Schedule). Xxxxxx and the Xxxxxx Company shall have
-46-
performed all of the obligations and complied with all of the covenants required
to be performed or complied with by Xxxxxx and the Xxxxxx Company at or prior to
the Closing. Xxxxxx and the Xxxxxx Company shall have delivered the Xxxxxx
Closing Disclosure Schedule and a certificate confirming the matters in each of
the foregoing sentences as of the Closing Date; provided, that the Xxxxxx
Closing Disclosure Schedule may only disclose facts or circumstances arising
after the date hereof which would cause any representations or warranties to be
incorrect and, if such developments individually or in the aggregate would be
reasonably likely to result in a material adverse effect on Xxxxxx or the Xxxxxx
Company, the Continuing Partners shall not be obligated to consummate the
transactions contemplated hereby (it being understood that if Bacon & Xxxxxxx
and the Continuing Partners close the transactions contemplated hereby after
delivery the Xxxxxx Closing Disclosure Schedule and of the aforementioned
certificate, neither Bacon & Xxxxxxx nor any of the Continuing Partners shall
have recourse for matters set forth therein).
17.2. No Pending Action. No action or proceeding before any court or
-----------------
governmental body shall be pending wherein an unfavorable judgment, decree or
order would prevent the carrying out of this Agreement or any of the
transactions contemplated hereby, declare unlawful the transactions contemplated
by this Agreement or cause such transactions to be rescinded.
17.3. No Change of Control. There shall not have occurred a Change of
--------------------
Control of Xxxxxx or the Xxxxxx Company nor shall Xxxxxx or the Xxxxxx Company
have entered into any agreement under which such a Change of Control might
occur.
17.4. Xxxxxx Incorporation. The Xxxxxx Incorporation shall have occurred.
--------------------
ARTICLE XVIII
INDEMNIFICATION
18.1. Survival. All covenants and agreements contained in this Agreement
--------
or in any agreement or other document delivered pursuant hereto shall be deemed
to be material and to have been relied upon by the parties hereto and shall
survive the Closing and be enforceable until the covenant or agreement has been
fully performed; provided, however, if such covenant or agreement does not
-------- -------
require performance following the Closing Date, such pre-Closing covenant or
agreement shall only survive the Closing for a period of twelve (12) months from
the Closing Date. The representations and/or warranties of the Continuing
Partners contained in this Agreement or in any agreement or other document
delivered pursuant hereto shall be deemed to be material and to have been relied
upon by Xxxxxx and the Xxxxxx Company and shall survive the Closing for a period
ending twelve (12) months from the Closing Date. The representations and/or
warranties of Xxxxxx and the Xxxxxx Company contained in this Agreement or in
any agreement or other document delivered pursuant hereto shall be deemed to be
material and to have been relied upon by the Continuing Partners and shall
survive the Closing for a period ending twelve (12) months from the Closing
Date. Any claim for indemnification that is asserted in writing within the
survival period shall survive until resolved or judicially determined without
possibility of appeal. Except as otherwise provided herein, the representations
and warranties set forth in this Agreement or in any agreement or other document
delivered pursuant hereto shall not be affected by any investigation,
verification or examination by any party hereto or by anyone on behalf of any
such party. The survival period for the representations and
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warranties shall in no way affect the Xxxxxx Company's responsibility to forever
indemnify the Continuing Partners with respect to the Assumed Liabilities, nor
the Continuing Partners' responsibility to forever indemnify Xxxxxx and the
Xxxxxx Company for the Excluded Liabilities.
18.2. Indemnification.
---------------
(a) Subject to the limitations contained herein, prior to the
Closing Xxxxxx and the Xxxxxx Company shall, and following the Closing the
Xxxxxx Company shall, indemnify and hold harmless the Continuing Partners
from and against any and all Losses related to, caused by or arising from
(i) any misrepresentation or breach of warranty on the date hereof or on
the Closing Date or failure to fulfill any covenant or agreement of Xxxxxx
or the Xxxxxx Company contained herein (including, without limitation, any
misrepresentation or breach of the IPO Covenants set forth on Schedule 3
hereto) or in any agreement or other document delivered pursuant hereto for
which notice is provided during the relevant survival period if one is
specified under Section 18.1; (ii) the Assumed Liabilities; and (iii) any
actual or alleged negligence, fraud, breach of contract or other breach of
duty or default by Xxxxxx or the Xxxxxx Company or any of their respective
owners, partners, employees, agents or contractors after April 30, 2001 and
prior to the end of the Transition Period with respect to joint marketing
for the combined business or performance of services resulting from such
joint marketing efforts. For the purpose of the preceding clause (iii), any
actual or alleged negligence, fraud, breach of contract or other breach of
duty or default by an employee, owner or partner of one party while acting
in the course of his duties while on secondment to the other party shall be
treated as having been committed by the party to whom such employee, owner
or partner was seconded. "Losses" means any and all actual losses, damages,
costs and expenses (including, without limitation, reasonable attorneys'
fees, and other reasonable costs and expenses); provided, however, that
-------- -------
Losses shall (i) not include consequential (such as loss of business or
profits), incidental, special or punitive losses, damages, costs, expenses
or any diminution in value and (ii) be reduced to take into account
recoveries received or to be received by the damaged party from third
parties in connection with such losses, damages, costs and expenses except
to the extent of any increase in the insurance premiums of the damaged
party resulting from such losses, damages, costs or expenses.
