EXHIBIT 10.1
EXECUTION COPY
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INVESTMENT AGREEMENT
between
DENTSU INC.
and
BDM, INC.
Dated as of March 14, 2000
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TABLE OF CONTENTS
RECITALS
ARTICLE I
SALE AND PURCHASE OF SHARES
1.1. Sale and Purchase of Shares...................................... 1
1.2. Closing.......................................................... 2
1.3. Closing Deliveries by BDM........................................ 2
1.4. Closing Deliveries by Dentsu..................................... 2
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF BDM
2.1. Due Organization................................................. 2
2.2. Capitalization, Title to Shares, etc............................. 3
2.3. Authority........................................................ 5
2.4. No Conflict; BBH................................................. 5
2.5. Governmental Approvals and Other Consents........................ 6
2.6. Client Relationships............................................. 6
2.7. Financial Statements, Undisclosed Liabilities.................... 6
2.8. Absence of Changes............................................... 7
2.9. Litigation....................................................... 10
2.10. Indebtedness..................................................... 11
2.11. Taxes............................................................ 11
2.12. Compliance with Law, Contractual Obligations, etc................ 11
2.13. Securities Law Compliance........................................ 12
2.14. No Broker or Finder.............................................. 12
2.15. Merger Documents................................................. 12
2.16. Disclosure....................................................... 12
2.17. Offering Memorandum; BDM Material Adverse Effect................. 12
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF DENTSU
3.1. Due Organization....................................................... 13
3.2. Authority.............................................................. 13
3.3. No Conflict............................................................ 13
3.4. Governmental Approvals and Other Consents.............................. 14
3.5. No Broker or Finder.................................................... 14
3.6. Private Placement...................................................... 14
ARTICLE IV
COVENANTS OF BDM
4.1. Satisfaction of Closing Conditions; Notification....................... 15
4.2. Public Announcements................................................... 15
4.3. Further Actions........................................................ 16
4.4. Conduct of BDM Business................................................ 16
4.5. Subsequent Financial Statements and Reports............................ 17
4.6. Issuance of Additional Shares of Class B Stock......................... 17
4.7. Signatories to BDM Voting Trust Agreement and BDM Stock Purchase
Agreement......................................................... 17
ARTICLE V
COVENANTS OF DENTSU
5.1. Satisfaction of Closing Conditions; Notification....................... 18
5.2. Public Announcements................................................... 18
5.3. Further Actions........................................................ 18
ARTICLE VI
CONDITIONS TO CLOSING
6.1. Conditions to Obligations of Each Party................................ 18
(a) No Injunction, etc............................................. 19
(b) Government Approvals and Consents.............................. 19
6.2. Conditions to Obligations of Dentsu.................................... 19
(a) Representations and Warranties................................. 19
(b) Performance of Agreements...................................... 19
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(c) Officer's Certificate......................................... 20
(d) No Material Adverse Effect.................................... 20
(e) Related Documents............................................. 20
(f) Restated Charter and By-Laws.................................. 20
(g) Opinions...................................................... 20
(h) Corporate and Other Proceedings............................... 21
6.3. Conditions to Obligations of BDM...................................... 21
(a) Representations and Warranties................................ 21
(b) Performance of Agreements..................................... 21
(c) Officer's Certificate......................................... 22
(d) Corporate Proceedings......................................... 22
(e) Alliance Agreement............................................ 22
(f) Opinion of Counsel............................................ 22
ARTICLE VII
PREEMPTIVE RIGHTS
7.1. Preemptive Rights prior to the IPO.................................... 22
7.2. Preemptive Rights with respect to the IPO............................. 25
7.3. Termination of Preemptive Rights...................................... 27
7.4. Issuance of Class B Stock............................................. 28
ARTICLE VIII
STANDSTILL AND TRANSFER PROVISIONS
8.1. Standstill............................................................ 28
8.2. Transfer Restrictions................................................. 31
8.3. Legends............................................................... 33
8.4. Registration Rights................................................... 34
ARTICLE IX
GOVERNANCE AND OTHER AGREEMENTS
9.1. Governance............................................................ 34
9.2. Rights of First Offer................................................. 36
9.3. Information and Inspection............................................ 39
9.4. Filings Regarding Rule 144............................................ 39
9.5. Tax Cooperation....................................................... 40
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ARTICLE X
TERMINATION
10.1. Termination................................................... 40
10.2. Effect of Termination......................................... 40
ARTICLE XI
INDEMNIFICATION
11.1. Indemnification by BDM........................................ 40
11.2. Indemnification by Dentsu..................................... 41
11.3. Notice of Claims and Cure Period.............................. 41
11.4. Limitations on Claims......................................... 42
11.5. Termination of Indemnification................................ 43
11.6. Third Person Claims........................................... 43
ARTICLE XII
CONFIDENTIALITY
12.1. Confidentiality of Terms of Related Documents................. 44
12.2. Confidentiality of Certain Information........................ 45
12.3. Exclusions.................................................... 46
ARTICLE XIII
MISCELLANEOUS
13.1. Expenses...................................................... 46
13.2. Notices....................................................... 47
13.3. GOVERNING LAW, ETC............................................ 48
13.4. Arbitration................................................... 48
13.5. Judicial Procedure............................................ 50
13.6. Binding Effect................................................ 50
13.7. Assignment.................................................... 50
13.8. No Third-Party Beneficiaries.................................. 50
13.9. Amendment; Waivers, etc....................................... 50
13.10. Severability.................................................. 51
13.11. Headings...................................................... 51
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13.12. Counterparts........................................................ 51
13.13. Interpretation...................................................... 51
13.14. No Other Representations or Warranties; Adequacy of Investigation... 51
13.15. Entire Agreement.................................................... 52
Schedules
Schedule A Definitions
Disclosure Schedule
Exhibits
Exhibit A Form of Restated Charter
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Alliance Agreement
Exhibit D Form of Restated By-Laws
Exhibit E Form of Opinion of Sidley & Austin
Exhibit F Form of Opinion of Xxxxxxxx & Xxxxx
Exhibit G Form of Opinion of General Counsel of BDM
Exhibit H Form of Opinion of Debevoise & Xxxxxxxx
Exhibit I Form of Opinion of Tokyo Eiwa
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INVESTMENT AGREEMENT, dated as of March 14, 2000, between DENTSU INC.,
a company organized under the laws of Japan with its principal office at 0-00,
Xxxxxxx, Xxxx-Xx, Xxxxx 000-0000, Xxxxx (together with its successors and
assigns, "Dentsu") and BDM, Inc., a corporation organized under the laws of
Delaware with its principal office at 00 Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx
00000 (together with its successors and assigns, "BDM"). Capitalized terms used
herein without definition have the respective meanings assigned to such terms in
Schedule A.
RECITALS
A. The Xxx Group, Inc. ("TLG") and The MacManus Group, Inc. ("TMG"),
each a Delaware corporation, have entered into a business combination as a
result of which they have become wholly-owned subsidiaries of BDM.
B. The parties hereto desire to provide for the issuance by BDM to
Dentsu of shares of BDM's Class B Stock representing 21.6% of the aggregate
voting capital stock of BDM outstanding as of the Closing Date (including the
Share Replacement Options).
C. BDM presently anticipates effecting and underwritten public
offering of shares of BDM Common Stock, including a registration of such shares
under the Securities Act and a listing of the BDM Common Stock on a national
securities exchange or on NASDAQ (an "IPO"), within two years from the date
hereof.
D. In order to achieve the foregoing objectives and otherwise to
establish mutually beneficial arrangements for long-term cooperation, the
parties hereto desire to enter into this Agreement, the Registration Rights
Agreement and the Alliance Agreement, all upon the terms and conditions set
forth herein and therein.
NOW, THEREFORE, in consideration of the mutual premises, covenants,
representations and warranties made herein and of the mutual benefits to be
derived herefrom, the parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF SHARES
1.1. Sale and Purchase of Shares. Upon the terms and subject to the
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conditions set forth in this Agreement, BDM will issue and sell to Dentsu, at
the Closing, an aggregate of 4,274,248 shares of BDM's Class B Stock (the
"Shares"), equal to 21.6% of the aggregate number of shares of BDM Common Stock
outstanding as of the Closing Date (taking into account the Shares to be issued
to Dentsu pursuant to this Agreement and treating the shares of BDM Common Stock
subject to the Share Replacement Options
as being outstanding for such purposes), for a purchase price of $115.38 per
share, and an aggregate purchase price of $493,162,734.20 (the "Aggregate
Purchase Price").
1.2. Closing. The closing of the sale and purchase of the Shares (the
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"Closing") shall take place at 10:00 am, local time, at the offices of BDM in
Chicago (or at such other place as the parties may agree upon), on March 14,
2000, or as soon as practicable following the satisfaction or waiver of all of
the conditions precedent set forth in Article VI or on such other date as the
parties may agree (the "Closing Date").
1.3. Closing Deliveries by BDM. At the Closing, BDM shall deliver, or
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cause to be delivered, the following to Dentsu:
(a) stock certificates representing the Shares, in good form for
delivery, free and clear of all Liens (other than any Liens created by
Dentsu) and registered in the name of Dentsu; and
(b) the opinions, certificates, agreements and other documents
contemplated to be delivered pursuant to Section 6.2.
1.4. Closing Deliveries by Dentsu. At the Closing, Dentsu shall
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deliver, or cause to be delivered, the following to BDM:
(a) the Aggregate Purchase Price, by means of wire transfer to the
account of BDM which has been designated to Dentsu; and
(b) the opinion, certificates, agreements and other documents
contemplated to be delivered pursuant to Section 6.3.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF BDM
BDM represents and warrants to Dentsu as of the date hereof and as of
Closing Date as follows:
2.1. Due Organization. (a) BDM is a corporation duly organized,
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validly existing and in good standing under the laws of the State of Delaware,
with all requisite power and authority to own, lease and operate all of its
assets and to carry on its business as it is now being conducted and as proposed
to be conducted, and is duly
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licensed or qualified to do business in each jurisdiction in which the nature of
the business conducted by it or the character or location of the assets owned or
leased by it makes such licensing or qualification necessary other than
jurisdictions in which the failure to be so licensed or qualified, individually
and in the aggregate, would not have or result in a BDM Material Adverse Effect
or materially impair the ability of BDM to perform its obligations hereunder or
under any other Related Document.
(b) Each Material BDM Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, with all requisite power and authority to own, lease and operate
all of its assets and to carry on its business as it is now being conducted and
as proposed to be conducted, and is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business or the character or
location of the assets owned or leased by it makes such licensing or
qualification necessary other than jurisdictions in which the failure to be so
licensed or qualified, individually and in the aggregate, would not have or
result in a BDM Material Adverse Effect or materially impair the ability of BDM
to perform its obligations hereunder or under any other Related Document.
(c) BDM has delivered to Dentsu complete and correct copies of the
Organizational Documents of BDM, as amended, modified or waived through and in
effect on the date hereof. Each of the Organizational Documents of BDM is in
full force and effect.
2.2. Capitalization, Title to Shares, etc. (a) As of the date
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immediately prior to the filing of the Restated Charter, BDM's authorized
capital stock consisted of 30,000,000 shares of common stock, par value $0.01
per share, of which 15,513,940 shares were issued and outstanding. As of the
date hereof, BDM's authorized capital stock consists of: (y) 40,000,000 shares
of Class A Stock, of which 4,274,248 shares have been reserved for issuance upon
conversion of the Class B Stock being issued to Dentsu on the Closing Date, and
(z) 10,000,000 shares of Class B Stock. All outstanding shares of capital stock
of BDM (other than the Shares) have been duly authorized and validity issued and
are fully paid and nonassessable.
(b) When issued and sold to Dentsu, the Shares (and any additional
shares of Class B Common Stock issued to Dentsu pursuant to Section 4.3(b)) will
be duly authorized, validly issued, fully paid and nonassessable. Upon the
delivery of the Shares to Dentsu at the Closing, as provided for in this
Agreement, Dentsu will acquire good and valid title to the Shares, free and
clear of any Lien other than any Lien created by Dentsu and without violation of
any preemptive rights. As of the Closing Date, the Shares will constitute 21.6%
of the aggregate number of shares of BDM Common Stock outstanding
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as of such date (taking into account the Shares to be issued to Dentsu pursuant
to this Agreement).
(c) (i) Section 2.2(c)(i) of the disclosure schedule to this Agreement
(the "Disclosure Schedule") contains the following complete and correct
information for each Material BDM Subsidiary: (A) the name of such Subsidiary;
(B) its jurisdiction of incorporation; (C) a description of the shares of
capital stock or other equity interests of such Subsidiary that are authorized
or issued and outstanding, including the names and stockholding (or other
equity holding) of each stockholder (or other equity holder) in such Subsidiary;
and (D) the percentage of the outstanding shares of capital stock or other
equity interests of such Subsidiary that is owned, directly and indirectly by
BDM.
(ii) All of the outstanding shares of capital stock or other equity
interests set forth in Section 2.2(c)(i) of the Disclosure Schedule are duly
authorized, validly issued, fully paid and nonassessable, and are owned (i) of
record and beneficially by the member of the BDM Group set forth in Section 2.2
(c)(i) of the Disclosure Schedule, free and clear of any Liens, or (ii) of
record and, to the Knowledge of BDM, beneficially by each Person (other than a
member of the BDM Group) set forth in Section 2.2(c)(i) of the Disclosure
Schedule.
(d) Except as set forth in the Related Documents and as otherwise
disclosed in Section 2.2(d) of the Disclosure Schedule: (i) None of BDM or any
Material BDM Subsidiary has any outstanding Convertible Securities or Stock
Purchase Rights; (ii) none of BDM or any Material BDM Subsidiary is a party to
any agreement or understanding pursuant to which it is or will be obligated to
purchase or redeem any shares of its capital stock or any Convertible Securities
or Stock Purchase Rights other than the stock purchase agreement that each
stockholder of BDM (other than Dentsu) was required to enter into pursuant to
the Merger Agreement (each a "BDM Stock Purchase Agreement"); and (iii) to the
Knowledge of BDM, no securities holder of BDM or any Material BDM Subsidiary is
a party to any voting agreement, voting trust, irrevocable proxy or other
agreement affecting the voting rights of any shares of the capital stock or
other equity interests of BDM or any Material BDM Subsidiary, other than the
voting trust agreement that each stockholder of BDM (other than Dentsu) was
required to enter into pursuant to the Merger Agreement (the "BDM Voting Trust
Agreement"). Except for the Related Documents, the BDM Stock Purchase Agreements
and as otherwise disclosed in Section 2.2(d) of the Disclosure Schedule, there
are no outstanding contractual or other rights or obligations to or of any
Person to repurchase, redeem or otherwise acquire any outstanding shares or
other equity interests of BDM or any Material BDM Subsidiary. Except as
otherwise disclosed in Section 2.2(d) of the Disclosure Schedule, to the
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Knowledge of BDM, each stockholder (other than Dentsu) of BDM is a party to the
BDM Voting Trust Agreement and a BDM Stock Purchase Agreement.
2.3. Authority. BDM has full corporate power and authority to
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execute and deliver this Agreement and each of the other Related Documents to
which it is a party, to perform fully its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the other Related Documents by BDM,
the performance of BDM's obligations hereunder and thereunder, and the
consummation of the transactions contemplated hereby and thereby have all been
duly authorized by all necessary corporate action. This Agreement has been duly
executed and delivered by BDM and constitutes the legal, valid and binding
obligation of BDM, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally and subject to general
principles of equity. Upon due execution and delivery thereof as contemplated in
this Agreement, each of the other Related Documents will have been duly executed
and delivered by BDM and will constitute the legal, valid and binding obligation
of BDM, enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally and subject to general principles of
equity.
2.4. No Conflict: BBH. Except as disclosed in Section 2.4 of
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the Disclosure Schedule, the execution, delivery and performance by BDM of this
Agreement and the other Related Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby do not and will
not, with or without the passage of time or the giving of notice or both, result
in (i) any conflict with or violation of any provision of any of the
Organizational Documents of BDM, (ii) any conflict with, violation of, or
default under any Law or Contractual Obligation applicable to any member of the
BDM Group or (iii) the creation or imposition, or require the creation or
imposition, of any Lien on any of the properties or revenues of any member of
the BDM Group pursuant to any Law or Contractual Obligation except, in the case
of clauses (ii) and (iii), to the extent that such conflict, violation, default
or Lien, individually and in the aggregate, would not have or result in a BDM
Material Adverse Effect, or materially impair the ability of BDM to perform its
obligations hereunder or under any other Related Document. BDM has delivered to
Dentsu a complete and correct copy of a letter, dated March 12, 2000, from BBH
Holdings Ltd. ("BBH") to BDM, concerning "Change of Control" of the companies
referred to in such letter. Such letter has been duly executed and delivered by
BBH.
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2.5. Governmental Approvals and Other Consents. (a) Except as
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disclosed in Section 2.5(a) of the Disclosure Schedule and except for the
consents, approvals or authorizations applied for under the HSR Act and any
required filings under the International Investment and Trade in Services Survey
Act, no Governmental Approval or other Consent is or was required to be made or
obtained by BDM in connection with the execution and delivery by BDM of this
Agreement or any other Related Document, the consummation by BDM of the
transactions contemplated hereby or thereby or the performance by BDM of any of
its obligations contained herein or therein.
