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