(b) Subject to the limitations contained herein, the Continuing
Partners, on a pro rata basis in accordance with the number of Xxxxxx
Preferred Shares received (or to be received if the Closing has not
occurred) or the Continuing Partners interest in Bacon & Xxxxxxx or Newco,
as the case may be, if the Closing does not occur, shall indemnify and hold
harmless Xxxxxx and the Xxxxxx Company, from and against any and all
Losses, related to, caused by or arising from (i) any misrepresentation or
breach of warranty on the date hereof or on the Closing Date or failure to
fulfill any covenant or agreement of Bacon & Xxxxxxx or any Continuing
Partner contained herein or in any agreement or other document delivered
pursuant hereto for which notice is provided during the survival period (if
one is specified under Section 18.1); (ii) the Excluded Liabilities and
(iii) any actual or alleged negligence, fraud, breach of contract or other
breach of duty or default by Bacon & Xxxxxxx or any of its owners,
partners, employees, agents or contractors after April 30, 2001 and prior
to the end of the Transition Period with respect to joint
-48-
marketing efforts for the combined business or performance of services
resulting from such joint marketing efforts. For the purpose of the
preceding clause (iii), any actual or alleged negligence, fraud, breach of
contract or other breach of duty or default by an employee, owner or
partner of one party while acting in the course of his duties while on
secondment to the other party shall be treated as having been committed by
the party to whom such employee, owner or partner was seconded.
(c) No Continuing Partner shall be entitled to make a claim for
indemnification against Xxxxxx or any of its Affiliates or Subsidiaries
(including Newco) by reason of the fact such Continuing Partner was a
partner, officer, manager, employee, agent or other representative of Bacon
& Xxxxxxx or its Affiliates or Subsidiaries (whether such claim is pursuant
to any statute, agreement, contractual obligation, including the Bacon &
Xxxxxxx Partnership Deed and the Newco Memorandum and Articles of
Association) with respect to any claim made against such Continuing Partner
under Subsection 18.2(b).
(d) Except as set forth in paragraph (c) above and except with
respect to any Excluded Liability, all rights to indemnification for acts
or omissions relating to the Business occurring prior to the Closing and
now existing in favor of the Continuing Partners shall survive the Closing
and continue in effect in accordance with their respective terms.
18.3. Third Party Claims.
------------------
(a) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give
rise to a claim for indemnification against the other Party (the
"Indemnifying Party") under this Article, then the Indemnified Party shall
promptly notify the Indemnifying Party thereof in writing; provided,
--------
however, that no delay on the part of the Indemnified Party in notifying
-------
the Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is materially prejudiced.
(b) The Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
satisfactory to the Indemnified Party so long as (i) the Indemnifying Party
notifies the Indemnified Party in writing within 10 business days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against
any Losses the Indemnified Party may suffer resulting from, arising out of,
relating to, or caused by the Third Party Claim, subject to the limitations
contained in this Article XVIII and the Indemnifying Party's reservation of
rights and reimbursement if no breach is found, (ii) the Indemnifying Party
provides the Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and fulfill the
Indemnifying Party's indemnification obligations hereunder, (iii) the Third
Party Claim involves only money damages and does not seek an injunction or
other equitable relief, (iv) settlement of, or an adverse judgment with
respect to, the Third Party Claim is not, in the good faith
-49-
judgment of the Indemnified Party, likely to establish a precedential
custom of practice adverse to the continuing business interests of the
Indemnified Party, and (v) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 18.3(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), and (iii) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party.
(d) Unless and until an Indemnifying Party assumes the defense of
the Third Party claim as provided in Section 18.3(b) above or in the event
any of the conditions set forth in Section 18.3(b) become unsatisfied,
however, (i) the Indemnified Party may defend against the Third Party Claim
in any manner it reasonably may deem appropriate; provided, however, in no
-------- -------
event will the Indemnified Party consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of each of the Indemnifying Parties (such consent not
to be withheld unreasonably), (ii) the Indemnifying Party will reimburse
the Indemnified Party promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys' fees and
expenses) to the extent the Indemnified Party is entitled to
indemnification, and (iii) the Indemnifying Party will remain responsible
for any Losses the Indemnified Party may suffer resulting from, arising out
of, relating to, or caused by the Third Party Claim to the fullest extent
provided in this Article but limited to the extent the Indemnified Party is
actually entitled to indemnification.
18.4. Limitation.
----------
(a) The Continuing Partners shall not be liable to Xxxxxx or the
Xxxxxx Company for indemnification (except for payments based on the
calculation of Closing Net Worth and payment of the Excluded Liabilities
and covenants and agreements that require performance post-Closing) until
the aggregate amount of all such claims exceeds(pound)1,400,000, in which
event Xxxxxx and the Xxxxxx Company shall only be entitled to recover all
such claims in excess of such amount. Xxxxxx and the Xxxxxx Company shall
not be liable to the Continuing Partners for indemnification (except for
payments based on the calculation of Closing Net Worth and payment of the
Assumed Liabilities and covenants and agreements that require performance
post-Closing) until the aggregate amount of all such claims exceeds
(Pounds)1,400,000, in which event the Continuing Partners shall only be
entitled to recover all such claims in excess of such amount.
(b) The maximum aggregate liability of the Continuing Partners for
indemnification (except for payments based on the calculation of Closing
Net Worth and payment of the Excluded Liabilities and covenants and
agreements that require performance post-Closing) shall not exceed
(Pounds)8,400,000. The maximum aggregate
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liability of each Continuing Partner is limited as provided in Section
18.4(e) and Section 24.11. The maximum aggregate liability of Xxxxxx and
the Xxxxxx Company for indemnification (except for covenants and agreements
that require performance post-Closing, including any payment based on
calculation of Closing Net Worth and payment of the Assumed Liabilities),
shall not exceed (Pounds)8,400,000. The Xxxxxx Company's liability for
breach of the IPO Covenants shall be subject to the thresholds and
limitations set forth in Section 18.4(a) and 18.4(b). The liability of each
Continuing Partner is also limited by Section 18.4(e) and 24.11.