(b) All Governmental Approvals and other Consents necessary in any
material respect for, or otherwise material to, the conduct of the Business by
the BDM Group have been duly obtained and will be in full force and effect as of
the Closing Date. As of the Closing Date, each member of the BDM Group will be
in compliance with all Governmental Approvals and other Consents held by it with
respect to the Business, except for such failures so to comply that,
individually and in the aggregate, would not have or result in a BDM Material
Adverse Material Effect. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not violate any such Governmental Approval or Consent, or result in any
revocation, cancellation, suspension, modification or nonrenewal thereof.
2.6. Client Relationships. Except as set forth in Section 2.6 to the
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Disclosure Schedule: (i) since the closing of the Mergers, (A) neither BDM nor
any Subsidiary has lost or resigned any Client account representing annual
revenues in excess of $5,000,000; (B) to the knowledge of BDM, no Client account
of BDM or any Subsidiary representing annual revenues in excess of $5,000,000
has been put up for review with such review still remaining unresolved; (ii)
neither BDM nor any Subsidiary is subject to any contractual exclusivity
provisions or other exclusivity arrangements that would prevent BDM or such
Subsidiary from accepting a major assignment from any Client on the "Target
List" (as such term is defined in the Alliance Agreement); and (iii) to the
Knowledge of BDM, no existing Client that is material to the BDM Group taken as
a whole has instituted a business conflict policy with respect to its
Advertising Agencies that would prevent BDM or such Subsidiary from accepting a
major assignment from any Client on such Target List.
2.7. Financial Statements, Undisclosed Liabilities. (a) TLG has
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heretofore delivered to Dentsu complete and correct copies of the following
financial statements (the "Financial Statements"): (i) the consolidated balance
sheets of Xxx Xxxxxxx Worldwide, Inc. (which was subsequently renamed The Xxx
Group, Inc.) and its subsidiaries as of December 31, 1998 and December 31, 1997
and the related consolidated
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statements of income, shareholders' investments and cash flows for the years
then ended, together with auditor's reports thereon by Xxxxxx Xxxxxxxx LLP, (ii)
the consolidated balance sheets of Xxx Xxxxxxx Company, Inc. (which was
subsequently renamed Xxx Xxxxxxx USA, Inc.) and its subsidiaries as of
December 31, 1998 and December 31, 1997 and the related consolidated statements
of income, shareholders' investments and cash flows for the years then ended,
together with auditor's reports thereon by Xxxxxx Xxxxxxxx LLP (with the
December 31, 1998 balance sheets described in clauses (i) and (ii) being
sometimes herein collectively referred to as the "1998 Balance Sheets") and
(iii) the consolidated balance sheets of TLG and its subsidiaries as at
March 31, 1999 and June 30, 1999 and the related consolidated statements of
income, shareholders' investments and cash flows for the periods then ended. The
Financial Statements are complete and correct in all respects, have been derived
from the accounting books and records of the indicated entities, and have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods presented in the Financial Statements subject, in the case of interim
unaudited Financial Statements, only to normal recurring year-end adjustments
(which adjustments are not material individually or in the aggregate). The
Financial Statements fairly present the consolidated financial condition and
consolidated results of operations of the indicated entities as of the dates and
for the periods indicated.
(b) To the Knowledge of BDM, no member of the TLG Group is subject to
any liabilities or obligations of any nature (including unasserted claims),
whether absolute, contingent, accrued or otherwise and whether due or to become
due, that are material to the BDM Group taken as a whole and that are not shown
or are in excess of amounts shown or reserved for in the 1998 Balance Sheets,
other than: (i) liabilities that were incurred by TLG or such Subsidiary after
the date of the December 31, 1998 balance sheet in the ordinary course of
business consistent with past practice and (ii) liabilities specifically
disclosed in the Disclosure Schedule or in the Offering Memorandum.
2.8. Absence of Changes. (a) Between December 31, 1998 and the date of
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this Agreement, except as set forth in the Disclosure Schedule or in the
Offering Memorandum, no member of the TLG Group has:
(i) declared, set aside, made or paid any dividend or other
distribution in respect of its capital stock or otherwise purchased or
redeemed, directly or indirectly, any shares of its capital stock;
(ii) issued or sold any shares of any class of its capital stock, or
any securities convertible into or exchangeable or exercisable for any such
shares;
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(iii) incurred any indebtedness for borrowed money, issued or sold any
debt securities or prepaid any debt in excess of $5,000,000 in any one case,
except for borrowings and repayments in the ordinary course of business
consistent with past practice;
(iv) mortgaged, pledged or otherwise subjected to any Lien, any of its
material properties or assets, tangible or intangible, except for Permitted
Liens in the ordinary course of business consistent with past practice;
(v) forgiven, canceled, compromised, waived or released any material
debts, claims or rights, except for debts, claims and rights against Persons
other than any member of the TLG Group, forgiven, canceled, compromised, waived
or released in the ordinary course of business consistent with past practice;
(vi) increased the compensation of any officer or employee, other than
(A) in the ordinary course of business consistent with past practice or (B) to
comply with Law;
(vii) suffered any damage, destruction or loss (whether or not covered
by insurance), or any strike or other employment-related problem, or any change
in relations with or any loss of a supplier or employee, that, individually or
in the aggregate, could have or result in a TLG Material Adverse Effect;
(viii) amended any of its Organizational Documents;
(ix) changed in any material respect its accounting practices, policies
or principles;
(x) incurred, assumed, guaranteed or otherwise become directly or
indirectly liable with respect to any liability or obligation outside the
ordinary course of business in excess of $5,000,000 in each case or $25,000,000
in the aggregate at any one time outstanding (whether absolute, accrued,
contingent or otherwise and whether direct or indirect, or as guarantor or
otherwise with respect to any liability or obligation of any other Person);
(xi) disposed or agreed to dispose of any material properties or assets
necessary for the conduct of the TLG Business other than in the ordinary course
of business consistent with past practice;
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(xii) entered into any agreement outside the ordinary course of
business consistent with past practice;
(xiii) made any material changes in policies or practices relating to
employment; or
(xiv) taken any action or omitted to take any action that would result
in the occurrence of any of the foregoing.
(b) Between January 31, 2000 (the closing date of the Mergers) and the
date of this Agreement, except as set forth in the Disclosure Schedule, no
member of the BDM Group has:
(i) declared, set aside, made or paid any dividend or other
distribution in respect of its capital stock or otherwise purchased or
redeemed, directly or indirectly, any shares of its capital stock;
(ii) issued or sold any shares of any class of its capital stock, or
any securities convertible into or exchangeable or exercisable for any such
shares;
(iii) incurred any indebtedness for borrowed money, issued or sold any
debt securities or prepaid any debt in excess of $5,000,000 in any one
case, except for borrowings and repayments in the ordinary course of
business consistent with past practice;
(iv) mortgaged, pledged or otherwise subjected to any Lien, any of its
material properties or assets, tangible or intangible, except for Permitted
Liens in the ordinary course of business consistent with past practice;
(v) forgiven, canceled, compromised, waived or released any material
debts, claims or rights, except for debts, claims and rights against
Persons other than any member of the BDM Group, forgiven, canceled,
compromised, waived or released in the ordinary course of business
consistent with past practice;
(vi) increased the compensation of any officer or employee, other than
(A) in the ordinary course of business consistent with past practice or (B)
to comply with Law;
(vii) suffered any damage, destruction or loss (whether or not covered
by insurance), or any strike or other employment-related problem, or any
change in
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relations with or any loss of a supplier or employee, that, individually or
in the aggregate, could have or result in a BDM Material Adverse Effect;
(viii) amended any of its Organizational Documents;
(ix) changed in any material respect its accounting practices,
policies or principles;
(x) incurred, assumed, guaranteed or otherwise become directly or
indirectly liable with respect to any liability or obligation outside the
ordinary course of business in excess of $5,000,000 in each case or
$25,000,000 in the aggregate at any one time outstanding (whether absolute,
accrued, contingent or otherwise and whether direct or indirect, or as
guarantor or otherwise with respect to any liability or obligation of any
other Person);
(xi) disposed or agreed to dispose of any material properties or
assets necessary for the conduct of the Business other than in the ordinary
course of business consistent with past practice;
(xii) entered into any agreement outside the ordinary course of
business consistent with past practice;
(xiii) made any material changes in policies, or practices relating
to policies, of employment; or
(xiv) taken any action or omitted to take any action that would
result in the occurrence of any of the foregoing.
2.9. Litigation. Except as set forth in Section 2.9 of the
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Disclosure Schedule, there are no judicial or administrative actions,
proceedings or investigations pending or, to the Knowledge of BDM, threatened
that, individually or in the aggregate, could reasonably be expected to impair
the ability of BDM to perform its obligations hereunder or under any other
Related Document, to have or result in a BDM Material Adverse Effect, or to
impair materially the ability of BDM or the BDM Group to conduct the Business
following the Closing. There are no outstanding orders, judgments, decrees or
injunctions issued by any Governmental Authority against any member of the BDM
Group that, individually or in the aggregate, in any way affect the Business and
could reasonably be expected to have or result in a BDM Material Adverse Effect.
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2.10. Indebtedness. Section 2.10 of the Disclosure Schedule sets
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forth a list of all outstanding Indebtedness of BDM and its Subsidiaries as of
the date hereof that exceeds US$5,000,000 in any instance. BDM has furnished to
Dentsu true and correct copies of the respective credit agreements of TMG and
TLG entered into in connection with the Mergers (including all exhibits and
schedules thereto), and each such agreement is in full force and effect and no
default of TMG, TLG or any of their respective Affiliates exists thereunder.
2.11. Taxes. (a) Except as disclosed in Section 2.11 of the Disclosure
-----
Schedule, or to the extent that a reserve has been provided in the applicable
1998 Balance Sheets: (i) BDM and each Subsidiary has filed all material Tax
Returns required to be filed by it; (ii) all such Tax Returns are complete and
accurate and disclose all material Taxes required to be paid by BDM or any
subsidiary for the periods covered thereby and all material Taxes shown to be
due on such Tax Returns have been timely paid; (iii) all material Taxes (whether
or not shown on any Tax Return) owed by BDM or any Subsidiary and required to
have been paid have been timely paid or, in the case of Taxes which BDM is
presently contesting in good faith, BDM or such Subsidiary has established an
adequate reserve for such Taxes; (iv) there is no action, suit, investigation,
audit, claim or assessment pending or proposed or threatened with respect to
material Taxes of BDM or any Subsidiary; and (v) there are no material Liens for
Taxes upon the assets of BDM or any subsidiary except Liens relating to current
Taxes not yet due.
(b) Xxx Xxxxxxx Company, Inc. was classified as an "S corporation"
within the meaning of Section 1361 of the Code for all periods from January 1,
1987 through December 31, 1998 for U.S. federal income tax purposes and during
such period validly elected to be classified as an "S corporation" in each
state where it filed a Tax Return on such basis.
(c) As of the Closing Date, BDM will not constitute a "United States
Real Property Holding Corporation" within the meaning of Section 897(c)(2) of
the Code.
2.12. Compliance with Law, Contractual Obligations, etc. Except as
-------------------------------------------------
disclosed in Section 2.12 of the Disclosure Schedule, (i) none of BDM or any
Material BDM Subsidiary is in breach of any of the provisions of its
Organizational Documents, other than in the case of any Material BDM Subsidiary,
a violation that, individually or in the aggregate, would not have or result in
a BDM Material Adverse Effect, and (ii) no member of the BDM Group is in
violation of any applicable Law or Contractual Obligation, other than a
violation that, individually or in the aggregate, would not have or result in a
BDM Material Adverse Effect. To the Knowledge of BDM, no member of the
11
BDM Group has received any notice or has any knowledge of any claim alleging any
such breach or violation.
2.13. Securities Law Compliance. Based on the representations and
-------------------------
warranties of Dentsu set forth in Section 3.6, the offer and sale of the Shares
to Dentsu hereunder is exempt from the registration and prospectus delivery
requirements of the Securities Act and the rules and regulations thereunder.
2.14. No Broker or Finder. Except as set forth on Section 2.14 of the
-------------------
Disclosure Schedule, no brokerage or finder's commissions or fees payable in
connection with the transactions contemplated by this Agreement or any other
Related Document on account of any action taken by BDM, TLG, TMG or their
respective representatives. BDM will indemnify Dentsu against and hold it
harmless from any liability, loss or expense (including, without limitation,
reasonable attorneys' fees) arising in connection with any claim for any such
commissions or fees.
2.15. Merger Documents. BDM has delivered to Dentsu complete and
----------------
correct copies of the Merger Agreement and all other documents required to be
delivered or executed in connection therewith (the "Merger Documents"),
including without limitation, the form of BDM Stock Purchase Agreement, the form
of BDM Voting Trust Agreement, and all tax opinions contemplated thereby.
2.16. Disclosure. To the Knowledge of BDM, documents furnished by or
----------
on behalf of TLG and TMG to Dentsu and its representatives in connection with
the due diligence investigation of TLG and TMG, including in respect of the
valuation of TLG and TMG, respectively, taken as a whole and as of the
respective dates such documents were so furnished, 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 therein in light of the
circumstances under which they were made, not misleading.
2.17. Offering Memorandum: BDM Material Adverse Effect. As of the date
------------------------------------------------
of delivery of the Offering Memorandum to the stockholders of TLG and TMG and as
of January 31, 2000 (the closing date of the Mergers), the information (other
than any information that was provided by Dentsu or any information derived
therefrom) contained in the Offering Memorandum was complete and correct in all
material respects and did not contain any untrue statement of a material fact or
omit any material fact required to make the statements therein not misleading.
Since January 31, 2000, there has not occurred any BDM Material Adverse Effect
or, to the Knowledge of BDM, any event, fact or change that could reasonably be
expected to lead to a BDM Material Adverse Effect.
12
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF DENTSU
Dentsu represents and warrants to BDM as of the date hereof and as of
the Closing Date as follows:
3.1. Due Organization. Dentsu is a company duly organized and validly
----------------
existing under the laws of Japan, with all requisite power and authority to own,
lease and operate all of its assets and to carry on its business as it is now
being conducted and as proposed to be conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the assets owned or
leased by it makes such licensing or qualification necessary other than
jurisdictions in which the failure to be so licensed or qualified would not have
a Dentsu Material Adverse Effect.
3.2. Authority. Dentsu has full corporate power and authority to
---------
execute and deliver this Agreement and each of the other Related Documents to
which it is a party, to perform fully its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery by Dentsu of this Agreement and each of the other Related
Documents to which it is a party, the performance of Dentsu's obligations
hereunder and thereunder, and the consummation of the transactions contemplated
hereby and thereby have all been duly authorized by all necessary corporate
action. This Agreement has been duly executed and delivered by Dentsu and
constitutes the legal, valid and binding obligation of Dentsu, enforceable in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and subject
to general principles of equity. Upon due execution and delivery thereof, the
other Related Documents shall have been duly executed and delivered by Dentsu,
and they shall constitute the legal, valid and binding obligation of Dentsu,
enforceable in accordance with their terms, except as may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally and subject to general principles of equity.
3.3. No Conflict. The execution, delivery and performance by Dentsu of
-----------
this Agreement and each of the other Related Documents to which it is a party
and the consummation of the transactions contemplated hereby and thereby do not
and will not, with or without the passage of time or the giving of notice or
both, result in (i) any conflict with or violation of any provision of the
Organizational Documents of Dentsu, (ii) any conflict with, violation of, or
default under any Law or Contractual Obligation
13
applicable to Dentsu or (iii) the creation or imposition, or require the
creation or imposition, of any Lien on any of the properties or revenues of
Dentsu pursuant to any Law or Contractual Obligation except, in the case of
clause (ii) and (iii), to the extent that any such conflict, violation, default
or Lien, individually and in the aggregate, would not have or result in a Dentsu
Material Adverse Effect or materially impair the ability of Dentsu to perform
its obligations hereunder or under any other Related Document.
3.4. Governmental Approvals and Other Consents. Except as disclosed in
-----------------------------------------
Section 3.4 of the Disclosure Schedule and except for the consents, approvals or
authorizations to be applied for under the HSR Act and any required filings
under the International Investment and Trade in Services Survey Act, no
Governmental Approval or other Consent is required to be made or obtained by
Dentsu in connection with the execution and delivery by Dentsu of this Agreement
or any other Related Document to which it is a party, the consummation by Dentsu
of the transactions contemplated hereby or thereby or the performance by Dentsu
of any of its obligations contained herein or therein.
3.5. No Broker or Finder. Dentsu is obligated to pay an Advisory
-------------------
Service Fee to Nomura Xxxxxxxxxxx Xxxxxxx Co., Ltd. in connection with its
advisory services. No other brokerage or finder's commissions or fees are
payable in connection with the transactions contemplated by this Agreement or
any other Related Document on account of any action taken by Dentsu or its
representatives, and Dentsu will indemnify BDM and TLG against and hold BDM and
TLG harmless from any liability, loss or expense (including, without limitation,
reasonable attorney's fees) arising in connection with any claim for any such
commissions or fees.
3.6. Private Placement. (a) Dentsu understands that (y) the offering
-----------------
and sale of the Shares are intended to be exempt from registration under the
Securities Act pursuant to Section 4(2) of the Securities Act and (z) there is
no existing public or other market for the Shares and there can be no
assurance that Dentsu will be able to sell or dispose of the Shares.
(b) Dentsu is an "accredited investor" as such term is defined in
Regulation D under the Securities Act.
(c) Dentsu has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the Shares and it is capable of bearing the economic risks of such
investment, including a complete loss of such investment.
14
(d) Dentsu has had access to the management and records of the BDM
Group and has been furnished with sufficient information in its opinion from the
BDM Group for determining whether to invest in the Shares, and has been given
the opportunity to ask questions of, and receive answers from, management of the
BDM Group regarding the businesses and affairs of such group and concerning
the terms and conditions of the Shares and other related matters.
(e) Dentsu understands that the Shares will be characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from BDM in transactions not involving a public offering and that
under such laws and applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited circumstances. In
this connection, it represents that it is familiar with Rule 144 under the
Securities Act, as currently in effect, and understands the resale limitations
imposed thereby and by the Securities Act.
ARTICLE IV
COVENANTS OF BDM
4.1. Satisfaction of Closing Conditions; Notification. BDM shall
------------------------------------------------
endeavor to bring about the satisfaction as soon as possible of all the
conditions contained in Sections 6.1 and 6.2. Without limiting the generality
of the foregoing, BDM shall apply for and prosecute with reasonable diligence
all applications for, and shall endeavor promptly to obtain, such Consents from
such third parties and Governmental Authorities as shall be necessary to permit
the consummation of the transactions contemplated by this Agreement including,
without limitation, making the requisite filings with the United States Federal
Trade Commission and the Antitrust Division of the Department of Justice
pursuant to the HSR Act. At all times prior to the Closing Date, BDM shall
promptly notify Dentsu in writing of any fact, condition, event or occurrence
that could reasonably be expected to result in the failure of any of the
conditions contained in Article VI to be satisfied, promptly upon becoming aware
of the same.
4.2. Public Announcements. BDM and Dentsu contemplate issuing a
--------------------
joint press release in connection with the execution and delivery of this
Agreement and/or the closing of the transactions provided for herein. BDM shall
not make, and BDM shall not permit its Affiliates to make, any other public
announcement in respect of this Agreement, the other Related Documents or the
transactions contemplated hereby or thereby without the prior written consent of
Dentsu, which consent shall not be unreasonably withheld or delayed.
15
4.3. Further Actions. (a) BDM shall endeavor to take or cause
---------------
to be taken all actions, and to do or cause to be done all other things,
necessary, proper or advisable in order for BDM to fulfill and perform its
obligations in respect of this Agreement and the Related Documents, and
otherwise to consummate and make effective the transactions contemplated hereby
and thereby.
(b) Without limiting the generality of Section 4.3(a), in the
event that for any reason (including as a result of the rescission following the
Closing Date of any repurchase or redemption by TLG or TMG of any shares of
their stock prior to the effective date of the Mergers) the number of shares of
Class B Stock issued to Dentsu on the Closing Date constitute less than 21.6% of
the aggregate number of shares of BDM Common Stock outstanding as of the Closing
Date (treating all shares of BDM Common Stock subject to the Share Replacement
Options and any shares of BDM Common Stock, other than Employee Shares, that
any former employee, shareholder or optionholder of TLG, TMG or any of their
Affiliates has the right to receive as of the Closing Date or becomes entitled
to receive as a result of any event occurring on or before the Closing Date as
being outstanding for such purpose as of the Closing Date) (the "Aggregate
Closing BDM Share Number"), then BDM shall issue to Dentsu, without additional
payment, such number of additional shares of Class B Stock as may be required so
that the aggregate number of shares of Class B Stock issued to Dentsu equals
21.6% of the Aggregate Closing BDM Share Number.
4.4. Conduct of BDM Business. On and after the date hereof to
-----------------------
the Closing Date, except as expressly required by this Agreement or as otherwise
expressly consented to by Dentsu in writing, BDM will, and BDM will cause each
member of the BDM Group to:
(i) carry on its business in, and only in, the ordinary course
of business, in substantially the same manner as heretofore conducted, and
endeavor to preserve intact its present business organization, keep
available the services of its present officers and significant employees,
and preserve its relationships with clients, suppliers and others having
business dealings with it, to the end that its goodwill and going business
shall be in all material respects unimpaired following the Closing;
(ii) with respect to BDM only, not (i) declare dividends on any
class of its capital stock or (ii) redeem or repurchase any shares of any
class of its capital stock, other than redemptions or repurchases pursuant
to the BDM Stock Purchase Agreements;
16
(iii) not sell, transfer or otherwise dispose of, in a single or
related series of transactions, a significant business unit of the BDM
Group (whether such disposition takes the form of a sale of assets, a sale
of Equity Securities of an entity that carries on such business or
otherwise) for an aggregate consideration (including the aggregate
principal amount of any assumed indebtedness) of more than $100,000,000;
(iv) with respect to BDM only, not cause or permit any amendment,
supplement, waiver or modification to or of any of its Organizational
Documents;
(v) not take any action or enter into any agreement that would
result in the occurrence of a BDM Change of Control; and
(vi) not agree or otherwise commit to take any of the actions
described in the foregoing paragraphs (i) through (v).
4.5. Subsequent Financial Statements and Reports. From the date
-------------------------------------------
hereof to and including the Closing Date, BDM will (i) provide to Dentsu such
management reports as are delivered to the Board of Directors, and (ii) timely
prepare, and promptly deliver to Dentsu, quarterly financial statements, to be
in scope and detail consistent with such quarterly financial statements as
historically distributed to the senior management of the TLG Group and the TMG
Group, respectively, and have previously been delivered to Dentsu.
4.6. Issuance of Additional Shares of Class B Stock. BDM shall not
----------------------------------------------
issue any shares of Class B Stock to any Person other than to Dentsu in
accordance with this Agreement.
4.7. Signatories to BDM Voting Trust Agreement and BDM Stock Purchase
----------------------------------------------------------------
Agreement. BDM shall use its best efforts to cause each securities holder of BDM
---------
who became or will become a securities holder of BDM pursuant to the terms of
the Merger Agreement promptly to become a party to the BDM Voting Trust
Agreement and a BDM Stock Purchase Agreement.
17
ARTICLE V
COVENANTS OF DENTSU
5.1. Satisfaction of Closing Conditions: Notification. Dentsu shall
------------------------------------------------
endeavor to bring about the satisfaction as soon as possible of all the
conditions contained in Sections 6.1 and 6.3. Without limiting the generality of
the foregoing, Dentsu shall apply for and prosecute with reasonable diligence
all applications for, and shall endeavor promptly to obtain, such Consents from
such third parties and Governmental Authorities as shall be materially necessary
to permit the consummation of the transactions contemplated by this Agreement
including, without limitation, making the requisite filings with the United
States Federal Trade Commission and the Antitrust Division of the United States
Department of Justice pursuant to the HSR Act. At all times prior to the Closing
Date, Dentsu shall promptly notify BDM and TLG in writing of any fact,
condition, event or occurrence that could reasonably be expected to result in
the failure of any of the conditions contained in Article VI to be satisfied,
promptly upon becoming aware of the same.
5.2. Public Announcements. BDM and Dentsu contemplate issuing a joint
--------------------
press release in connection with the execution and delivery of this Agreement
and/or the closing of the transactions provided for herein. Dentsu shall not,
and shall not permit any of its Affiliates to, make any other public
announcement in respect of this Agreement, the Related Documents or the
transactions contemplated hereby or thereby without the prior written consent of
BDM, which consent shall not be unreasonably withheld or delayed.
5.3. Further Actions. Dentsu shall endeavor to take or cause to be
---------------
taken all actions, and to do or cause to be done all other things, necessary,
proper or advisable in order for Dentsu to fulfill and perform its obligations
in respect of this Agreement and the Related Documents to which it is a party,
or otherwise to consummate and make effective the transactions contemplated
hereby and thereby.
ARTICLE VI
CONDITIONS TO CLOSING
6.1. Conditions to Obligations of Each Party. The obligations of BDM
---------------------------------------
and Dentsu to consummate the Closing shall be subject to the satisfaction, or
waiver, on or prior to the Closing Date of the following conditions:
18
(a) No Injunction, etc. Consummation of the transactions contemplated
------------------
hereby or by the Related Documents shall not have been restrained, enjoined
or otherwise prohibited or made illegal by any applicable Law, including
any order, injunction, decree or judgment of any court or other
Governmental Authority; and no such Law that would have such an effect
shall have been promulgated, entered, issued or determined by any court or
other Governmental Authority to be applicable to this Agreement or the
Related Documents. No action or proceeding shall be pending or threatened
by any Governmental Authority or other Person on the Closing Date before
any court or other Governmental Authority to restrain, enjoin or otherwise
prevent the consummation of any of the transactions contemplated hereby or
by the Related Documents, or to recover any material damages or obtain
other material relief as a result of such transactions, or that otherwise
relates to the application of any such Law.
(b) Government Approvals and Consents. All Governmental Approvals and
---------------------------------
Consents required to be made or obtained by any party hereto or any other
member of the BDM Group and the Dentsu Group, including without limitation
the expiration or termination of the applicable waiting period pursuant to
the HSR Act, in connection with the execution and delivery of this
Agreement and the Related Documents or the consummation of the transactions
contemplated hereby or thereby shall have been made or obtained.
6.2. Conditions to Obligations of Dentsu. The obligations of Dentsu to
-----------------------------------
consummate the Closing shall be subject to the satisfaction, or waiver, on or
prior to the Closing Date of the following additional conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of BDM contained in Article II and in any other Related Document
shall be true and correct in all material respects at and as of the date
hereof and shall be true and correct in all material respects at and as of
the Closing Date (except to the extent such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties shall be true and correct in all material respects at and as of
such earlier date).
(b) Performance of Agreements. BDM shall have in all material
-------------------------
respects duly performed and complied with all agreements, covenants and
conditions required by this Agreement or any Related Document to be
performed or complied with by it prior to or on the Closing Date.
19
(c) Officer's Certificate. BDM shall have delivered to Dentsu a
---------------------
certificate, dated the Closing Date and signed by an officer of BDM, in form
and substance reasonably satisfactory to Dentsu, to the effect set forth in
Sections 6.2(a), 6.2(b) and 6.2(d).
(d) No Material Adverse Effect. No event, occurrence, fact, condition,
--------------------------
change, development or effect shall exist or have occurred or come to exist (i)
since the date hereof that, individually or in the aggregate, has had or
resulted in or could reasonably be expected to become or result in, a BDM
Material Adverse Effect, (ii) since the date of the 1998 Balance Sheet that,
individually or in the aggregate, has had or resulted in or could reasonably be
expected to become or result in, a TLG Material Adverse Effect, or (iii) since
December 31, 1998 that, individually or in the aggregate, has had or resulted
in or could reasonably be expected to become or result in, a TMG Material
Adverse Effect.
(e) Related Documents. Counterparts of each of the following
-----------------
Related Documents shall have been duly executed by BDM and delivered to Dentsu:
(1) a Registration Rights Agreement, between Dentsu and BDM,
substantially in the form of Exhibit B (the "Registration Rights
Agreement"); and
(2) an Alliance Agreement, between Dentsu and BDM, substantially in
the form of Exhibit C (the "Alliance Agreement").
(f) Restated Charter and By-Laws. (1) An Amended and restated Certificate
----------------------------
of Incorporation for BDM, in the form of Exhibit A (the "Restated Charter"),
shall have been duly adopted and filed with the Secretary of State of the State
of Delaware, to become effective on or prior to the Closing Date; and
(2) The by-laws of BDM shall have been amended to be in the form of Exhibit
D (the "Restated By-Laws").
(g) Opinions. Dentsu shall have received the following opinions of
--------
legal counsel and tax advisors addressed to it and dated the Closing
Date:
(1) opinion of Sidley & Austin, counsel to TLG and BDM, dated the
Closing Date and substantially in the form of Exhibit E as to the matters
set forth therin;
20
(2) opinion of Xxxxxxxx & Xxxxx, counsel to TLG and BDM, dated the
Closing Date and substantially in the form of Exhibit F as to the matters
set forth therein;
(3) opinion of Xxxxxxxxx X. Xxxxxxx, General Counsel of BDM, dated
the Closing Date and substantially in the form of Exhibit G as to the
matters set forth therein; and
(4) opinion of Xxxxxxxx & Xxxxx, tax counsel to TLG, concerning the
U.S. federal income tax consequences of the Xxxxxxx Merger, dated the
Closing Date and substantially in the same form as the opinion dated
January 28, 2000 previously delivered to TLG, and opinion of Xxxxxx
Xxxxxxxx LLP, tax adviser to TMG, concerning the U.S. federal income tax
consequences of the MacManus Merger, dated the Closing Date and
substantially in the same form as the opinion dated January 28, 2000
previously delivered to TLG and TMG.
(h) Corporate and Other Proceedings. All corporate, partnership and other
--------------------------------
proceedings of each member of the BDM Group in connection with the
transactions contemplated by this Agreement and the Related Documents, and all
documents and instruments incident thereto, shall be reasonably satisfactory
in form and substance to Dentsu and its counsel, and Dentsu and its counsel
shall have received all such documents and instruments, or copies thereof,
certified if requested, as may be reasonably requested.
6.3. Conditions to Obligations of BDM. The obligation of BDM to consummate
--------------------------------
the transactions contemplated hereby shall be subject to the satisfaction, or
waiver, on or prior to the Closing Date, of the following additional conditions:
(a) Representations and Warranties. The representations and warranties of
-------------------------------
Dentsu contained in Article III and in any other Related Document shall be
true and correct in all material respects at and as of the date hereof and
shall be true and correct in all material respects at and as of the Closing
Date (except to the extent such representations and warranties expressly
relate to an earlier date, in which case such representations and warranties
shall be true and correct in all material respects, at and as of such earlier
date).
(b) Performance of Agreements. Dentsu shall have in all material respects
--------------------------
duly performed and complied with all agreements, covenants and con-
21
ditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) Officer's Certificate. Dentsu shall have delivered to BDM a
---------------------
certificate, dated the Closing Date and signed by an officer of Dentsu, in
form and substance reasonably satisfactory to BDM, to the effect set forth
above in Sections 6.3(a) and 6.3(b).
(d) Corporate Proceedings. All corporate proceedings of Dentsu in
---------------------
connection with the transactions contemplated by this Agreement and the
Related Documents, and all documents and instruments incident thereto, shall
be reasonably satisfactory in form and substance to BDM and its counsel, and
BDM and its counsel shall have received all such documents and instruments, or
copies thereof, certified if requested, as may be reasonably requested.
(e) Alliance Agreement. The Alliance Agreement shall have been duly
------------------
executed and delivered by Dentsu.
(f) Opinion of Counsel. BDM shall have received the following opinions
------------------
of legal counsel addressed to it and dated the Closing Date:
(1) opinion of Debevoise & Xxxxxxxx, counsel to Dentsu,
dated the Closing Date and substantially in the form of Exhibit H as to
the matters set forth therein (which opinion may rely on the opinion of
Tokyo Eiwa referred to below as to such Japanese Law matters as Debevoise
& Xxxxxxxx reasonably deems appropriate); and
(2) opinion of Tokyo Eiwa, counsel to Dentsu, dated the
Closing Date and substantially in the form of Exhibit I.
ARTICLE VII
PREEMPTIVE RIGHTS
7.1. Preemptive Rights prior to the IPO. (a) Prior to the IPO and
----------------------------------
subject to paragraph (d) below, BDM shall not issue any additional Equity
Securities (other than Employee Shares), unless BDM shall have provided
written notice of such issuance (an "Issuance Notice") to Dentsu at least 45
days prior to the planned date of such issuance. The Issuance Notice shall set
forth (i) the date on which such Equity Securities are to be issued (the
"Issuance Date"), (ii) the per unit price of such Equity
22
Securities (the "Issuance Price"), (iii) the number of such Equity Securities to
be issued (the "New Equity Securities") (assuming the exercise in full by
Dentsu of its preemptive rights hereunder with respect to such issuance), and
(iv) any other material terms and conditions of such issuance. To the extent
that any property other than the cash is to constitute payment for such New
Equity Securities, the Issuance Price shall be calculated to reflect the fair
market value of such other property as determined in good faith by the Board
of Directors.
(b) Subject to paragraph (e) below, Dentsu shall have the right,
exercisable by delivery of written notice (the "Exercise Notice") to BDM during
the 30-day period following the date of the Issuance Notice, to subscribe for up
to 20% of the New Equity Securities, provided that any such New Equity
Securities to be issued to Dentsu shall be shares of Class B Stock, or
securities exchangeable for or convertible into or purchase rights in respect of
Class B Stock, rather than Class A Stock. The Exercise Notice shall set forth
the number of New Equity Securities (the "Exercise Amount") to be purchased by
Dentsu and shall constitute the binding and irrevocable agreement of Dentsu to
purchase the Exercise Amount of the Issuance Date and upon the terms and
conditions set forth in the Issuance Notice. Should Dentsu fail to elect to
purchase the full number of New Equity Securities that it has the right to
purchase, BDM may, at its option, issue some or all of the remaining such
securities (in the form of shares of Class A Stock, or securities exchangable
for or convertible into or purchase rights in respect of Class A Stock) to one
or more other Persons.
(c) On the Issuance Date (assuming the delivery of an Exercise
Notice, and subject to paragraph (d) below):
(1) BDM shall (i) allot to Dentsu a number of New Equity Securities
(in the form of shares of Class B Stock, or securities exchangable for or
convertible into or purchase rights in respect of Class B Stock) equal to
the Exercise Amount; (ii) issue and deliver to Dentsu, free and clear of
any Liens, one or more certificates or other appropriate instruments
representing such New Equity Securities registered in the name of Dentsu;
(iii) deliver an opinion of counsel to BDM, reasonably acceptable to
Dentsu, addressing favorably the due authorization and valid issuance of
such New Equity Securities; and (iv) deliver a certificate signed by a duly
authorized officer of BDM stating that, upon delivery to Dentsu of New
Equity Securities and payment therefor by Dentsu, Dentsu will acquire good
and valid title thereto, free and clear of any Lien (other than any Lien
created by Dentsu) without violation of any preemptive rights, and in the
case of the issuance of shares Class B Stock, such shares will be fully
paid and nonassessable; and
23
(2) Dentsu will pay to BDM, by wire transfer of immediately
available funds to the account of BDM designated by BDM to Dentsu at
least four Business Days prior to the Issuance Date, an amount equal
to the product of (x) the Exercise Amount and (y) the Issuance Price.