(c) If the Closing occurs, Xxxxxx and the Xxxxxx Company shall be
required to satisfy indemnification claims exclusively from the Escrowed
Shares pursuant to the terms of the Escrow Agreement; provided, that the
--------
foregoing limitation shall not apply with respect to indemnification claims
relating to the Excluded Liabilities or the Closing Net Worth adjustment.
If the Closing does not occur, Xxxxxx and the Xxxxxx Company shall satisfy
their indemnification claims as set forth in Section 18.4(e). Escrowed
Shares that are returned to the Xxxxxx Company in satisfaction of
indemnification claims will be valued at the then market value thereof,
which shall be determined in accordance with Subsection 2(a) of the Escrow
Agreement. Immediately prior to such return of Escrowed Shares to Xxxxxx or
the Xxxxxx Company as the case may be, the Continuing Partners shall have
the option to substitute cash (U.S. dollars) for such Escrowed Shares in an
amount equal to the then market value thereof, and upon such payment such
Escrowed Shares will be released to the Continuing Partners who made such
payment.
(d) Notwithstanding anything contained in this Agreement or any
other agreement or documents to the contrary, the remedies set forth in
Section 18.2, if any, shall be the sole and exclusive remedies for any
liability, damage, expense, liability or other obligation or other Loss (or
claim therefor), by virtue of or based upon the alleged misrepresentation
or inaccuracy in, or alleged non-fulfillment of, or breach of, or of, any
of the representations, warranties, covenants, undertakings, and other
obligations set forth or contained in this Agreement, in any schedule or
exhibit hereto or in any certificate or other document delivered pursuant
hereto or any other agreement or document, the subject of this Agreement,
the business of Bacon & Xxxxxxx and its subsidiaries, the assets,
liabilities, ownership, operation, management, use or control of such
business, any of their assets, or any of the transactions contemplated
hereby or any actions or omissions at or prior to the Closing Date, except
(i) solely to the extent of fraud (but only against the party committing
fraud and only for actual losses suffered, specifically excluding lost
profits, diminution in value, or special, consequential indirect,
consequential or punitive damages or losses and except); (ii) solely to the
extent of any covenants or agreements that require performance post-closing
(including any payment based on the calculation of Closing Net Worth and
payments of the Excluded Liabilities) in which event (and solely in such
event), all rights contained in this Article are cumulative and are in
addition to all other rights and remedies which are otherwise available,
pursuant to the terms of this Agreement or applicable law and (iii) where
injunctive relief, specific performance or other equitable relief is sought
as a remedy.
(e) The maximum aggregate liability of any Continuing Partner
hereunder shall not exceed the percentage of the Xxxxxx Preferred Shares
received (or to be received if
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the Closing has not occurred) by such Continuing Partner (expressed as
a percentage of the total number of Xxxxxx Preferred Shares received
(or to be received if the Closing has not occurred) by all Continuing
Partners at the Closing) multiplied by the Exchange Consideration. In
-------------
addition, if the Closing does not occur, Xxxxxx'x and the Xxxxxx
Company's recourse as to any Continuing Partner shall be limited solely
to such Continuing Partner's interest in Bacon & Xxxxxxx or Newco, as
the case may be.
18.5. Limitation Regarding Business Information. Save for any
-----------------------------------------
representation or warranty expressly given under this Agreement or any
subsequent written agreement to effect the combination of the parties'
businesses, each party agrees that no representation, promise or warranty,
express or implied, will be treated as being given by or on behalf of either
party (or any of such party's subsidiaries or its or its subsidiary's agents,
employees or advisers (each a "Disclosing Party")) to the other party as to the
accuracy or completeness of any Business Information and that (save in the case
of fraud) neither the Disclosing Party nor any of its subsidiaries nor any of
its subsidiaries' employees, agents or advisers shall have any liability in
respect of any such express or implied representation, promise or warranty and
each party agrees that neither it nor any of its subsidiaries or any of its
subsidiaries' employees, agents or advisers shall take any action against any
Disclosing Party in respect of any lack of accuracy or completeness of any such
Business Information.
18.6. Mitigation; Subrogation. The Indemnified Party shall take all
-----------------------
commercially reasonable steps to mitigate all indemnifiable damages after
becoming aware of any event which would reasonably be expected to give rise to
any indemnifiable damages of the Indemnifying Party. To the extent that an
Indemnifying Party has discharged any claim for indemnification hereunder, the
Indemnifying Party shall be subrogated to the rights of the Indemnified Party
against third parties.
ARTICLE XIX
TERMINATION
19.1. Termination. Notwithstanding any other provision herein, this
-----------
Agreement shall terminate:
(a) forthwith upon written notice by either party if the Xxxxxx
Incorporation shall not have occurred by February 28, 2003 or if Xxxxxx
shall have determined prior to that date not to proceed with the Xxxxxx
Incorporation; or
(b) forthwith upon written notice by either party if an Event of
Default occurs in respect of the other; or
(c) forthwith upon written notice by either party if the other
party suffers a professional indemnity claim which is reasonably likely
to result in the other party incurring a loss which exceeds such
party's professional indemnity insurance coverage by $100,000,000; or
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(d) forthwith upon written notice given by either party following
a material breach by the other of any of its obligations under this
Agreement, which breach shall remain uncured for a period of thirty
(30) days following written notice specifying the nature of such
breach.