(d) If in connection with any issuance of New Equity Securities
in a business combination or another strategic transaction where the
consideration to be received by BDM is other than cash the BDM Board of
Directors determines in good faith that it would not be practical to
deliver to Dentsu a related Issuance Notice 45 days prior to the Issuance
Date, BDM shall deliver such Issuance Notice to Dentsu as far in advance of
such Issuance Date as it so determines to be practical (but in any event no
later than one Business Day prior to such Issuance Date). In such event,
Dentsu will still have 30 days after receipt of such Issuance Notice to
deliver an Exercise Notice to BDM, and in the event it does so, the parties
shall proceed to consummate the issuance of the Exercise Amount of New
Equity Securities to Dentsu as set forth in paragraph (c) above on the
related Issuance Date (if practicable) or as soon as practicable after the
delivery of such Exercise Notice (if issuance on the related Issuance Date
is not practicable). The parties further acknowledge that BDM will have no
obligation to delay the issuance of the New Equity Securities to be issued
to other investors pending the exercise by Dentsu of its preemptive rights
with respect to such issuance.
(e) If in connection with the issuance of any New Equity
Securities constituting Convertible Securities or Stock Purchase Rights
("New Derivative Securities") the BDM Board of Directors determines in good
faith that it is impracticable to grant Dentsu the preemptive rights with
respect to such securities at the time of the issuance thereof, then BDM
shall give written notice to Dentsu to such effect (which notice shall also
include the information otherwise to be set forth in an Issuance Notice
with respect to such New Equity Securities pursuant to Section 7.1(a)). In
such event, notwithstanding the preceding provisions of this Section 7.1,
Dentsu shall not have the right to purchase up to 20% of such New
Derivative Securities at the time of the issuance thereof. Rather, Dentsu
shall have the right to purchase, within 30 days after it has received
notice from BDM of the conversion, exchange or exercise of any such New
Derivative Securities (which notice shall be provided by BDM to Dentsu as
soon as practicable after any such conversion or exchange), a number of
shares of Class B Stock equal to 25% of the number of shares of BDM Common
Stock into or for which such New Derivative Securities have been so
converted, exchanged or exercised, at a purchase price per share equal to
the sum of (i) the aggregate consideration, if any, paid to BDM for all
such New Derivative Securities divided by the total number of shares of BDM
Common Stock into or for which such New Derivative securities are
convertible, exchangeable or exercisable, plus (ii) the price per share of
BDM Common Stock, if any,
24
paid or payable by the holders of such New Derivative Securities upon the
conversion, exchange or exercise thereof.
7.2. Preemptive Rights with respect to the IPO. (a) At least 45
------------------------------------------
days prior to the date of the initial filing (the "Initial Filing Date") by BDM
of a registration statement under the Securities Act with respect to the IPO
(the "IPO Registration Statement"), BDM shall provide to Dentsu written notice
(the "IPO Issuance Notice") of its intention to so file. The IPO Issuance Notice
shall set forth (i) the date on which the IPO is expected to occur, (ii) the
number of shares of BDM Common Stock expected to be issued by BDM in the IPO
assuming no exercise of any Over-Allotment Option (the "Base IPO Share Number")
(iii) the number of shares of BDM Common Stock potentially issuable with respect
to any Over-Allotment Option, assuming the full exercise thereof (the
"Over-Allotment Share Number"), (iv) the expected price range per share of BDM
Common Stock to be issued in the IPO (the "Estimated Price Range"), and (v) and
other terms and conditions of or fact material to such issuance. The IPO
Issuance Notice shall also be accompanied by a copy of the most recent draft, if
one exists, of the IPO Registration Statement.
(b) Dentsu shall have the right to subscribe for and to
purchase from BDM, on the date of and contingent upon the closing of the IPO, a
number of shares of Class B Stock equal to up to 25% of the Base IPO Share
Number, plus an additional number of shares of Class B Stock equal to up to 25%
of the Over-Allotment Share Number in the event and to the extent that the
Over-Allotment Option is exercised. Such subscription right shall be
exercisable by delivery of written notice (the "IPO Exercise Notice") to BDM at
any time prior to the later of the 30/th/ day following the date of the IPO
Issuance Notice and the second day prior to the initial filing of the IPO
Registration Statement. The IPO Exercise Notice shall set forth (i) the number
of shares of Class B Stock (the "Dentsu Base Shares") to be purchased by Dentsu
in connection with the IPO assuming no exercise of any Over-Allotment Option
(which number shall not exceed 25% of the Base IPO Share Amount), and (ii) the
number of shares of Class B Stock (the "Dentsu Over-Allotment Shares" and,
together with the Dentsu Base Shares, the "Dentsu IPO Shares") to be purchased
by Dentsu in connection with the exercise of the Over-Allotment Option assuming
such option is exercised in full (which number shall not exceed 25% of the
Over-Allotment Share Number). The IPO Exercise Notice shall constitute the
irrevocable commitment of Dentsu to purchase (1) on the date of the closing of
the IPO, the Dentsu Base Shares and (2) on the date of the closing of any
issuance of BDM Common Stock pursuant to any exercise of the Over-Allotment
Option, the number of shares of Class B Stock equal to the number of shares
being issued on such date pursuant to the Over-Allotment Option multiplied by a
fraction equal to (x) the number of Dentsu Over-Allotment Shares divided by (y)
the Over-Allotment Share Number, subject in each
25
case only to the IPO Exercise Notice not having been withdrawn or modified in
the limited circumstances set forth in Section 7.2(d).
(c) Prior to the date of the closing of the IPO, provided that Dentsu
has delivered to BDM an IPO Exercise Notice, BDM will deliver to Dentsu,
promptly upon the filing thereof, a copy of (x) the IPO Registration Statement,
(y) each amendment thereto, and (z) each "prospectus" (as defined in Section
2(a)(10) of the Securities Act) delivered by BDM to any offeree with respect to
the IPO. BDM will also provide Dentsu written notice of any change in the
Estimated Price Range (a "Pricing Change Notice") or in the Base IPO Share
Number (an "Issue Size Change Notice").
(d) Dentsu shall have the right to withdraw or modify the IPO Exercise
Notice only as follows:
(1) If BDM delivers an Issue Size Change Notice setting forth a
decrease in the Base IPO Share Number from that set forth in the IPO Issuance
Notice (or the most recent Issue Size Change Notice), the number of Dentsu
Base Shares shall be automatically reduced to 25% of the Base IPO Share
Number set forth in such Issue Size Change Notice, provided that if the
number of Dentsu Base Shares set forth in the IPO Exercise Notice or in the
most recent Share Reduction Notice, as applicable, constituted less than 25%
of the Base IPO Share Number set forth in the original IPO Issuance Notice or
the most recent Issue Size Change Notice, as applicable (such percentage, the
"Prior Notice Percentage"), Dentsu shall have the right, upon notice to BDM
(a "Share Reduction Notice") given within 5 days of Such Issue Size Change
Notice, to further reduce the number of Dentsu Base Shares to a percentage of
the revised Base IPO Share Number not less than the Prior Notice Percentage.
(2) If BDM delivers an Issue Size Change Notice setting forth an
increase in the Base IPO Share Number from that set forth in the IPO Issuance
Notice (or the most recent Issue Size Change Notice), Dentsu shall have the
right, upon notice to BDM given within 5 days of such Issue Size Change
Notice, to increase the number of Dentsu Base Shares to an amount not greater
than 25% of the Base IPO Share Number set forth in such Issue Size Change
Notice.
(3) If BDM delivers a Pricing Change Notice setting forth an Estimated
Price Range having an upper limit in excess of 200% of the upper limit of the
Estimated Price Range set forth in the IPO Issuance Notice, Dentsu shall have
the right, upon notice to BDM given within 5 days of such Pricing Change
Notice, to
26
either (x) withdraw the IPO Exercise Notice, or (y) to reduce the number of
Dentsu Base Shares and/or the number of Dentsu Over-Allotment Shares.
(4) Dentsu shall have the right to withdraw the IPO Exercise Notice,
exercisable by delivery of written notice thereof to BDM, in the event that
the closing of the IPO has not occurred by the first anniversary of the
date of the IPO Exercise Notice.
(e) On the closing date of the IPO and on any subsequent date of any
closing of any issuance of BDM Common Stock pursuant to the Over-Allotment
Option:
(1) BDM shall (i) allot to Dentsu a number of shares of Class B Stock
equal to the number of Dentsu IPO Shares to be purchased on such date; (ii)
issue and deliver to Dentsu, free and clear of any Liens (other than Liens
created by Dentsu), one or more certificates representing such Dentsu IPO
Shares, registered in the name of Dentsu; (iii) deliver an opinion of
counsel to BDM, reasonably acceptable to Dentsu, addressing favorably the
due authorization and valid issuance of such Dentsu IPO Shares, and (iv)
deliver a certificate signed by a duly authorized officer of BDM stating
that, upon delivery to Dentsu of such Dentsu IPO Shares, and payment
therefor by Dentsu, Dentsu will acquire good and valid title to such
shares, free and clear of any Lien (other than any Lien created by Dentsu)
without violation of any preemptive rights, and such shares shall be fully
paid and nonassessable; and (v) deliver to Dentsu a copy of the final
prospectus with respect to the IPO, together with a representation that
such final prospectus is complete and correct in all material respects and
did not contain any untrue statement of a material fact or omit any
material fact required to make the statements therein not misleading.
(2) Dentsu will pay to BDM, by wire transfer of immediately available
funds to an account designated by BDM at least four Business Days prior to
the closing date of the IPO, an amount equal to the product of (x) the
number of Dentsu IPO Shares and (y) the price per share of BDM Common Stock
set forth on the cover of the final prospectus with respect to the IPO less
all underwriting commissions and selling discounts included in such price.
7.3 Termination of Preemptive Rights. The preemptive rights granted to
--------------------------------
Dentsu pursuant to Sections 7.1 and 7.2 above shall automatically terminate in
the event of any termination of the Alliance Agreement by BDM pursuant to clause
(3) of Section 7(a) thereof.
27
7.4. Issuance of Class B Stock. BDM agrees that it will not issue or
-------------------------
sell any shares of Class B Stock except pursuant to this Agreement, or as
expressly permitted by the Restated Charter as in effect from time to time.
ARTICLE VIII
STANDSTILL AND TRANSFER PROVISIONS
8.1. Standstill. (a) Except as provided in Subsections (b) and (c)
----------
below, Dentsu shall not at any time, and shall cause its Affiliates not to,
directly or indirectly, except with the prior written consent of the Board of
Directors:
(i) acquire, or offer or propose to acquire, record or beneficial
ownership of any additional shares of capital stock of BDM or any
additional Convertible Securities or Stock Purchase Rights if as a result
of such acquisition Dentsu and its Affiliates would become the record or
beneficial owner of the greater of (x) (1) until the third anniversary of
the Closing Date, more than 20% of the total number of outstanding shares
of capital stock of BDM, or (2) thereafter, more than 25% of the total
number of outstanding shares of capital stock of BDM, in each case
calculated on a fully-diluted basis (taking into account all Employee
Shares, whether or not issued, as well as any Share Replacement Options)
and (y) the sum of (A) the number of shares of capital stock of BDM owned
by any other Person or group of Persons acting in concert (other than any
Employee Holder(s)), plus (B) 5% of the total number of outstanding shares
of capital stock of BDM, calculated on a fully-diluted basis (taking into
account all Employee Shares, whether or not issued, as well as any Share
Replacement Options);
(ii) make, or in any way cause or participate in, any "solicitation" of
"proxies" (as such terms are defined or used in Rule 14a-1 under the
Exchange Act) with respect to BDM, become a "participant" in any "election
contest" (as such terms are defined or used in Rule 14a-1 under the
Exchange Act) with respect to BDM, or seek to advise, encourage or
influence any Person with respect to the voting of any voting securities of
BDM;
(iii) initiate, propose or otherwise solicit (or participate in the
solicitation of) stockholders of BDM for the approval of one or more
stockholder proposals, as described in Rule 14a-8 under the Exchange Act or
otherwise, or induce or attempt to induce any other Person to initiate,
propose or solicit any such stockholder proposal;
28
(iv) nominate for election or otherwise seek to place any representative
on the Board of Directors, other than the nomination and election of the
"Class B Directors" as defined in and pursuant to Article IV of the Restated
Charter;
(v) in any manner, agree, attempt, seek or propose (or make any request
for permission) to deposit any BDM Common Stock owned by Dentsu or any of its
Affiliates, directly or indirectly, in any voting trust or similar arrangement
or to subject any BDM Common Stock owned by Dentsu or any of its Affiliates to
any other voting or proxy agreement, arrangement or understanding;
(vi) form, join or in any way participate in any group, act in concert
with any other Person or otherwise take any action or actions which would
cause it to be deemed a "person" (for the purposes of Section 13(d) of the
Exchange Act) with respect to any shares of capital stock of BDM;
(vii) participate in or encourage the formation of any group (A) which
owns, seeks or offers to acquire beneficial ownership of any shares of capital
stock of BDM or any Convertible Securities or Stock Purchase Rights or (B)
which seeks or offers to affect control of BDM for the purpose of
circumventing any provision of this Agreement;
(viii) (A) solicit, seek or offer to effect, (B) negotiate with or provide
any information to any party with respect to, (C) make any public
announcement, proposal, offer or filing under the Exchange Act, any similar
statute or otherwise, or take any action to cause BDM to make any such
announcement, proposal, offer or filing with respect to: (1) any form of
business combination or similar transaction involving BDM or any Subsidiary
thereof, including, without limitation, a merger, tender or exchange offer,
(2) any form of restructuring, recapitalization or similar transaction in
respect of BDM or (3) any disposition of all or substantially all of the
assets of BDM;
(ix) take any action challenging the validity or enforceability of any
covenant or agreement contained in this Section 8.1; or
(x) instigate, advise, assist, encourage or finance (or assist or
arrange financing for) any Person in connection with any of the foregoing;
provided that nothing in this Section 8.1 shall (A) prohibit any person who is
serving as a Director from, solely in his or her capacity as such Director, (x)
taking any action or making any statement at any meeting of the Board of
Directors or of any committee
29
thereof; (y) making any statement to any Director, officer or agent of BDM; or
(z) making any statement or disclosure required under the federal securities
laws or other applicable laws; (B) prohibit Dentsu or any of its Affiliates from
taking any action in opposition to any "solicitation" of "proxies" (as such
terms are defined or used in Rule 14a-1 under the Exchange Act) with respect to
BDM by any Person other than BDM; or (C) restrict any private communications
between Dentsu or any of its Affiliates and any person designated by Dentsu as a
Director. BDM will furnish to Dentsu from time to time promptly, upon request,
at BDM's expense a calculation showing the percentage of BDM's capital stock
owned at the time by Dentsu and its Affiliates on a fully diluted basis (taking
into account all authorized options, whether issued or unissued).
(b) Notwithstanding Subsection (a) above, nothing contained in this
Section 8.1 or Section 8.2 shall prohibit Dentsu or any of its Affiliates from
(i) tendering any shares of BDM Common Stock into any tender or exchange offer
made by any person other than Dentsu or an Affiliate of Dentsu, unless the Board
of Directors has recommended that stockholders of BDM reject such offer and such
recommendation has not been withdrawn (it being understood that Dentsu or any
such Affiliate, as the case may be, may not tender any shares of BDM Common
Stock pursuant to such tender or exchange offer until the Board of Directors has
publicly taken a position with respect to such offer or has stated that it will
remain neutral or is unable to take a position with respect thereto), in
accordance with Rule 14e-2 under the Exchange Act, any successor regulation or
otherwise; (ii) bidding or otherwise participating in any auction for BDM or any
Subsidiary of BDM in the event that the Board of Directors of BDM has determined
to sell BDM or such Subsidiary through such a procedure; (iii) purchasing at any
time before and upon an IPO, additional shares of BDM Common Stock in accordance
with Sections 7.1, 7.2 and 9.2.
(c) Dentsu's and its Affiliates' obligations contained in Subsection
(a) above shall be suspended and shall cease to be in effect if, after the IPO,
any Person or group of Persons acting in concert (other than Employee
Holder(s)), acquires in a single transaction or a series of related
transactions, other than a Permitted Issuance, record or beneficial ownership of
an aggregate number of shares of BDM Common Stock (a "Threshold Position") equal
to or exceeding 20% of the total number of shares of a capital stock of BDM then
outstanding, calculated on a fully-diluted basis (taking into account all
Employee Shares, whether or not issued and any Share Replacement Options). Such
suspension of Dentsu's and its Affiliates' obligations hereunder shall continue,
and Dentsu shall have no obligations under Subsection (a) above, until such
time, if ever, as of which no such Person or group of Persons acting in concert,
other than Persons who acquired shares in a Permitted Issuance, owns
beneficially or of record a Threshold Position, at which time Dentsu's and its
Affiliates' obligations contained in Subsection (a) above shall
30
be fully reinstated and thereafter applicable in accordance with their terms
(provided that any actions taken by Dentsu during the time that such obligations
were suspended shall remain valid and Dentsu shall have no obligation to
reverse such actions or do anything else with respect thereto).