19.2. Event of Default. For the purposes of Section 19.1 above, an
----------------
Event of Default shall occur:
(a) in respect of Xxxxxx if:
(i) Xxxxxx (which, in this Subsection 19.2(a)(i) shall
include the Xxxxxx Company) or any of its subsidiaries (a) is
generally not paying, or admits in writing its inability to pay,
its debts as they become due, (b) files, or consents by answer or
otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other
similar law or jurisdiction, (c) makes an assignment for the
benefit of its creditors, (d) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers
with respect to it or with respect to any substantial part of its
property, (e) is adjudicated as insolvent or to be liquidated or
(f) takes corporate action for the purpose of any of the
foregoing; or a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by
Xxxxxx or the relevant subsidiary, a custodian, receiver, trustee
or other officer with similar powers with respect to Xxxxxx or
any subsidiary of Xxxxxx or with respect to any substantial part
of its property, or constituting an order for relief or approving
a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of Xxxxxx or any
subsidiary of Xxxxxx, or any such petition shall be filed against
Xxxxxx or any subsidiary of Xxxxxx, and
(b) in respect of the Continuing Partners if:
(i) any encumbrancer takes possession of the whole or a
material part of the assets of Bacon & Xxxxxxx; or
(ii) any insolvency proceedings are commenced against Bacon
& Xxxxxxx or any steps are taken with a view to proposing (under
any enactment or otherwise) any kind of composition, scheme of
arrangement, compromise or arrangement involving Bacon & Xxxxxxx
and its creditors; or
(iii) any application is made for an administration order or
the appointment of an administrator in relation to Bacon &
Xxxxxxx.
19.3. Bankruptcy of Continuing Partners. If during the Transition
---------------------------------
Period any Continuing Partner shall cease to be a partner of Bacon & Xxxxxxx by
reason of his bankruptcy he shall thereupon cease to have any further rights or
obligations under this Agreement.
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19.4. Effect of Termination. Upon termination of this Agreement:
---------------------
(a) the parties shall use all reasonable efforts to separate their
businesses in a prompt, sensible and practical manner causing the minimum
of disruption to clients;
(b) any employee of the Continuing Partners seconded to Xxxxxx will
be required to return to work for the Continuing Partners and any employee
of Xxxxxx seconded to the Continuing Partners will be required to return to
work for Xxxxxx; and
(c) Subject to Sections 18.4(e) and 24.12, each party to this
Agreement shall remain responsible for any breach by it or him of this
Agreement or any other agreement or document delivered pursuant hereto
prior to such termination.
19.5. Non-Solicitation. For a period of two years following termination
----------------
of this Agreement neither party shall:
(a) solicit the custom of any person who at the date of termination
was a client of the other in respect of the provision of services to such
client of the same nature as those provided by the other at any time during
the period of 12 months prior to Closing; or
(b) seek to solicit or entice away from the other party any employee
of such other party; or
(c) assist any other person to do any of the foregoing.
ARTICLE XX
PI COVER
20.1. Continuation of Insurance Coverage. For a period of ten years from
----------------------------------
April 30, 2001 the Continuing Partners shall maintain, in compliance with clause
9 of the Demerger and Business Transfer Agreement, professional indemnity
insurance cover in respect of negligence, breach of contract, breach of duty and
other default of the nature customarily covered by professional indemnity
insurance in connection with any services rendered or advice given prior to
Closing by Bacon & Xxxxxxx, any predecessor or successor firms of Bacon &
Xxxxxxx, any Continuing Partner or any partner, employee, consultant or former
partner, employee or consultant of Bacon & Xxxxxxx or any predecessor or
successor firm of Bacon & Xxxxxxx. The Continuing Partners shall ensure that
each of Xxxxxx and the Xxxxxx Company is named as an insured party in respect of
such insurance cover. Any insurance policies required under this Section shall
contain a provision that coverages provided under the policies will not be
reduced, canceled, or allowed to expire until at least 30 days prior written
notice has been given to Xxxxxx and the Xxxxxx Company.
20.2. Cost of Insurance Coverage. During the Transition Period the cost of
--------------------------
maintaining such insurance cover as is referred to in Section 20.1 shall be
borne by the Continuing Partners. During the remainder of the ten year period
referred to in Section 20.1, following the Closing, Xxxxxx Company shall procure
that such cost shall be borne by Newco (including the payment when due of all
premiums, insurance premium tax and fees payable in connection therewith).
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20.3. Alternative Insurance Coverage. The Xxxxxx Company may elect to
------------------------------
maintain, in place of the insurance cover referred to in Section 20.1, combined
insurance cover for all or part of the Xxxxxx business following the Closing,
provided the Xxxxxx Company has demonstrated to the reasonable satisfaction of
the Authorized Partners that:
(a) the terms of such cover are reasonable;
(b) such cover fulfils the obligations of the Continuing Partners
under clause 9 of the Demerger and Business Transfer Agreement; and
(c) such cover does not expose the Continuing Partners to any greater
risk than the cover referred to in Section 20.1 above.
ARTICLE XXI
REGULATORY ISSUES
21.1. Conduct of Business. Each of the Continuing Partners, Xxxxxx and the
-------------------
Xxxxxx Company agree to conduct their respective business activities in
compliance with all applicable rules and regulations in all material respects
and will be responsible for ensuring that to the extent that their business or
that of any of their respective subsidiaries constitutes "investment business"
(as defined by the Financial Services Act 1986) or, if applicable, a "regulated
activity" (as defined by the Financial Services and Markets Act 2000) they and
such subsidiary are fully authorized to conduct such business in the United
Kingdom.