(d) To the extent that Dentsu and its Affiliates are permitted to
purchase additional shares of BDM Common Stock under the restrictions set forth
in Subsection (a) above, Dentsu shall effect, and shall cause its Affiliates to
effect, each such purchase: (i) in compliance with any policy adopted by the BDM
Board of Directors regarding transactions in securities of BDM by Persons with
access to inside information, (ii) in compliance with all applicable securities
laws and (iii) with respect to purchases of shares on any stock exchange or
securities market, pursuant to an orderly plan intended to minimize the
potential disruptive effect of such purchases on the public trading markets for
BDM's securities.
8.2. Transfer Restrictions. (a) Dentsu may not Transfer any shares of
---------------------
BDM Common Stock held by it except: (i) in a Permitted Intercompany Transfer
pursuant to Subsection (b) below, (ii) at any time following the earlier of the
second anniversary of the Closing Date or the termination of the Alliance
Agreement, in a Permitted Third Party Sale pursuant to Subsection (c) below,
(iii) at any time following the closing of an IPO, pursuant to Subsection (d)
below; or (iv) otherwise with the approval of the Board of Directors.
(b) Dentsu may at any time (whether prior to or following the IPO)
Transfer any shares of BDM Common Stock pursuant to a Permitted Intercompany
Transfer. A "Permitted Intercompany Transfer" means a transfer of some or all
of the shares of BDM Common Stock then held by Dentsu to a direct or indirect
wholly-owned Subsidiary of Dentsu (a "Permitted Dentsu Transferee"), provided
that (x) such transferee shall have first agreed in writing in a form reasonably
satisfactory to BDM to be bound by the provisions of this Agreement as if it
were Dentsu hereunder, (y) such transfer shall be in compliance with the
provisions of Subsection (e) below, and (z) Dentsu shall be responsible for all
Taxes and other charges imposed in connection with such transfer (including any
increased withholding taxes that may result therefrom). Upon any such transfer,
any reference to "Dentsu" in this Agreement shall be deemed to be a reference to
Dentsu and/or such Permitted Dentsu Transferee, as applicable. For so long as
such Permitted Dentsu Transferee continues to hold shares of BDM Common Stock
transferred to it pursuant to this Section 8.2(b), Dentsu shall not permit such
Permitted Dentsu Transferee to cease to be a direct or indirect wholly-owned
Subsidiary of Dentsu unless Dentsu first causes such Permitted Dentsu Transferee
to transfer such shares to another Permitted Dentsu Transferee in a Permitted
Intercompany Transfer.
31
(c) Subject to Subsections (e) and (f) below, commencing on the
earlier of (x) the second anniversary of the Closing Date and (y) any
termination of the Alliance Agreement in accordance with its terms, Dentsu may
transfer all or part of the shares of BDM Common Stock held by it in a private
sale to a Permitted Purchaser (a "Permitted Third Party Sale"), provided that
this Section 8.2(c) shall terminate on the closing of the IPO and thereafter any
transfer other than a Permitted Intercompany Transfer shall be made pursuant to
Section 8.2(d). It shall be a condition to the consummation of any such
Permitted Third Party Sale that the shares of BDM Common Stock have first been
offered to BDM in accordance with the provisions of Section 9.2(b). It shall be
a further condition to the consummation of any such Permitted Third Party Sale
that the Permitted Purchaser shall have entered into an agreement with BDM in
such form as BDM may reasonably prescribe (a "Permitted Purchaser Agreement")
pursuant to which: (i) such Permitted Purchaser represents and warrants to BDM
that it is a "Permitted Purchaser" as defined herein, (ii) for so long as such
Permitted Purchaser continues to hold any of the shares of BDM Common Stock
transferred to it by Dentsu (the "PTP Shares"), it will be bound by and entitled
to the benefits of the provisions of Sections 8.1, 8.2, 8.3, 8.4, 13.4 and the
other relevant Sections of Article XIII of this Agreement, and Article XI (as it
applies to any failure of BDM to perform any covenant or agreement under this
Agreement or the Registration Rights Agreement or to fulfill any obligation in
respect of this Agreement or the Registration Rights Agreement) and Article XII,
as if it were "Dentsu" for the purposes thereof (it being acknowledged, however,
that (A) Dentsu will not be entitled to assign to such Permitted Purchaser, and
such Permitted Purchaser will not succeed to, any corporate governance rights
granted to Dentsu pursuant to Article IX, any preemptive rights granted to
Dentsu pursuant to Section 7.1 or 7.2 or any other rights of Dentsu not listed
above, and (B) Dentsu may also assign certain rights under the Registration
Rights Agreement to such Permitted Purchaser pursuant to the applicable
provisions of such agreement), (iii) such Permitted Purchaser makes
representations and warranties to BDM with respect to the purchase of such PTP
Shares and entering into such Permitted Purchaser Agreement comparable to those
made by Dentsu in Sections 3.1, 3.2, 3.3, 3.4 and 3.5 and (iv) such Permitted
Purchaser agrees that prior to the completion of an IPO, such Permitted
Purchaser may only transfer such PTP Shares in a Permitted Third Party Sale to a
subsequent Permitted Purchaser.
(d) Subject to Subsection (f) below, at any time following the closing
of an IPO, Dentsu may Transfer any shares of BDM Common Stock then held by it
(i) in one or more public offerings pursuant to an effective registration
statement under the Securities Act, (ii) pursuant to Rule 144 under the
Securities Act, (iii) through sales into any tender or exchange offer, to the
extent permitted by Section 8.1(b); or (iv) in privately negotiated sales not
effected on any securities exchange or through any automatic quotation system,
provided that such sale (together with any previous sales by Dentsu to the same
Person or
32
group of related Persons) would not to the knowledge of Dentsu result in the
transfer by Dentsu of more than 2% of the total number of outstanding shares of
BDM Common Stock (calculated on a fully diluted basis) to any one Person or
group of related Persons.
(e) Dentsu may not Transfer any shares of BDM Common Stock except (i)
pursuant to an effective registration statement under the Securities Act or an
exemption from the registration provisions thereof, and (ii) in compliance with
any applicable state or foreign securities laws. No such Transfer of such
securities other than pursuant to such an effective registration statement or
pursuant to Rule 144 under the Securities Act shall be valid or effective unless
Dentsu shall have delivered to BDM a legal opinion in form and substance
reasonably satisfactory to BDM to the effect that such proposed Transfer is
exempt from the registration requirements of the Securities Act. In the case of
any Transfer of securities by Dentsu under Rule 144 under the Securities Act,
Dentsu will provide BDM with a copy of any certificate provided by Dentsu to the
broker or market-maker effecting such Transfer.
(f) Dentsu may not Transfer any shares of Class B Stock pursuant to
Subsection (c) or (d) above, provided that nothing shall prohibit Dentsu from
converting any shares of Class B Stock into shares of Class A Stock and
Transferring such shares of Class A Stock pursuant to such provisions.
8.3. Legends. Each certificate representing shares of BDM Common Stock
-------
issued to Dentsu, and each certificate representing shares of BDM Common Stock
issued to any transferee, shall bear the following legends:
"DURING THE TERM OF THE INVESTMENT AGREEMENT DATED MARCH 14, 2000 (THE
"AGREEMENT") AMONG BDM, INC. (THE "COMPANY") AND DENTSU INC., THE SHARES
REPRESENTED BY THIS CERTIFICATE (THE "SHARES") MAY ONLY BE TRANSFERRED IN A
"PERMITTED THIRD PARTY SALE", OR IN A "PERMITTED INTERCOMPANY TRANSFER" (AS
THOSE TERMS ARE DEFINED IN THE AGREEMENT) OR AS OTHERWISE SPECIFIED IN THE
AGREEMENT.
"THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. NO TRANSFER OF THE SHARES
SHALL BE VALID OR EFFECTIVE UNLESS SUCH TRANSFER IS MADE (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN APPLICABLE
EXEMPTION
33
FROM THE REGISTRATION REQUIREMENTS THEREOF, (B) IN COMPLIANCE WITH ANY
APPLICABLE STATE SECURITIES LAWS AND (C) IN COMPLIANCE WITH THE ADDITIONAL
TRANSFER RESTRICTIONS AND REQUIREMENTS SET FORTH IN THE AGREEMENT."
8.4. Registration Rights. Dentsu shall have the registration rights
-------------------
set forth in the Registration Rights Agreement.
ARTICLE IX
GOVERNANCE AND OTHER AGREEMENTS
9.1. Governance. (a) Dentsu shall have the rights set forth in the
----------
Restated Charter to elect Directors.
(b) At least 5 days prior to each meeting of the Board of
Directors, the Secretary of BDM shall furnish to each Director an agenda for
such meeting. The agenda for each Board of Directors meeting shall include any
item which any of the Directors has delivered for inclusion therein in writing
to the Secretary of BDM at least 8 days prior to the date scheduled for such
meeting. The provisions of this Section 9.1(b) shall only apply for so long as
Dentsu and/or one or more Permitted Dentsu Transferees beneficially own at least
5% of the issued and outstanding BDM Common Stock.
(c)(i) For so long as Dentsu and/or one or more Permitted Dentsu
Transferees beneficially own at least 15% of the total number of outstanding
shares of BDM Common Stock, Dentsu will be entitled to designate one member of
each principal committee of the Board of Directors that may exist from time to
time, including, to the extent such committees exist, the Executive Committee,
the Audit Committee, the Compensation Committee and the Nominating Committee,
subject to applicable rules of the Commission and any stock exchange on which
the BDM Common Stock is listed regarding requirements for the independence of
members of such Committees or other relevant matters.
(ii) At least 5 days prior to each meeting of any principal
committee of the Board of Directors to which Dentsu is entitled to designate a
member pursuant to Section 9.1(c)(i), the Secretary of BDM shall furnish to each
member of such committee an agenda for such meeting. The agenda for each such
committee meeting shall include any item which any of the members thereof has
delivered for inclusion therein in writing to the Secretary of BDM at least 8
days prior to the date scheduled for such meeting.
34
(d) Prior to the IPO and provided Dentsu and/or one or more
Permitted Dentsu Transferees beneficially own at least 15% of the total number
of outstanding shares of XXX Xxxxxx Xxxxx, XXX shall take all actions necessary
to ensure that none of the actions listed below is taken without Dentsu's Prior
Approval:
(i) any acquisition in a single or series of related transactions,
by BDM or any Subsidiary of BDM, directly or indirectly (whether such
acquisition takes the form of a purchase of assets, a purchase of Equity
Securities, by merger or otherwise), of any Major Competitor (as such term
is defined in the Alliance Agreement);
(ii) any disposition, in a single or series of related transactions,
by BDM or any Subsidiary of BDM of a significant business unit of the BDM
Group (whether such disposition takes the form of a sale of assets, a sale
of Equity Securities of an entity that carries on such business or
otherwise) for an aggregate consideration (including the aggregate
principal amount of any assumed indebtedness) of more than $100,000,000;
(iii) making of any investment, or establishment of any alliance,
joint venture or other similar cooperative arrangement (other than a
Permitted Joint Venture), by BDM or any of its Subsidiaries with or in any
Major Competitor (as such term is defined in the Alliance Agreement) of
Dentsu;
(iv) dismissal or appointment of the Chief Executive Officer of BDM;
(v) any change in the principal external auditor for the BDM Group,
provided that Dentsu will not unreasonably withhold or delay giving
Dentsu's Prior Approval to any such change where the new auditor is one of
the "Big 5" accounting firms as of the date hereof or firms of equivalent
stature at the time of such proposed change;
(vi) the occurrence of any material transaction or the entering into
effect of any material arrangement between BDM or any BDM Subsidiary, on
the one hand, and any shareholder thereof (other than Dentsu or, in the
case of a BDM Subsidiary, BDM or any other BDM Subsidiary holding shares
thereof) or any Affiliate of such shareholder (other than an Employment
Related Transaction or Arrangement) unless (A) such transaction or
arrangement is fully disclosed to Dentsu or during any period when an
individual appointed by Dentsu is serving as a Director, to the Board of
Directors of BDM and (B) the terms of such transaction or arrangement are
as favorable to BDM or such Subsidiary as terms that
35
would have been obtainable at the time for a comparable transaction or
arrangement in arm's length dealings with an unrelated third person; and
(vii) any issuance of shares of BDM Common Stock to Employees in
excess of the number of authorized Employee Shares, or any issuance of
Employee Shares at a price per share less than the per share fair market
value of the BDM Common Stock (as determined in good faith by the Board of
Directors or the Compensation Committee thereof) as of (A) the date of
grant of the stock option or other incentive award pursuant to which such
Employee Shares are being issued or (B) if such Employee Shares are being
issued other than pursuant to a stock option or other incentive award, the
date of issuance of such shares.
(e) Until the earlier of (x) the closing of the IPO and (z) the
second anniversary of the Closing Date, and provided Dentsu and/or one or more
Permitted Dentsu Transferees beneficially own at least 15% of the total number
of outstanding shares of XXX Xxxxxx Xxxxx, XXX shall not take any action or
enter into any agreement that would result in the occurrence of a BDM Change of
Control without Dentsu's Prior Approval.
9.2. Rights of First Offer. (a) In the event that the IPO has not
---------------------
taken place prior to the second anniversary of the Closing Date, from such
second anniversary until the earlier of (x) the closing of the IPO and (y) the
fifth anniversary of the Closing Date, BDM shall not agree to any transaction
resulting in a BDM Change of Control (a "BDM COC Transaction") except pursuant
to the following procedures:
(1) BDM shall give Dentsu a written notice (a "COG Notice") stating
that BDM is contemplating a BDM COC Transaction and setting forth in
reasonable detail the material terms of the proposed transaction, including
the price to the extent determined.
(2) During the 45-day period ("Dentsu First Offer Period")
following receipt of the COC Notice by Dentsu, Dentsu shall have an
exclusive right to negotiate with BDM with respect to a BDM COC
Transaction, which negotiations shall be conducted in good faith but
neither party shall be under any obligation to commit to such a
transaction. During the Dentsu First Offer Period, BDM shall not directly
or indirectly solicit or encourage any inquiries or proposals for, or enter
into or continue any discussions with respect to, any BDM COC Transaction
with any third party.
36
(3) At any time during the Dentsu First Offer Period, Dentsu may give
BDM a written notice (a "Dentsu Offer Notice") offering to purchase 100% of
the outstanding voting capital stock of BDM (other than shares of BDM
Common Stock owned by Dentsu), which notice shall set forth the purchase
price and other material terms of the offer.
(4) BDM may accept the offer set forth in the Dentsu Offer Notice by
delivering written notice of irrevocable acceptance thereof to Dentsu at
any time during the 30 days following the receipt of the Dentsu Offer
Notice, in which case the parties shall proceed to consummate the
transaction promptly and in accordance with the terms and conditions of the
offer, subject to receipt of any required third party approvals or
Governmental Approvals, compliance with all Laws applicable thereto and the
absence of any injunction or similar legal order preventing such
transaction. If BDM has not accepted the offer set forth in the Dentsu
Offer Notice within such 30-day period, BDM will have been deemed to have
rejected such offer on the last day of such 30-day period.
(5) If BDM does not accept the offer set forth in the Dentsu Offer
Notice within 30 days following receipt thereof, or if no Dentsu Offer
Notice is given by Dentsu during the Dentsu First Offer Period, BDM shall
have until the 180/th/ day following the expiration of the Dentsu First
Offer Period (if no Dentsu Offer Notice has been given) or the date of
rejection by BDM of the offer set forth in the Dentsu Offer Notice (if such
a notice has been given), as applicable, to negotiate and consummate a BDM
COC Transaction with a third party at a price and on terms and conditions
no less favorable to BDM than those specified in the Dentsu Offer Notice,
if any. If a BDM COC Transaction is not consummated within such 180-day
period, BDM shall not be permitted to agree to a BDM COC Transaction
pursuant to this Section 9.2(a) without again complying with each
requirement in this Section 9.2(a).
(b) Dentsu shall not consummate any Permitted Third Party Sale
pursuant to Section 8.2(c) without having first complied with the following
procedures:
(1) Dentsu shall give BDM a written notice (a "Transfer of Common
Stock Notice") stating that Dentsu is contemplating the transfer of all or
part of the shares of BDM Common Stock held by it in a private sale (a
"Transfer of Common Stock") and setting forth in reasonable detail the
material terms of the proposed transaction, including the number of shares
of BDM Common Stock that Dentsu intends to transfer (the "Offered Shares")
as well as the price to the extent determined.
37
(2) During the 15 Business Day period ("BDM First Offer Period")
following receipt of the Transfer of Common Stock Notice by BDM, BDM shall
have an exclusive right to negotiate with Dentsu with respect to a Transfer
of Common Stock to BDM or another Person or Persons designated by BDM,
which negotiations shall be conducted in good faith but neither party shall
be under any obligation to commit to such a transaction. During the BDM
First Offer Period, Dentsu shall not directly or indirectly solicit or
encourage any inquiries or proposals for, or enter into or continue any
discussions with respect to, any Transfer of Common Stock with any third
party.
(3) At any time during the BDM First Offer Period, BDM may give
Dentsu a written notice (a "BDM Offer Notice") offering to purchase 100% of
the Offered Shares, which notice shall set forth the purchase price and
other material terms of the offer.