21.2. Regulatory Assistance. Notwithstanding the provisions of Article VI,
---------------------
to the extent that the parties engage in business jointly during the Transition
Period or the regulated business activities of one party overlap with those of
the other, each shall provide such assistance to the other in providing such
information as may be required by the Institute of Actuaries (in the case of the
Continuing Partners) or IMRO (in the case of Xxxxxx) or, in each case, any
successor regulatory body, to ensure full compliance with such regulations
governing the conduct of their respective businesses as may be in force from
time to time.
ARTICLE XXII
VARIATION OF DEEDS ETC.
22.1. Bacon & Xxxxxxx Partnership Deed. The Continuing Partners agree that
--------------------------------
where any of the provisions of this Agreement or any of the transactions
contemplated by this Agreement expressly or implicitly constitutes, or requires,
a variation or waiver of the Bacon & Xxxxxxx Partnership Deed, this Agreement
constitutes a valid resolution or waiver for the purposes of clause 37.4 of the
Bacon & Xxxxxxx Partnership Deed. The Continuing Partners acknowledge that the
provisions of any such variation are adequately set out in this Agreement for
the purposes of clause 37.4 of the Partnership Deed. For the avoidance of doubt
the Continuing Partners hereby waive any rights of veto contained in clause 37.2
of the Partnership Deed in respect of the matters set out in this Agreement.
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22.2. Xxxxxx Operating Agreement. Xxxxxx hereby agrees that it will procure
--------------------------
that such changes shall be made to the Xxxxxx Operating Agreement on or prior to
Closing as shall be necessary to give effect to the terms of this Agreement. In
the event of any inconsistency between the provisions of this Agreement on the
one hand and Xxxxxx'x Articles of Organization or the Xxxxxx Operating Agreement
(as amended from time to time) on the other hand the provisions of this
Agreement shall prevail.
22.3. Appointment of Authorized Partners. Each Continuing Partner hereby
----------------------------------
appoints each of Xxxxx Xxxxxx, Xxxxxxx Xxxxx, Xxxxx Xxxxxx, Xxxx Xxxxx and
Xxxxxxx Xxxxxx (the "Authorized Partners") the attorney-in-fact of such
Continuing Partner, with full power and authority, including power of
substitution, acting in the name of and for and on behalf of such Continuing
Partner (i) to amend or waive any provision of this Agreement, (ii) to terminate
this Agreement pursuant to the provisions of Article 19, and (iii) to do all
other things and to take all other action under or related to this Agreement
that the Authorized Partners may consider necessary or proper to effectuate the
transactions contemplated hereby and to resolve any dispute with Xxxxxx or the
Xxxxxx Company over any aspect of this Agreement and on behalf of such
Continuing Partner to enter into any agreement to effectuate any of the
foregoing which shall have the effect of binding such Continuing Partner as if
such Continuing Partner had personally entered into such an agreement; provided,
that all actions taken or decisions made by the Authorized Partners on behalf of
the Continuing Partner shall be taken or made in a manner which is ratable and
equitable amongst all Continuing Partners. The Authorized Partners shall have
the exclusive right, power and authority, on behalf of all Continuing Partners,
to pursue, defend, and settle any indemnification claims pursuant to Article 18
and to do all things and to take all other actions the Authorized Partners may
consider necessary or proper to resolve any indemnification claims after the
Closing. This appointment and power of attorney shall be deemed as coupled with
an interest and all authority conferred hereby shall be irrevocable and shall
not be subject to termination by operation of law, whether by the death or
incapacity or liquidation or dissolution of any Continuing Partner or the
occurrence of any other event or events and the Authorized Partners may not
terminate this power of attorney with respect to any Continuing Partner or such
Continuing Partner's successors or assigns without the consent of Xxxxxx or the
Xxxxxx Company. Successor Authorized Partners shall be appointed by a majority
of the Continuing Partners then employed by Newco or the Xxxxxx Company. Any
notice given to the Authorized Partners pursuant to this Agreement or any other
agreements contemplated hereby shall constitute effective notice to all
Continuing Partners, and any other party to this Agreement or any other Person
may rely on any notice, consent, election or other communication received from
the Authorized Partners as if such notice, consent, election or other
communication had been received from all the Continuing Partners. Each
Continuing Partner agrees to hold the Authorized Partners harmless from any and
all loss, damage or liability and expenses (including legal fees) which such
Continuing Partner may sustain as a result of any action taken in good faith by
the Authorized Partners.
ARTICLE XXIII
CONFIDENTIALITY AND ANNOUNCEMENTS
23.1. Confidentiality Each of the parties shall keep confidential and not
---------------
disclose to any other person or use for any purpose (other than carrying this
Agreement into effect) the
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provisions of this Agreement, the subject matter or terms of this Agreement or
any information obtained from the other party in connection with the negotiation
or implementation of this Agreement.
23.2. Exceptions. Notwithstanding Section 23.1, a party may disclose
----------
information:
(a) if and to the extent required by law or by any stock exchange or
other regulatory or governmental body to which that party is subject; or
(b) if and to the extent required to be disclosed to a party's
professional advisers for use in connection with any matters contemplated
in this Agreement (in which case it shall only be disclosed on the basis
that such professional advisers keep such information confidential); or
(c) which is or becomes within the public domain through no fault of
that party; or
(d) as permitted by Section 23.3.