(4) Dentsu may accept the offer set forth in the BDM Offer Notice by
delivering written notice of irrevocable acceptance thereof to BDM at any
time during the 30 days following the receipt of the BDM Offer Notice, in
which case the parties shall proceed to consummate the transaction promptly
and in accordance with the terms and conditions of the offer, subject to
receipt of any required third party approvals or Governmental Approvals,
compliance with all Laws applicable thereto and the absence of any
injunction or similar legal order preventing such transaction. If Dentsu
has not accepted the offer set forth in the BDM Offer Notice within such
30-day period, Dentsu will have been deemed to have rejected such offer on
the last day of such 30-day period.
(5) If Dentsu does not accept the offer set forth in the BDM Offer
Notice within 30 days following receipt thereof, or if no BDM Offer Notice
is given by BDM during the BDM First Offer Period, Dentsu shall have until
the 180/th/ day following the expiration of the BDM First Offer Period (if
no BDM Offer Notice has been given) or the date of rejection by Dentsu of
the offer set forth in the BDM Offer Notice (if such a notice has been
given), as applicable, to negotiate and consummate a Transfer of Common
Stock with a Permitted Purchaser in accordance with the provision of
Section 8.2(c) and at a price and on terms and conditions no less favorable
to Dentsu than those specified in the BDM Offer Notice, if any. If a
Transfer of Common Stock is not consummated within such 180-day period,
Dentsu shall not be permitted to effect a sale of the Offered Shares
pursuant to Section 8.2(c) without again complying with each requirement in
this Section 9.2(b).
38
9.3. Information and Inspection. (a) Prior to the IPO and provided
--------------------------
Dentsu and/or one or more Permitted Dentsu Transferees beneficially own at least
5% of the total number of outstanding shares of BDM Common Stock: (i) within 90
days after the end of each fiscal year, BDM shall provide Dentsu with
consolidated balance sheets of BDM and its consolidated Subsidiaries as at the
end of such year and the related consolidated statements of income, cash flow,
stockholders' equity and changes in financial position of BDM and its
consolidated Subsidiaries for such fiscal year, setting forth in each case in
comparative form the consolidated figures for the previous fiscal year,
accompanied by a report thereon of independent public accountants of recognized
international standing selected by BDM (which report shall state, subject to any
qualifications or limitations specified therein: (A) that such consolidated
financial statements present fairly the financial position of BDM and its
consolidated Subsidiaries as at the dates indicated and the results of their
operations and changes in their financial position for the periods indicated in
conformity with generally accepted accounting principles and (B) that the audit
by such accountants in connection with such consolidated financial statements
has been made in accordance with generally accepted auditing standards); and
(ii) within 45 days after the end of each calendar quarter, BDM shall also
provide Dentsu with unaudited consolidated balance sheets of BDM and its
Subsidiaries as of the end of such quarter and the related consolidated
statements of income, cash flow, stockholders' equity and changes in financial
position of BDM and its Subsidiaries for such quarter and, to the extent
provided by BDM to its stockholders generally or to its lenders, monthly
financial statements and any other financial information regularly provided by
BDM from time to time to its lenders.
(b) Dentsu and its representatives (including its accountants and
auditors) shall have the right to conduct an audit of the books and records of
BDM regarding any report specified in Section 9.3(a). Such audit right may be
exercised by Dentsu not more than twice during any 12-month period, and each
audit shall be at the expense of Dentsu and take place at reasonable times,
during normal business hours and after reasonable advance notice to BDM. At the
request of Dentsu, BDM promptly shall make available such information, including
access to such BDM employees, as is reasonably necessary to enable Dentsu and
its representative (including its accountants and auditors) to verify the
accuracy of any report specified in Section 9.3(a).
9.4. Filings Regarding Rule 144. At all times after the IPO, BDM will
--------------------------
file the reports required to be filed by it under the Securities Act and the
rules and regulations adopted by the Commission thereunder and will take such
further action as BDM may reasonably request, all to the extent required from
time to time to enable BDM to sell BDM Common Stock without registration under
the Securities Act within the limitation of the exemptions provided by Rule 144
or any similar rule or regulation hereafter adopted
39
by the Commission. Upon the request of Dentsu, BDM will deliver to Dentsu a
written statement as to whether it has complied with such requirements.
9.5. Tax Cooperation. If BDM deducts or withholds any Taxes with
---------------
respect to any payment made by BDM to Dentsu, BDM shall promptly provide to
Dentsu a copy of the official receipt in respect of such Taxes together with
such other documents as Dentsu may reasonably request to enable Dentsu to claim
a credit in respect of such Taxes. BDM shall also provide Dentsu such
information and documents as Dentsu may reasonably request to enable Dentsu to
claim a tax credit with respect to Taxes paid or accrued by any member of the
BDM Group.
ARTICLE X
TERMINATION
10.1. Termination. This Agreement may be terminated at any time prior
-----------
to the Closing Date:
(1) by the written agreement of Dentsu and BDM; or
(2) by BDM or Dentsu by written notice to the other party at any time
after 5:00 p.m. New York City time on June 30, 2000 if the Closing shall
not have been consummated on or before such date and time, unless such date
is extended by the mutual written consent of BDM and Dentsu.
10.2. Effect of Termination. In the event of the termination of this
---------------------
Agreement, this Agreement shall have no further force or effect, and no party
shall have any liability to the other party (or the other party's Affiliates or
any of their respective officers, directors, shareholders, employees, agents,
advisors or representatives) hereunder except as provided in Section 13.1 and
except for any liability resulting from such party's breach of this Agreement,
provided that the provisions of Section 8.1, Article XII and Article XIII shall
survive any such termination.
ARTICLE XI
INDEMNIFICATION
11.1. Indemnification by BDM. (a) To the extent permitted by
----------------------
applicable law, BDM shall indemnify and hold harmless Dentsu, each Dentsu
Affiliate and each officer, director, shareholder, employee, agent, adviser and
representative of Dentsu
40
and each Dentsu Affiliate from and against any and all Losses and Expenses
incurred by such Persons in connection with or arising from:
(1) any material inaccuracy of any representation or warranty of BDM
contained in this Agreement, in any certificate delivered by or on behalf
of BDM pursuant to Section 6.2(c) or under any of the Related Documents; or
(2) any failure of BDM to perform any covenant or agreement
hereunder or under any of the Related Documents or fulfill any other
obligation in respect hereof or thereof.
(b) BDM shall also indemnify and hold harmless Dentsu in respect of
Dentsu's pro rata interest in any Losses or Expenses incurred by BDM or any of
its Subsidiaries (calculated in accordance with clause (e) of Section 11.4 and
after taking into account Dentsu's pro rata interest in (i) any insurance
recovery actually claimed and received by BDM in respect thereof; and (ii) the
amount of any net tax benefit actually claimed and received by BDM or any
Subsidiary in respect thereof) resulting from the claims referred to in the
third and fourth paragraphs of Section 2.9 of the Disclosure Schedule (as such
claims may be amended from time to time).
11.2. Indemnification by Dentsu. To the extent permitted by applicable
-------------------------
law, Dentsu shall indemnify and hold harmless BDM and each BDM Affiliate, and
each of their respective officers, directors, shareholders, employees, agents,
advisers and representatives from and against any and all Losses and Expenses
incurred by such Persons in connection with or arising from:
(1) any material inaccuracy of any representation or warranty of
Dentsu contained in this Agreement, in any certificate delivered by or on
behalf of Dentsu pursuant to Section 6.3(c) or under any of the Related
Documents; or
(2) any failure of Dentsu to perform any covenant or agreement
hereunder or under any of the Related Documents or fulfill any other
obligation in respect hereof or thereof.
11.3. Notice of Claims and Cure Period. Any Person seeking
--------------------------------
indemnification hereunder (the "Indemnified Party") shall give to the party
obligated to provide indemnification to such Indemnified Party (the
"Indemnifying Party") a written notice (a "Claim Notice") describing in
reasonable detail the facts giving rise to any claim for indemnification
hereunder and shall include in such Claim Notice a reference to the provision of
this Agreement or any other Related Document upon which such claim is
41
based. Furthermore, no Indemnified Party shall be entitled to assert any claim
for indemnification hereunder unless (i) such Indemnified Party shall first have
notified the Indemnifying Party in writing of the inaccuracy, breach or failure
on which such claim is based at least 60 days prior to delivering the related
Claim Notice and (ii) such inaccuracy, breach or failure shall remain uncured as
of the date of such Claim Notice.
11.4. Limitations on Claims. (a) The claims for indemnification
---------------------
contemplated under this Article XI are intended to constitute the sole remedies
of the parties to this Agreement for monetary relief based on any breach of any
representation, warranty or covenant or agreement of any Person under this
Agreement or any other Related Document (other than the Registration Rights
Agreement), and no other claim for damages or other form of monetary relief may
be asserted by any party hereto based on any such breach.
(b) Except for inaccuracies in the representations and warranties
contained in Section 2.11 and for the indemnification obligation set forth in
Section 11.1(b), no Indemnifying Party shall be required to indemnify any
Indemnified Party with respect to any claim for indemnification pursuant to this
Article XI unless and until such claim has been finally determined pursuant to
the provisions of Section 13.4 and the aggregate amount of all claims against
the Indemnifying Party exceeds $5,000,000 as so determined.
(c) Except for inaccuracies in the representations and warranties
contained in Sections 2.2(a), 2.2(b), 2.2(d), and 2.3, and except for the
indemnification obligation set forth in Section 11.1(b) the aggregate liability
of BDM in respect of all claims based upon inaccuracies of the representations
or warranties set forth in Article II shall not exceed $100,000,000.
(d) Except for inaccuracies in the representations and warranties
contained in Section 3.2, the aggregate liability of Dentsu in respect of all
claims based upon inaccuracies of its representations or warranties set forth in
Article III shall not exceed $100,000,000.
(e) In calculating the amount of any Loss or Expense for which any
Indemnified Party is entitled to indemnification under this Article XI, there
shall be deducted (i) any insurance recovery actually claimed and received by
the Indemnified Party in respect thereof (and no right of subrogation shall
accrue hereunder to any insurer) and (ii) the amount of any net tax benefit
actually claimed and received by the Indemnified Party with respect to such Loss
or Expense (after giving effect to the tax effect of receipt of the
indemnification payments), provided that in no event shall the Indemnified Party
have any obligation to make any claim or take any position or otherwise act in
any manner
42
with respect to any such possible claim or benefit with respect to any such Loss
or Expense.
11.5. Termination of Indemnification. (a) Except as provided in
------------------------------
Subsection (b) or (c) below, the indemnification obligations provided for in
this Article XI shall terminate (x) with respect to any claim based on a failure
to perform any covenant of an Indemnifying Party or the failure of an
Indemnifying Party to perform any obligation, one year after discovery of such
breach or failure by such Indemnified Party (unless a Claim Notice with respect
to such claim shall have been given prior to the expiration of such period) and
(y) with respect to a claim based on any inaccuracy of any representation or
warranty of an Indemnifying Party, eighteen (18) months after the Closing Date
(unless a Claim Notice with respect to such claim shall have been given prior to
the expiration of such period).
(b) Notwithstanding Subsection (a) above, (i) the indemnification
obligations of BDM set forth in Section 11.1(b) and with respect to any claim
based on any inaccuracy of any of the representations and warranties set forth
in Subsections 2.1, 2.2, 2.3, 2.4, 2.5, 2.13 and 2.14 shall survive
indefinitely, and (ii) the indemnification obligations of BDM with respect to
any claim based on any inaccuracy of any of the Tax representations and
warranties set forth in Subsection 2.11 shall terminate 60 days after the
expiration of the applicable statute of limitations (unless a Claim Notice with
respect to such claim shall have been given prior to the expiration of such
period).
(c) Notwithstanding Subsection (a) above, the indemnification
obligations of Dentsu with respect to any claim based on any inaccuracy of any
of the representations and warranties set forth in Subsections 3.1, 3.2, 3.3,
3.4, 3.5 and 3.6 shall survive indefinitely.
11.6. Third Person Claims. (a) Subject to paragraph (b) below, the
-------------------
Indemnified Party shall have the right to conduct and control, through counsel
of its choosing, the defense, compromise or settlement of any third Person
claim, action or suit against such Indemnified Party as to which indemnification
will be sought by any Indemnified Party from any Indemnifying Party hereunder,
and in any such case the Indemnifying Party shall cooperate in connection
therewith and shall furnish such records, information and testimony and attend
such conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested by the Indemnified Party in connection therewith; provided,
that (i) the Indemnifying Party may participate, through counsel chosen by it
and at its own expense, in the defense of any such claim, action or suit as to
which the Indemnified Party has so elected to conduct and control the defense
thereof; and (ii) the Indemnified Party shall not, without the written consent
of the Indemnifying Party
43
(which written consent shall not be unreasonably withheld), pay, compromise or
settle any such claim, action or suit, except that no such consent shall be
required if, following a written request from the Indemnified Party, the
Indemnifying Party shall fail, within 14 days after the making of such request,
to acknowledge and agree in writing that, if such claim, action or suit shall be
adversely determined, such Indemnifying Party has an obligation to provide
indemnification hereunder to such Indemnified Party. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay, settle or
compromise any such claim, action or suit without such consent, provided that in
such event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless such consent is unreasonably withheld.
(b) If any third Person claim, action or suit against any
Indemnified Party is solely for money damages, the Indemnifying Party shall have
the right to conduct and control, through counsel of its choosing, the defense,
compromise or settlement of any such third Person claim, action or suit against
such Indemnified Party as to which indemnification will be sought by any
Indemnified Party from any Indemnifying Party hereunder if the Indemnifying
Party has acknowledged and agreed in writing that, if the same is adversely
determined, the Indemnifying Party has an obligation to provide indemnification
to the Indemnified Party in respect thereof, and in any such case the
Indemnified Party shall cooperate in connection therewith and shall furnish such
records, information and testimony and attend such conferences, discovery
proceedings, hearings, trials and appeals as may be reasonably requested by the
Indemnifying Party in connection therewith; provided that the Indemnified Party
may participate, through counsel chosen by it and at its own expense, in the
defense of any such claim, action or suit as to which the Indemnifying Party has
so elected to conduct and control the defense thereof. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay, settle or
compromise any such claim, action or suit, provided that in such event the
Indemnified Party shall waive any right to indemnity therefor hereunder unless
the Indemnified Party shall have sought the consent of the Indemnifying Party to
such payment, settlement or compromise and such consent was unreasonably
withheld, in which event no claim for indemnity therefor hereunder shall be
waived.
ARTICLE XII
CONFIDENTIALITY
12.1. Confidentiality of Terms of Related Documents. Except as may be
---------------------------------------------
required by law, by the rules of any securities exchange on which its securities
are listed, or in accordance with Sections 4.2 and 5.2 hereof, each party shall
keep confidential and not disclose (other than to its counsel, accountants,
underwriters or other advisors or
44
consultants in connection with (i) the negotiation or performance of this
Agreement and the other Related Documents, (ii) the exercise by such party or
its Affiliates of their rights with respect to this Agreement or any other
Related Document, (iii) any debt or equity offering or other financing
transaction entered into by such party or (iv) any business combination entered
into by such party (subject to compliance with the provisions of Section 9.2, if
applicable), and shall cause its Affiliates and its and their respective
directors, officers, employees, representatives, agents and independent
contractors to keep confidential and not disclose, any of the terms and
conditions of this Agreement or any other Related Document to any third party
without the prior written consent of the other party to this Agreement.
Notwithstanding the foregoing, either party or any applicable Affiliate may
include such information in its financial statements or notes thereto to the
extent required by GAAP or other applicable generally accepted accounting
principles.
12.2. Confidentiality of Certain Information. Each party hereto
--------------------------------------
agrees, and each of their respective Affiliates shall be deemed to have agreed:
(a) not to disclose or permit any other Person access to any
confidential information relating to the other party to this Agreement
which has been disclosed by such other party pursuant to this Agreement or
any Related Document or during the course of the negotiations leading up to
the execution of this Agreement ("Confidential Information"), except that
such disclosure or access shall be permitted to (i) an Affiliate of such
party or an employee, officer, director, agent, representative, external or
internal auditor, independent contractor or attorney of such party or any
Affiliate requiring access to the Confidential Information in the course of
his or her employment or services, and such Persons shall have an
obligation hereunder to keep the Confidential Information confidential,
other than as provided in this Section 12.2 and in Section 12.3 below; (ii)
regulatory authorities or securities exchanges, or (iii) an arbitrator or
court to enforce the rights of such party or its Affiliates hereunder,
provided that the disclosing party shall first notify the other party so
that the other party may seek a protective order;
(b) except with the prior consent of the other party (which shall be
within the absolute discretion of such party and may be predicated on the
payment of a separate royalty or other fee), not to use any Confidential
Information to develop a new service or capability or to enhance an
existing service or capability; and
(c) to ensure that its Affiliates and its and their employees,
officers, directors, agents, representatives, auditors, independent
contractors and attorneys are advised of the confidential nature of the
Confidential Information and are precluded from taking any action
prohibited under this Section 12.1, provided that
45
in any event each party shall be liable for any breach of this Section 12.1
by its Affiliates or its or their employees, officers, directors, agents,
representatives, auditors, independent contractors, or attorneys.
12.3. Exclusions. Nothing in this Article XII shall restrict any
----------
Person with respect to Confidential Information which:
(a) that Person rightfully possessed before it received the
information from a party, as evidenced by written documentation;
(b) was at the time of disclosure to such Person in the public domain,
or subsequently becomes publicly available through no fault of that Person;
(c) is subsequently furnished rightfully to that Person by a third
party not affiliated with any party and not known to be under restrictions
on use or disclosure of such information;
(d) is independently developed by an employee, agent or contractor of
such Person; or
(e) is required to be disclosed by law, regulation or court order,
provided that the disclosing Person gives the affected party advance notice
of the proposed disclosure in a timely manner.
ARTICLE XIII
MISCELLANEOUS
13.1. Expenses. (a) Except as set forth below in this Section 13.1 or
--------
as otherwise specifically provided for in this Agreement, each of BDM and Dentsu
shall bear their respective expenses, costs and fees (including attorneys',
auditors' and financing commitment fees) in connection with the transactions
contemplated hereby, including the preparation, execution and delivery of this
Agreement and compliance herewith, whether or not the transactions contemplated
hereby shall be consummated.
(b) If this Agreement is terminated pursuant to paragraph (2) of
Section 10.1 and the failure of the Closing to have been consummated by the date
specified therein is attributable to BDM, including without limitation the
failure of the conditions set forth in Subsections 6.2(a), (b), (c), (d), (e),
(f), and (g) to have been satisfied, then BDM shall promptly reimburse Dentsu
for its expenses, costs and fees (including reasonable
46
attorneys', auditors' and financing commitment fees) incurred in connection with
the transactions contemplated hereby and any previous transactions negotiated
between TLG and Dentsu since November 1998.
(c) If this Agreement is terminated pursuant to paragraph (2) of
Section 10.1 and the failure of the Closing to have been consummated by the date
specified therein is attributable to Dentsu, including without limitation the
failure of the conditions set forth in Subsections 6.3(a), (b), (c) and (e) to
have been satisfied, then Dentsu shall promptly reimburse BDM and TLG for their
respective expenses, costs and fees (including reasonable attorneys', auditors'
and financing commitment fees) incurred in connection with the transactions
contemplated hereby and any previous transactions negotiated between TLG and
Dentsu since November 1998.
13.2. Notices. (a) All notices, requests, demands and other
-------
communications under this Agreement shall be in writing and shall be either (i)
personally delivered, (ii) sent by Federal Express or other reputable overnight
carrier or (iii) sent by telecopier (with a copy also sent by reputable
overnight carrier; postage prepaid) to the party for which it is intended at the
following address:
(1) if to Dentsu, to:
Dentsu Inc.
0-00, Xxxxxxx, Xxxx-xx
Xxxxx 000-0000, Xxxxx
Attention: Xx. Xxxxx Xxxxxx, Managing Director
Telecopier No. (000) 0000-0000
with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxx
Telecopier No. 000-000-0000
or to such other address as Dentsu may have designated by notice
hereunder; and
47
(2) if to BDM, to:
BDM, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xx. Xxxxxxxxx X. Xxxxxxx, Chief Administrative Officer
Telecopier No. (000) 000-0000
with a copy to:
Sidley & Austin
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Telecopier No. (000) 000-0000
or to such other address as BDM may have designated by notice hereunder.
(b) Every notice, demand, request or other communication hereunder
shall be deemed to have been duly given or served: (i) on the date on which
personally delivered, with receipt acknowledged, (ii) two Business Days after
timely delivery to Federal Express or another overnight courier service, if sent
by courier or (iii) upon transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip confirming that the number of pages
constituting the communication have been transmitted without error, if
telecopied (subject to a copy of such communication also being sent by
reputable overnight courier).
13.3. GOVERNING LAW, ETC. THIS AGREEMENT SHALL BE GOVERNED IN ALL
-------------------
RESPECTS, INCLUDING AS TO VALIDITY, INTERPRETATION AND EFFECT, BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OR RULES OF
CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT
THE APPLICATION OF LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
13.4. Arbitration. (a) Any dispute, controversy or claim arising out
------------
of, relating to, or in connection with, this Agreement, or the breach,
termination or validity thereof, will be submitted to the Chief Executive
Officer of BDM and the President of Dentsu as soon as reasonably practicable
for resolution.
48
(b) If the Chief Executive Officer of BDM and the President of Dentsu
are unable to resolve any such dispute, controversy or claim within 15 days
after same is submitted to them, either party may at any time thereafter require
that such dispute, controversy or claim be finally settled by binding
arbitration. The arbitration shall be conducted in accordance with the CPR
Institute for Dispute Resolution Rules for Non-Administered Arbitration of
International Disputes in effect at the time of the arbitration, except as they
may be modified herein or by mutual agreement of the parties. The seat of the
arbitration shall be New York City, United States, and it shall be conducted in
the English language provided that either party may submit testimony or
documentary evidence in any language if it furnishes, upon the request of the
other party, a translation into English of any such testimony or documentary
evidence. The neutral organization designated to perform the functions
specified in Rule 6 and Rules 7.7(b), 7.8 and 7.9 shall be the CPR Institute for
Dispute Resolution. Notwithstanding Section 13.3 of this Agreement the
arbitration and this clause shall be governed by Title 9 (Arbitration) of the
United States Code.
(c) The arbitration shall be conducted by three arbitrators. The
arbitrators shall be selected as provided in the rules specified above.
(d) In order to facilitate the comprehensive resolution of related
disputes, and upon request of any party to the arbitration proceeding, the
arbitration tribunal may, within 90 days of its appointment, consolidate the
arbitration proceeding with any other arbitration proceeding involving any of
the parties hereto relating to this Agreement or any other Related Documents.
The arbitration tribunal shall not consolidate such arbitrations unless it
determines that (i) there are issues of fact or law common to the two
proceedings so that a consolidated proceeding would be more efficient than
separate proceedings, and (ii) no party hereto would be prejudiced as a result
of such consolidation through undue delay or otherwise. In the event of
different rulings on this question by the arbitration tribunal constituted
hereunder and the tribunal constituted under any Related Document, the ruling of
the panel constituted hereunder shall control. In the case of a consolidated
proceeding, the arbitrators in that proceeding shall be named in accordance
with the provisions hereof.
(e) The arbitral award shall be in writing, state the reasons for the
award and be final and binding on the parties. The award may include an award of
costs, including reasonable attorneys' fees and disbursements. The arbitral
award may not provide for punitive damages or any other relief not contemplated
by this Agreement or the other relevant Related Documents.
49
(f) All proceedings in connection with any arbitration, including its
existence, the content of the proceedings and any decision, shall be kept
confidential to the maximum extent possible consistent with the law.
(g) Judgment upon the decision may be entered by any court having
jurisdiction thereof or having jurisdiction over the relevant party or its
assets.
(h) Each party will bear a fifty percent (50%) share of all fees,
costs and expenses of the arbitrators, and notwithstanding any law to the
contrary, each party will bear all the fees, costs and expenses of its own
attorneys, experts and witnesses; provided, however, that in connection with any
judicial proceeding to compel arbitration pursuant to this Agreement or to
confirm, vacate or enforce any award rendered by the arbitration tribunal, the
prevailing party in such a proceeding will be entitled to recover reasonable
attorneys' fees and expenses incurred in connection with such proceeding, in
addition to any other relief to which it may be entitled.
13.5. Judicial Procedure. Nothing in Section 13.4 shall be construed
-------------------
to prevent any party from seeking from a court a temporary restraining order or
other temporary or preliminary relief to preserve the status quo pending final
resolution of a dispute, controversy or claim pursuant to Section 13.4, or if
such party makes a good faith determination that a breach of the terms of this
Agreement or any other Related Document by another party is such that a
temporary restraining order or other temporary or preliminary relief is the only
appropriate and adequate remedy at such time.
13.6. Binding Effect. This Agreement will be binding upon any inure to
---------------
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns.
13.7. Assignment. This Agreement will not be assignable or otherwise
-----------
transferable by any party hereto without the prior written consent of the other
parties hereto.
13.8. No Third-Party Beneficiaries. Except as provided in Article XI
-----------------------------
with respect to indemnification of Indemnified Parties hereunder, nothing in
this Agreement shall confer any rights upon any person or entity other than the
party hereto and their respective heirs, successors and permitted assigns.
13.9. Amendment; Waivers, etc. No amendment, modification or discharge
------------------------
of this Agreement, and no waiver hereunder, will be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
50
amendment, modification, discharge or waiver is sought. Any such waiver will
constitute a waiver only with respect to the specific matter described in such
writing and will in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, will be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies herein provided are cumulative and
none is exclusive of any other, or of any rights or remedies that any party may
otherwise have at law or in equity. The rights and remedies of any party based
upon, arising out of or otherwise in respect of any inaccuracy or breach of any
representation, warranty, covenant or agreement or failure to fulfill any
condition will in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warrranty, covenant or agreement as to which there is no inaccuracy or breach.
13.10. Severability. If any provision, including any phrase,
------------
sentence, clause, section or subsection, of this Agreement is invalid,
inoperative or unenforceable for any reason, such circumstances will not have
the effect of rendering such provision in question invalid, inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision herein contained invalid, inoperative, or unenforceable to any extent
whatsoever.
13.11. Headings. The headings contained in this Agreement are for
--------
purposes of convenience only and will not affect the meaning or interpretation
of this Agreement.
13.12. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which will be deemed an original and all of which will
together constitute one and the same instrument.
13.13. Interpretation. Except as otherwise stated, reference to
--------------
Articles, Sections, Exhibits and Schedules means the Articles, Sections,
Exhibits and Schedules of this Agreement. The words "including" or "includes"
or similar terms used herein will be deemed to be followed by the words "without
limitation," whether or not such additional words are actually set forth herein.
13.14. No Other Representations or Warranties; Adequacy of
---------------------------------------------------
Investigation. Each party hereby acknowledges that no such party or any
-------------
Affiliate thereof is
51
making any representation or warranty in connection with the transactions and
other matters contemplated by this Agreement and the other Related Document
other than those expressly set forth in this Agreement and the other Related
Documents, and that no officer, employee or other agent or representative of any
such party or any such Affiliate has the authority to make any additional
representations and warranties on behalf of such party or any such Affiliate.
Furthermore, Dentsu hereby acknowledges that it has been afforded an opportunity
to undertake due diligence investigations of BDM and its Affiliates and has not
uncovered as a result of any such investigation any facts indicating that any
representation or warranty of BDM is not true and correct as of the date of this
Agreement.
13.15. Entire Agreement. This Agreement and the other Related
-----------------
Documents (when executed and delivered) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and thereof.
[SIGNATURE PAGES FOLLOW]
52
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
BDM, INC.
By /s/ Xxxxx X. Xxxxx
--------------------
Name: Xxxxx X. Xxxxx
Title: Chief Executive Officer
DENTSU INC.
By /s/ Xxxxxx Xxxxxx
-------------------
Name: Xxxxxx Xxxxxx
Title: President
SCHEDULE A
DEFINITIONS
In this Schedule, in this Agreement and in any other document that
refers to terms as defined herein, the following terms shall have the respective
meanings assigned below (each such definition to be equally applicable to the
plural and singular forms of the respective terms so defined):
"Additional Shares" has the meaning specified in Section 7.1.
"Advertising Services" means any type of advertising, business to
business communications, marketing, market research, promotional or media
buying services.
"Affiliate" of any Person means a Person which directly or
indirectly through one or more intermediaries controls, or is controlled
by, or is under common control with such Person. The term "control" as
used with respect to any Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise.
"Aggregate Closing BDM Share Number" has the meaning set forth in
Section 4.3(b)
"Aggregate Purchase Price" has the meaning set forth in Section 1.1.
"Agreement" means this Investment Agreement, including the Exhibits
and Schedules hereto, as the same may be amended or modified from time to
time in accordance with its terms.
"Alliance Agreement" has the meaning set forth in Section 6.2.
"Base IPO Share Number" has the meaning set forth in Section 7.2.
"BBH" has the meaning set forth in Section 2.4.
A-1
"BDM" has the meaning set forth in the Heading.
"BDM Change of Control" means any decision by the Board of Directors to
approve or permit any transaction, including without limitation any third party
tender offer for voting capital stock of BDM and any merger, consolidation or
similar business combination of BDM with or into any other Person, as a result
of which the stockholders of BDM immediately prior to the consummation of such
transaction would no longer control BDM (or if BDM is not the surviving entity,
the Successor Entity) immediately thereafter. The term "control" means (i) the
beneficial ownership by an Person or group of Persons of outstanding shares of
voting capital stock of BDM (or any Successor Entity) entitled to exercise 50%
or more of the total votes entitled to be cast at a regular or special meeting,
or by action by written consent, of the stockholders of BDM (or any Successor
Entity) in the election of directors, of (ii) the possession by any Person or
group of Persons of the power, directly or indirectly, (A) to elect a majority
of the board of directors of BDM (or any Successor Entity), or (B) to direct or
cause the direction of the management and policies of or with respect to BDM (or
any Successor Entity), whether through ownership of securities, by contract or
otherwise.
"BDM COC Transaction" has the meaning set forth in Section 9.2(a).
"BDM Common Stock" means the common stock of BDM, including the Class A
Stock and the Class B Stock.
"BDM Convertible Securities" has the meaning set forth in Section 7.1.
"BDM First Offer Period" has the meaning set forth in Section 9.2(b).
"BDM Group" means, collectively, BDM and its Subsidiaries.
"BDM Material Adverse Effect" means any event, occurrence, fact,
condition, change, development or effect that is materially adverse to the
business, operations, results of operations, condition (financial or otherwise),
properties (including intangible properties), assets (including intangible
assets) or liabilities of the BDM Group taken as a whole.
"BDM Offer Notice" has the meaning set forth in Section 9.2(b).
"BDM Stock Purchase Agreement" has the meaning set forth in Section
2.2(d).
A-2
"BDM Voting Trust Agreement" has the meaning set forth in Section
2.2(d).
"Board of Directors" means the board of directors of BDM.
"Xxxxxxx Merger" means the merger of the TAC with and into TLG in
accordance with the Merger Agreement.
"Business" means the business and operations of the BDM Group, taken as
a whole, as previously or currently conducted or contemplated to be conducted
(including the TLG Business and the TMG Business).
"Business Day" means any day other than (i) a Saturday, Sunday or other
day on which commercial banks in Chicago, Illinois , London, England or Tokyo,
Japan are authorized or obligated by law or executive order to close, (ii)
December 29 and December 30 and (iii) the first Friday of December of each year
(or such other day as BDM from time to time designates as its "Breakfast Day")
"Claim Notice" has the meaning set forth in Section 11.3.
"Class A Stock" means the Class A Common Stock, par value $0.01 per
share, of BDM.
"Class B Directors" means the director(s) of BDM elected by Dentsu
and/or one or more Permitted Dentsu Transferees as holders of the Class B Stock
pursuant to Article IV of the Restated Charter.
"Class B Stock" means the Class B Common Stock, par value $0.01 per
share, of BDM.
"Client" means a purchaser of Advertising Services.
"Closing" has the meaning set forth in Section 1.2.
"Closing Date" has the meaning set forth in Section 1.2.
"COC Notice" has the meaning set forth in Section 9.2.(a)
"Code" means the Internal Revenue Code of 1986, as amended.
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"Commission" means the United States Securities and Exchange
Commission or any successor agency.
"Confidential Information" has the meaning set forth in Section
12.2(a).
"Consent" means any consent, approval, authorization, waiver, permit,
grant, franchise, concession, agreement, license, certificate, exemption,
order, registration, declaration, filing, report or notice of, with or to
any Person.
"Contractual Obligation" shall mean, with respect to any Person, any
provision of any mortgage or security issued by such Person or any of its
Subsidiaries or of any lease, franchise, agreement, guaranty, instrument or
undertaking to which such Person or any such Subsidiary is a party or by
which it or any of its properties or assets is bound.
"Convertible Securities" means, with respect to any Person,
evidences of indebtedness, shares of stock or other securities that are
convertible into or exchangeable for, with or without payment of additional
consideration in cash or property, shares of capital stock of such Person
or any Successor Entity, either immediately or upon the occurrence of a
specified date or a specified date or a specified event.
"Dentsu" has the meaning set forth in the Heading.
"Dentsu Base IPO Shares" has the meaning set forth in Section 7.2.
"Dentsu First Offer Period" has the meaning set forth in Section
9.2(a).
"Dentsu Group" means, collectively, Dentsu and its Subsidiaries.
"Dentsu IPO Shares" has the meaning set forth in Section 7.2(b).
"Dentsu Material Adverse Effect" means any event, occurrence, fact,
condition, change, development or effect that is materially adverse to
the business, operations, prospects, results of operations, condition
(financial or otherwise), properties (including intangible properties),
assets (including intangible assets) or liabilities of the Dentsu Group
taken as a whole.
"Dentsu Offer Notice" has the meaning set forth in Section 9.2(a).
"Dentsu Over-Allotment Shares" has the meaning set forth in Section
7.2.
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"Dentsu's Prior Approval", in respect of an action or event, means: (i)
prior written approval of such action or event by (x) any Director appointed by
Dentsu, (y) any representative director of Dentsu, or (z) all 4 members of the
Alliance Committee (as such term is defined in the Alliance Agreement) appointed
by Dentsu, or (ii) the affirmative vote in favor of approving such action or
event by all of the Class B Directors voting thereon at any meeting of the Board
of Directors or any committee thereof (as reflected in the minutes of such
meeting) or in any written consent in lieu of a meeting.
"Director" means a member of the Board of Directors.
"Disclosure Schedule" has the meaning set forth in Section 2.2.
"Employee Holder(s)" means any Employee, group of Employees, entity
controlled by a group of Employees, or a trust for the benefit of a group of
Employees that hold shares of BDM Common Stock.