23.3. Disclosure by Xxxxxx and the Continuing Partners. Xxxxxx may disclose
------------------------------------------------
the provisions of this Agreement to all or any of its Owners to the extent
necessary to obtain their consent to the making of all such changes to the
Xxxxxx Operating Agreement as shall be necessary to give effect to the terms of
this Agreement or, after obtaining the Authorized Partners' written consent
(such consent not to be withheld unreasonably), in connection with the Xxxxxx
Company IPO. The Continuing Partners may disclose the provisions of this
Agreement to all or any of their equity partners to the extent necessary to
obtain their consents to the making of all such changes to the Bacon & Xxxxxxx
Partnership Deed as shall be necessary to give effect to the terms of this
Agreement or, after obtaining Xxxxxx'x written consent (such consent not to be
withheld unreasonably), in connection with the Xxxxxx Company IPO.
23.4. No Public Announcement. No public announcement or press release in
----------------------
connection with the subject matter of this Agreement shall be made or issued by
or on behalf of either party without the prior written approval of the other,
save as required by law or by any stock exchange or other regulatory or
governmental body to which that party is subject (in which case the disclosing
party will use its reasonable best efforts to advise the other party prior to
making the disclosure and provide such party with an opportunity to comment on
the disclosure).
23.5. Survival of Obligations. The restrictions contained in this Article
-----------------------
shall continue to apply after the termination of this Agreement without limit in
time.
ARTICLE XXIV
MISCELLANEOUS
24.1. Notice. Any notice to be given under this Agreement shall be in
------
writing. Notices to be given to any party under this Agreement shall be sent by
prepaid letter mail (airmail if from a different country) or facsimile
transmission to the party at its address or fax number and for the attention of
the individual set out below, or to such other address, fax number or individual
as the
-57-
party to be served shall notify to the other in accordance with this Section.
Any notice given under this Agreement shall be deemed to have been given as
follows: (a) if sent by post, five days after the date of posting; and (b) if
sent by fax, when dispatched.
Party Address Fax No
Xxxxxx Holdings LLC 000 Xxxx Xxx Xxxx + + 1 847 771 7940
Xxxxxx Associates, Inc. Lincolnshire
Attention: Chief Executive Officer Illinois
cc General Counsel 60069, USA
The Continuing Partners St. Olaf House + x00 00 0000 0000
Attention: the Partnership London Bridge City
Secretary, Xxxxx & Xxxxxxx Xxxxxx
XX0 0XX
24.2. No Joint Venture or Agency. Nothing in this Agreement shall
--------------------------
be construed as establishing or implying any partnership or joint venture
between the parties or as constituting any party the agent of the other.
24.3. Entire Agreement. Each party acknowledges that in entering
----------------
into this Agreement it is not relying upon any draft, agreement, undertaking,
representation, warranty, promise, assurance or arrangement of any nature
whatsoever, whether or not in writing, relating to the subject matter of this
Agreement, including the Heads of Agreement made or given by any person at any
time before the date of this Agreement and will not be relying on any draft
agreement or arrangement on or after the date of this Agreement and before the
Closing (a "Pre-Contractual Statement") except as set forth in an exhibit hereto
or in a writing that expressly refers to this Section 24.3 and is executed by
each party. Each Party acknowledges that it will not be relying upon any draft,
agreement, undertaking, representation, warranty, promise, assurance or
arrangement of any nature whatsoever except as set forth in an exhibit hereto or
in a writing that is executed by Xxxxxx and an Authorized Partner. No party
shall have any right of action (except in the case of fraud) against any other
party arising in connection with any Pre-Contractual Statement, except to the
extent that such Pre-Contractual Statement is repeated in this Agreement or any
schedule hereto.
24.4. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the domestic laws of the State of Illinois without
giving effect to any choice or conflict of law provision or rule (either of the
State of Illinois or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Illinois.
24.5. Amendments and Waivers. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by
Xxxxxx, the Xxxxxx Company and an Authorized Partner. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
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24.6. Severability. Any term or provision of this Agreement that is
------------
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
24.7. Counterparts. This Agreement may be executed in any number of
------------
counterparts, and by the parties on separate counterparts, but shall not be
effective until each party has executed at least one counterpart.
24.8. Currency. Any amount expressed to be payable hereunder in
--------
Sterling shall be payable in Sterling only and not its equivalent in any other
currency.
24.9. No Third Party Beneficiaries. The parties to this Agreement do
----------------------------
not intend that any term of this Agreement should be enforceable, by virtue of
the Contracts (Rights of Third Parties) Xxx 0000 of England and Wales or
otherwise, by any person who is not a party to this Agreement.
24.10. Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties hereto and their respective successors,
heirs and assigns, including as to Xxxxxx, upon the Xxxxxx Company pursuant to
Section 2.1(e)(iii).
24.11. Pro Rata and Several Obligations; Non-Recourse, etc.
---------------------------------------------------
Notwithstanding anything contained in this Agreement or in any other agreement,
document or instrument to the contrary: (i) all obligations and liabilities of
the Continuing Partners for indemnification shall be on a pro rata and several
basis, and accordingly, the portion of any obligation, liability or Loss that a
Continuing Partner is responsible for shall, subject to the other limitations
contained herein, including, without limitation, Section 18.4, be the amount of
such obligation or liability multiplied by a fraction, the numerator of which is
the number of Xxxxxx Preferred Shares received (or to be received if the Closing
has not occurred) by such Continuing Partner pursuant to Section 2.1 and the
denominator of which is the aggregate number of Xxxxxx Preferred Shares issued
(or to be issued if the Closing has not occurred) by Xxxxxx pursuant to Section
2.1; (ii) subject to the other limitations and exclusions contained herein,
including without limitation, Section 18.4, all obligations and liabilities of a
Continuing Partner shall be satisfied solely and exclusively from such
Continuing Partner's (a) pro rata share of the Escrow if a Closing occurs, or
(b) interest in Bacon & Xxxxxxx or Newco, as the case may be, if the Closing
does not occur.
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IN WITNESS WHEREOF, each of the undersigned has executed this Agreement
as of the date first above written.
XXXXXX HOLDINGS L.L.C.
By:/s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Printed Name: Xxxxxx X. Xxxxxx
----------------------------------
Title: Chairman of the Executive Committee and
----------------------------------------
Authorized Representative
-----------------------------------------------
XXXXXX ASSOCIATES, INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------------
Printed Name: Xxxx X. Xxxxxxx
----------------------------------
Title: Chief Executive Officer
-----------------------------------------
-60-
Executed as a deed by XXXXX XXXXXX )
on his own behalf and as attorney for )
X. X. XXXXX, M. A. POMERY, ) .../s/ Xxxxx Xxxxxx.....
X. X. XXXXXX, X. X. XXXXX,
A. R. XXXXXX, X. X. XXXXX,
X. X. XXXXXXX, P. R. C. XXXXXX,
X. X. WESBROOM,
M. G. J. XXXXXX, X. X. XXXXXX,
X. XXXXXX, L. S. PARSONAGE,
X. X. XXXXXXXX, R. L. M. XXXXXX,
N. D. XXXXXXXXXXX, X. X. XXXXXXXX,
X. XXXXXXX, P. M. XXXXXXX,
A. S. CAIRNS, M. A. XXXXX,
A. M. JUDES, R. A. BLOCK,
X. X. XXXXXXX, R. D. SENIOR,
S. A. ST XXXXX-XXXXXX,
A. R. ASHTON, X. X. XXXX,
A. D. XXX, X. X. XXXXXXXX,
X. X. XXXX, X. X. CORVESOR,
X. X. XXXXXX, X. X. XXXXXX,
X. X. XXXXXXXXX, X. XXXXXXXX,
X. X. XXXXXX, X. XXXXXXXXXX,
X. X. X. XXXXXX, X. X. XXXXXXXX,
X. X. XXXXX, X. XXXXX,
X. X. XXXXXX, M. A. XXXXX,
X. X. XXXXXX, X. X. XXXXXX,
T. D. A. REAY, X. X. XXXXXXX,
X. X. XXXXXXXXXX
THE XXXXX & XXXXXXX
EMPLOYEE TRUST
in the presence of:
Witness' signature :
Witness' name :
Occupation :
Address :
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SCHEDULE 1
The Continuing Partners
-----------------------
Part A - The Original Continuing Partners
--------------------------------
Xxxxxx Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxxx Xxxxxx
Xxxxx Xxxxxx
Xxxxxxx Xxxxx Block
Xxxxxxx Xxxxxxx Xxxxxx
Xxxxxxx Xxxx Xxxxxxx
Xxxxx Xxxxxxxxx Xxxx
Xxxxxx Xxxxx Corvesor
Xxxxxx Xxxxxxx Xxx
Xxx Xxxxxxx
Morfydd Xxx Xxxxx
Xxxxxx Xxxxxxx Xxxxxx
Xxxxxxxx Xxxxx Xxxxxxxxxxx
Xxxxxxx Xxxxxx Xxxxxx Xxxxxx
Xxxxx Xxxx Xxxxx
Xxxxxxx Xxxx Xxxxxxxx
Xxxxxxx Xxxxxxx Xxxxxx
Xxx Xxxxx Xxxxxx
Xxxxxxx Xxxx Xxxxx
Xxxxxx Xxxxxx Xxxxxx Xxxxxx
Xxxx Xxxx Xxxxx
Xxxxxx Xxxxxxx XxXxxxxx
Xxxxxx Xxxxxxx Xxxx
Xxxxxxx Xxxxxxx Xxxxx
Xxxxx Xxxxxx Xxxxxx
Xxxxxxx Xxxxxxx Xxxxxxx
Xxxxxxxxxxx Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxx Xxxxxx
Xxxxx Xxxxx Parsonage
Xxxx Xxxxx Xxxxxxxx
Xxxxxxx Xxxx Xxxxxx
Xxxxxx Xxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxx Senior
Xxxxx Xxxxxx St. Xxxxx-Xxxxxx
Penelope Xxxx Xxxxxxx
Xxxxx Xxxxxxx Wesbroom
Xxxxxxx Xxxx Xxxxxxxx
Part B - The 2002 Partners
-----------------
Xxxxx Xxxxxxxxxx
Xxxx Xxxxxxxxx Xxxx Xxxxxx
Xxxxx Xxxxx Lelliott
Xxxx Xxxxxx Lowes
Andrew Payne
Brian Kenneth Wilson
John Charles Oliver
Mark Adam Jones
Sara Lousie Kenyon
Robert Huw Davies
Andrew James Tunningley
Timothy David Alan Reay
Andrew James Staddon
The Bacon & Woodrow Employee Trust
-2-
SCHEDULE 2
DEMERGER COSTS
1. General. As a contribution to the Continuing Partners' costs of the
-------
demerger of Bacon & Woodrow, Hewitt hereby covenants, subject as hereinafter
provided, to pay to the Continuing Partners in respect of each of the accounting
periods ending April 30, 2002 and April 30, 2003 such amount (if any) by which
the Allocable Management Profit for such accounting period shall be less than
(pound)21,000,000. The maximum payment from Hewitt to the Continuing Partners
under this Section in respect of the accounting period ending on 30th April,
2002 shall not exceed (Pounds)2,500,000 and in respect of both accounting
periods shall not exceed (Pounds)5,000,000 in aggregate. Each sum payable under
this Section shall be paid to the Continuing Partners on July 31 following the
end of the accounting period in question.