"Employee Shares" means a pool of shares of BDM Common Stock available for
issuance to Employees. As of the Closing Date, the number of authorized Employee
Shares shall be 1,583,055, representing 8% of the number of shares of BDM Common
Stock that will be outstanding as of the Closing Date (taking into account the
Share Replacement Options and the shares of Class B Stock to be issued to Dentsu
pursuant to this Agreement). Following the Closing, the number of authorized
Employee Shares shall be: (i) adjusted proportionately from time to time in the
event of any stock dividend, stock split or other subdivision or combination of
the outstanding BDM Common Stock, (ii) decreased by the number of shares subject
to options or other incentive awards granted to Employees from time to time,
(iii) increased by the number of shares subject to any such stock options or
other incentive awards that are forfeited, canceled or expire unexercised, and
(iv) increased by the number of shares of BDM Common Stock purchased from time
to time from any Employee pursuant to the applicable BDM Stock Purchase
Agreement and the number of shares of BDM Common Stock, if any, purchased (or
not issued) as a result of the claim referred to in the fourth paragraph of
Section 2.9 of the Disclosure Schedule (as such claim may be amended from time
to time). The number of authorized Employee Shares shall not be reduced by any
grant of Share Replacement Options.
"Employees" means any employees, officers or directors of, or individual
consultants to, any member of the BDM Group and any affiliated entity (even if
not controlled by BDM).
A-5
"Employment Related Transaction or Arrangement" means any transaction or
arrangement between BDM or any BDM Subsidiary, on the one hand (the "employer"),
and any shareholder thereof who is an officer, director or employee of or
consultant to BDM or any BDM Subsidiary, on the other hand (the "employee"),
that is entered into in the ordinary course of the business of such employer in
respect of such employment or other relationship, including, without limitation,
the payment of compensation and the provision of other employment-related
perquisites, participation by the employee in employee benefit or welfare plans,
the purchase by the employee of stock in BDM or any BDM Subsidiary and the
participation of the employee in any stock-based incentive plans (and any
related repurchases of such stock or stock-based awards).
"Equity Securities" means (i) shares of capital stock, (ii) Convertible
Securities, and (iii) Stock Purchase Rights.
"Estimated Price Range" has the meaning set forth in Section 7.2.
"Exchange Act" means the Securities Exchange Act of 1934, or any
successor statute, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect from time to time. Reference to a particular
section of the Securities Exchange Act of 1934 shall include a reference to the
comparable section, if any, of any such successor statute.
"Exercise Amount" has the meaning set forth in Section 7.1.
"Exercise Notice" has the meaning set forth in Section 7.1.
"Expenses" means any and all expenses incurred in connection with
investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder (including court filing
fees, court costs, arbitration fees or costs, witness fees, and reasonable fees
and disbursements of legal counsel, investigators, expert witnesses,
consultants, accountants and other professionals).
"Financial Statements" has the meaning set forth in Section 2.7.
"GAAP" means generally accepted accounting principles in effect from time
to time in the United States of America.
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"Governmental Approval" means any Consent of, with or to any
Governmental Authority.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, and any entity,
authority or body exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations
thereunder.
"Indebtedness" (a) in respect of any member of the TLG
Group, has the meaning set forth in the Credit Agreement dated
January 28, 2000 among TLG, Bank of America, N.A., Citibank, N.A,
Bank One, NA and the other financial institutions party thereto,
(b) in respect of any member of the TMG Group, has the meaning
set forth in the Amended and Restated Credit Agreement dated as
of January 28, 2000 among TMG, DMB&B U.S.A., Inc., Bank of
America, N.A., Citibank, N.A., Bank One, NA and the other
financial institutions party thereto and (c) in respect of BDM,
means any of the following, without duplication: (i) all
indebtedness for borrowed money; (ii) all non-contingent
reimbursement or payment obligations with respect to letters of
credit, banker's acceptances, bank guarantees, surety bonds and
similar instruments, other than any of same constituting
Indebtedness of any member of the TLG Group or TMG Group; (iii)
all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or
businesses; (iv) all obligations with respect to capital leases
(but not operating leases); (v) all indebtedness referred to in
clauses (i) through (iv) above which are secured by (or for which
the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any lien or security interest
upon or in property (including accounts and contracts rights)
owned by BDM, even though BDM has not assumed or become liable
for the payment of such Indebtedness; and (vi) all guaranties in
respect of indebtedness or obligations of Persons other than
members of the TLG Group or the TMG Group of the types referred
to in clauses (i) through (iv).
"Indemnified Party" has the meaning set forth in Section
11.3.
"Indemnifying Party" has the meaning set forth in Section
11.3.
"Initial Filing Date" has the meaning set forth in Section
7.2.
A-7
"IPO" has the meaning set forth in the Recitals.
"IPO Exercise Notice" has the meaning set forth in Section
7.2.
"IPO Issuance Notice" has the meaning set forth in Section
7.2.
"IPO Registration Statement" has the meaning set forth in
Section 7.2.
"Issuance Date" has the meaning set forth in Section 7.1.
"Issuance Notice Percentage" has the meaning set forth in
Section 7.2.
"Issuance Price" has the meaning set forth in Section 7.1.
"Issue Size Change Notice" has the meaning set forth in
Section 7.2.
"Knowledge of BDM" means the actual knowledge of any of the
following officers of BDM: (i) the Chief Executive Officer, (ii)
the Chairman, (iii) the Vice Chairman, (iv) the President, (v)
each member of the Executive Committee (other than any member to
be designated by Dentsu), (vi) the Chief Operating Officer, (vii)
the Chief Administrative Officer, and (viii) the General
Counsel.
"Law" means all applicable provisions of all (i)
constitutions, treaties, statutes, and other requirements of law
(including the common law), codes, rules, regulations, ordinances
or orders of any Governmental Authority, (ii) Governmental
Approvals and (iii) orders, decisions, injunctions, judgments,
awards and decrees of or agreements with any Governmental
Authority.
"Lien" means any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge,
claim, security interest, easement or encumbrance, or preference,
priority or other security agreement or preferential arrangement
of any kind or nature whatsoever (including, without limitation,
any lease or title retention agreement, any financing lease
having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing
statement perfecting a security interest under the Uniform
Commercial Code or comparable law of any jurisdiction).
"Losses" means any and all losses, costs, obligations,
liabilities, settlement payments, awards, judgments, fines,
penalties, damages, expenses, deficiencies or
A-8
other charges (whether absolute, accrued, conditional or
otherwise and whether or not resulting from third party claims).
"MAC" means the TMG Acquisition Corp., the Delaware
Corporation in existence immediately prior to the MacManus
Merger.
"MacManus Merger" means the merger of MAC with and into TMG
in accordance with the Merger Agreement.
"Material BDM Subsidiary" means any Subsidiary of BDM that
would be a "significant subsidiary" (as that term is defined in
the Commission's Regulation S-X) if BDM were a "registrant" for
purposes of such definition, including without limitation the
Subsidiaries of BDM listed in Section 2.2(c)(i) of the Disclosure
Schedule.
"Material TLG Subsidiary" means any Subsidiary of TLG that
would be a "significant subsidiary" (as that term is defined in
the Commission's Regulation S-X) if TMG were a "registrant" for
purposes of such definition.
"Material TMG Subsidiary" means any Subsidiary of TMG that
would be a "significant subsidiary" (as that term is defined in
the Commission's Regulation S-X) if TMG were a "registrant" for
purposes of such definition.
"Merger Agreement" means that certain Agreement and Plan of
Merger, dated as of December 30, 1999, by and among BDM, TLG,
TMG, TAC and MAC.
"Merger Documents" has the meaning set forth in Section
2.15.
"Merger" means, collectively, the MacManus Merger and the
Xxxxxxx Merger.
"NASDAQ" means the Nasdaq Stock Market.
"New Convertible Securities" has the meaning set forth in
Section 7.1(d).
"New Derivative Securities" has the meaning set forth in
Section 7.1(e).
"New Equity Securities" has the meaning set forth in Section
7.1(a).
"Offered Shares" has the meaning set forth in Section
9.2(b).
A-9
"Offering Memorandum" means the Joint Proxy
Statement/Private Placement Memorandum, dated December 30, 1999,
that was delivered by BDM to the stockholders of TLG and TMG in
connection with the Mergers.
"Organizational Documents" means, as to any Person, the
articles of incorporation and by-laws, any partnership or limited
liability company agreement, and deed of trust or any other
documents serving similar purposes in the jurisdiction in which
such Person is organized.
"Over-Allotment Option" means an option granted by BDM to
the underwriters in connection with the IPO to cover over-
allotments pursuant to the applicable underwriting agreement.
"Over-Allotment Share Number" has the meaning set forth in
Section 7.2.
"Permitted Dentsu Transferee" has the meaning set forth in
Section 8.2.
"Permitted Intercompany Transfer" has the meaning set forth
in Section 8.2.
"Permitted Issuance" means the issuance of shares of BDM
Common Stock as consideration in connection with any acquisition
by BDM or any Affiliate (whether by purchase, merger or
otherwise) of a business or businesses that the BDM Board of
Directors has determined to be in the best interest of BDM and
its stockholders.
"Permitted Joint Venture" means any alliance, joint venture
or similar cooperative arrangement (A) to which BDM, Dentsu or
any Affiliate thereof is a party as of the date of this
Agreement, (B) to which BDM, Dentsu or any Affiliate thereof
intends to hereafter become a party (and has disclosed such
intention in writing to the other party prior to the date of this
Agreement), (C) that is unrelated to Advertising Services, (D)
that is related to Advertising Services but limited to speciality
services not involving the offering of Advertising Services under
the trade names of BDM, Dentsu, TLG or TMG (e.g., an arrangement
relating to media buying, a production studio, etc.), or (E) that
involves a joint or cooperative offering of Advertising Services
but only in a single advertising market or region not including
any of the "top twenty" advertising markets in the world (as
measured by the country-by-country rankings for annual media
expenditures published by Zenithmedia for the calendar year
immediately preceding the date of entry into such alliance, joint
venture or similar cooperative arrangement, or as
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measured by such other country-by-country ranking as may be
agreed in writing by the parties from time to time).
"Permitted Liens" means (i) Liens reflected in the
Disclosure Schedule, (ii) Liens for Taxes and other governmental
charges and assessments with are not yet due and payable or which
are being contested in good faith by appropriate proceedings,
(iii) easements, rights of way, title imperfections and
restrictions, zoning ordinances and other similar encumbrances
affecting real property, (iv) statutory Liens in favor of lessors
arising in connection with any property leased to any member of
the TLG Group or the BDM Group, as applicable, (v) Liens
reflected in the Financial Statements and (vi) any other Liens
which do not materially interfere with the current use of
properties affected thereby.
"Permitted Purchaser", with respect to shares of BDM Common
Stock means a Person who would be permitted under Rule
13d-1(b)(1) under the Securities Exchange Act to report the
acquisition of beneficial ownership of such shares on Schedule
13G under the Securities Exchange Act (assuming for such purposes
that the BDM Common Stock were then registered under Section 12
of the Securities Exchange Act) and any analogous foreign Person,
in each case that is generally in the business of investing in
securities or holding securities for investment purposes,
provided that such Person (i) is not a "Major Competitor" of BDM
(as such term is defined in the Alliance Agreement) or an
Affiliate thereof, (ii) does not hold any equity interest (other
than a "Permitted Portfolio Investment" (as such term is defined
in the Alliance Agreement)) in any such Major Competitor and
(iii) no representative of such Person serves as an officer or
director of any such Major Competitor.
"Permitted Purchaser Agreement" has the meaning set forth in
Section 8.2(c).
"Permitted Third Party Sale" has the meaning set forth in
Section 8.2(c).
"Person" mean any natural person, firm, partnership,
association, corporation, company, limited liability company,
trust, business trust, Governmental Authority or other entity.
"Pricing Change Notice" has the meaning set forth in Section
7.2.
"Prior Notice" has the meaning set forth in Section 7.1.
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"Prior Notice Percentage" has the meaning set forth in Section 7.2.
"PTP Shares" has the meaning set forth in Section 8.2(c).
"Registration Rights Agreement" has the meaning set forth in Section 6.2.
"Related Documents means (i) this Agreement, (ii) the Alliance Agreement,
(iii) the Amended and Restated Certificate of Incorporation for BDM,
substantially in the form of Exhibit A hereto, and (iv) the Registration Rights
Agreement, of even date herewith, between BDM and Dentsu, as each such document
may be amended or modified from time to time in accordance with its respective
terms.
"Restated By-Laws" has the meaning set forth in Section 6.2.
"Restated Charter" has the meaning set forth in Section 6.2.
"Securities Act" means the Securities Act of 1933, or any successor
statute, and the rules and regulations promulgated thereunder, all as the same
shall be in effect from time to time. Reference to a particular section of the
Securities Act of 1933 shall include a reference to the comparable section, if
any, of any such successor statute.
"Securities Exchange Act" means the Securities Exchange Act of 1934, or any
successor statute, and the rules and regulations promulgated thereunder, all as
the same shall be in effect from time to time. Reference to a particular section
of the Securities Exchange Act of 1934 shall include a reference to the
comparable section, if any, of any such successor statute.
"Share Reduction Notice" has the meaning set forth in Section 7.2.
"Share Replacement Options" means any stock options granted by BDM to
Employees to purchase shares of BDM Common Stock with an exercise price equal to
the book value per share of BDM Common Stock, but only to the extent that such
options are coupled with a prior or concurrent repurchase by BDM (or TLG or TMG)
from such Employee of an equal number of shares of BDM Common Stock (or stock of
TLG or TMG) at book value.
"Shares" has the meaning set forth in Section 1.1.
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"Stock Purchase Rights" means, in respect of any Person, any options,
warrants or other securities or rights (preemptive or otherwise) to subscribe to
or exercisable for the purchase of shares of capital stock or any Convertible
Securities of such Person or any Successor Entity, whether or not immediately
exercisable.
"Subsidiary" of a Person means: (a) any corporation, association or other
business entity (i) of which more than 50% of the voting power of the
outstanding voting stock is beneficially owned, directly or indirectly, by such
Person or (ii) the accounts of which would be consolidated with those of such
Person in its consolidated financial statements in accordance with GAAP, (b) any
corporation, association or other business entity whose voting stock is publicly
traded if such Person beneficially owns, directly or indirectly, shares of
voting stock representing more than 30% of the voting power of all outstanding
voting stock unless some other Person beneficially owns, directly or indirectly,
shares of voting stock representing more than 30% of such voting power, (c) any
partnership in which such Person or one or more Subsidiaries thereof is a
general partner and either (i) such Person and its Subsidiaries together own a
majority of the partnership interests thereof or (ii) such Person otherwise
directly or indirectly controls such partnership in such a manner as to permit
the accounts of such partnership to be consolidated with those of such Person in
its consolidated financial statements in accordance with GAAP or, (d) any
limited liability company in respect of which such Person is a manager or
managing member and either (i) such Person and its Subsidiaries together own a
majority of the membership interests thereof or (ii) such Person otherwise
directly or indirectly controls such limited liability company in such a manner
as to permit the accounts of such limited liability company to be consolidated
with those of such Person in its consolidated financial statements in accordance
with GAAP.
"Successor Entity" means, in respect of any Person participating in a
merger, consolidation or other business combination in which such Person is not
the surviving entity, the surviving entity in such transaction.
"TAC" means the TLG Acquisition Corp., the Delaware Corporation in
existence immediately prior to the Xxxxxxx Merger.
"Tax" (and with correlative meaning, "Taxes" and "Taxable") means any
federal, state, local or foreign net income, gross income, gross receipts,
windfall profit, severance, property, production, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or add-on minimum, ad
valorem, transfer, stamp, or environmental tax, or any other tax, custom, duty,
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governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any Governmental Authority.
"Tax Return" means any return, report or similar statement required to be
filed with respect to any Tax (including any attached schedules), including any
information return, claim for refund, amended return or declaration of estimated
Tax.
"Threshold Position" has the meaning set forth in Section 8.1.
"TLG" has the meaning set forth in the Recitals.
"TLG Business" means the business and operations of the TLG Group as
currently conducted or contemplated to be conducted immediately prior to the
Closing.
"TLG Group" means, collectively, TLG and its Subsidiaries.
"TLG Material Adverse Effect" means any event, occurrence, fact, condition,
change, development or effect that is materially adverse to the business,
operations, prospects, results of operations, condition (financial or
otherwise), properties (including intangible properties), assets (including
intangible assets) or liabilities of (i) TLG, (ii) any Material TLG Subsidiary,
or (iii) the TLG Group taken as a whole.
"TMG" has the meaning set forth in the Recitals.
"TMG Business" means the business and operations of the TMG Group as
conducted or contemplated to be conducted immediately prior to the Closing.
"TMG Group" means, collectively, TMG and its Subsidiaries.
"TMG Material Adverse Effect" means any event, occurrence, fact, condition,
change, development or effect that is materially adverse to the business,
operations, prospects, results of operations, condition (financial or
otherwise), properties (including intangible properties), assets (including
intangible assets) or liabilities of (i) TMG, (ii) any Material TMG Subsidiary,
or (iii) the TMG Group taken as a whole.
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"Transfer" means, with respect to any property, any sale, transfer or other
disposition of, or the granting of any option or the right to acquire, such
property or any interest therein (other than any such disposition creating any
Lien), in each case whether effected directly or indirectly by means of a
Transfer of any interest in another Person.
"Transfer of Common Stock" has the meaning set forth in Section 9.2(b).
"Transfer of Common Stock Notice" has the meaning set forth in Section
9.2(b).
"1998 Balance Sheets" has the meaning set forth in Section 2.7.
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