2. Reduction in Number of Continuing Partners. If the number of
------------------------------------------
Continuing Partners reduces to less than 35 then the (Pounds)21,000,000 amount
referred to in Paragraph 1 above shall be reduced by multiplying such amount by
the fraction of X/35 where X is the average number of Continuing Partners who
shall have been partners in Bacon & Woodrow (or, as the case may be, members of
Hewitt Bacon & Woodrow Limited) throughout the accounting period in question.
3. Timing of Closing.
-----------------
(a) If Closing occurs during, but prior to the end of, any of the
accounting periods referred to in Paragraph 1 above, the amount of
(Pounds)21,000,000 referred to therein in relation to that accounting
period shall be reduced by multiplying it by the fraction X/365 where X is
the number of days in that accounting period which shall have elapsed prior
to Closing. If Closing occurs prior to the commencement of any of such
accounting periods no amount shall be payable under this Schedule in
respect of such accounting period.
(b) If Closing shall not have taken place by June 30, 2002 or if
this Agreement is terminated for any reason, any sums paid by Hewitt under
this Schedule shall be repaid by Bacon & Woodrow together with interest
from the date of receipt by the Continuing Partners until repayment at a
rate equal to Barclays Bank plc base rate from time to time, such interest
to be compounded annually on July 31 in each year.
"Allocable Management Profit" means, in respect of any accounting period of
Bacon & Woodrow, the Total Income less Total Expenditure derived by Bacon &
Woodrow from its business activities in respect of that accounting period as
derived from the Bacon & Woodrow management accounts for such accounting period,
such management accounts to be prepared on the same bases and using the same
accounting policies and assumptions as those used in the management accounts of
Bacon & Woodrow in respect of the accounting period ended on April 30, 2001.
Calculation of Allocable Management Profit shall exclude the Insurance Business.
For this purpose:-
(a) "Total Income" means Work Done recorded in the accounting period
plus or minus write ups or write downs (normally put through at the
the time of billing) to
-1-
reflect the realizable value of Work Done plus any uplift charged to
clients on disbursements incurred and paid for on any clients behalf
plus Other Income;
(b) "Work Done" means the number of chargeable hours recorded in the
accounting period multiplied by applicable charge out rates;
(c) "Other Income" means income derived from client activities that is
not charged on a time spent basis - for example, the Online!
subscription service, non-client specific bulletins produced by the
Investment or Benefits Research sections, dividend or profit shares
received from investments and sales of software;
(d) "Total Expenditure" means (subject to paragraph (e) below) all costs
incurred in undertaking the Bacon & Woodrow business, including
(without limitation):-
(i) annuities paid to Former Partners; and
(ii) prudent provisions for known or anticipated liabilities;
(e) Total Expenditure does not include:-
(i) Notional Salaries, benefits or pension allowances of Partners,
interest on Partners' capital balances, bonuses, Ownership
Reward or any other allocation of profit to Partners;
(ii) bank interest payable or receivable; or
(iii) bank transaction charges; or
(iv) any cash outflow in respect of exit payments due to retiring
Partners of Bacon & Woodrow retiring on 30th April, 2001; or
(v) any payment made to Mr. Graham Farren to compensate him for
early retirement as managing partner.
(f) in respect of Triskel Limited and Kerr Henderson Bacon & Woodrow
Limited, Allocable Management Profit shall include dividends and
management charges received from such subsidiaries but not the income
and expenditure of the subsidiaries themselves. In respect of the
remaining subsidiaries of Bacon & Woodrow, Allocable Management
Profit shall be calculated on a consolidated basis.
For illustration, the Allocable Management Profit of Bacon & Woodrow (including
the Insurance Business) in respect of the accounting period ended April 30, 2001
was on this basis (Pounds)25.5 million and excluding the Insurance Business was
(Pounds)20.6 million.
-2-
SCHEDULE 3
IPO COVENANTS
On the Effective Date, the Prospectus (as amended or as supplemented if the
Hewitt Company shall have filed with the Commission any amendment or supplement
thereto), including the financial statements included or incorporated by
reference in the Prospectus, will comply with all applicable provisions of the
Securities Act and the Exchange Act and will contain all statements required to
be stated therein in accordance with the Securities Act and the Exchange Act. On
the Effective Date, the Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The foregoing representations and warranties do not apply to (i) any
statements or omissions made in reliance on and in conformity with information
relating to any Participating Partner furnished in writing by such Participating
Partner specifically for inclusion in the Prospectus or any amendment or
supplement thereto and (ii) any statements or omissions with respect to Bacon &
Woodrow, the Business or the Continuing Partners.
The Hewitt Company Shares issued to the Participating Partners pursuant to this
Business Amalgamation Agreement, when issued in accordance with the terms
thereof, will be duly authorized, validly issued, fully-paid and non-assessable.
"Commission" means the Securities Exchange Commission.
"Effective Date" means the date on which the registration statement in respect
of the Hewitt Company IPO is declared effective by the Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.
"Prospectus" means the final prospectus included in the registration statement
in respect of the Hewitt Company IPO which is declared effective by the
Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
