EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
among
KT HOLDING COMPANY
KT ACQUISITION I CORP.
AH ACQUISITION I L.L.C.
KNIGHT/TRIMARK GROUP, INC.
ARBITRADE HOLDINGS LLC
TARMACHAN CAPITAL MANAGEMENT, INC.
TARMACHAN CAPITAL CO.
DEEPHAVEN INC.
GILDOR TRADING, INC.
XXXXX XXXXXXX
XXXXXX XXXXXX
XXXXX XXXXX
XXXXXXX XXXXXXXX
and
XXXX XXXXX
Dated as of November 17, 1999
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THIS AGREEMENT AND PLAN OF MERGER, dated as of November 17, 1999
(the "Agreement"), among KT HOLDING COMPANY, a Delaware corporation
("Parent"), KT ACQUISITION I CORP., a Delaware corporation ("SubKT"), AH
ACQUISITION I L.L.C., a Delaware limited liability company ("SubAH"),
KNIGHT/TRIMARK GROUP, INC., a Delaware corporation ("KT"), ARBITRADE
HOLDINGS LLC, a Delaware limited liability company ("AH") and TARMACHAN
CAPITAL MANAGEMENT, INC., TARMACHAN CAPITAL CO., DEEPHAVEN INC., GILDOR
TRADING, INC., XXXXX XXXXXXX, XXXXXX XXXXXX, XXXXX XXXXX, XXXXXXX XXXXXXXX
and XXXX XXXXX (together, the "Members").
WHEREAS, KT and AH desire to combine their respective businesses
in a transaction upon the terms and subject to the conditions in this
Agreement;
WHEREAS, (i) Parent is a newly formed corporation organized and
existing under the laws of the State of Delaware, all of the issued and
outstanding capital stock of which is owned by KT; (ii) KT is a corporation
organized and existing under the laws of the State of Delaware; and (iii)
AH is a limited liability company organized and existing under the laws of
the State of Delaware;
WHEREAS, KT has caused Parent to form SubKT and SubAH, each a
wholly owned subsidiary of Parent, and all the outstanding capital stock of
SubKT and all of the outstanding membership interests of SubAH are owned by
Parent;
WHEREAS, the Board of Directors of KT and the members of AH have
each approved this Agreement;
WHEREAS, the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Mergers and
also to prescribe various conditions to the Mergers;
WHEREAS, concurrently with the execution of this Agreement, as a
condition and an inducement to the willingness of Parent and KT to enter
into this Agreement, the Members have entered into employment and non-
competition agreements with AH (the "New Employment Agreements");
WHEREAS, for U.S. federal income tax purposes, it is intended
that (i) the KT Merger (as hereinafter defined), taken together with the AH
Merger (as hereinafter defined), will qualify as a transaction described in
Section 351 of the Internal Revenue Code of 1986, as amended (the "Code"),
and/or the KT Merger will qualify as a transaction described in Section
368(a) of the Code, and (ii) the AH Merger, taken together with the KT
Merger, will qualify as a transaction described in Section 351 of the Code;
and
WHEREAS, for financial accounting purposes, it is intended that
the transactions contemplated by this Agreement will be accounted for as a
pooling-of-interests transaction in accordance with United States generally
accepted accounting principles ("GAAP").
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, and fully
intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGERS; CLOSING
Section 1.1 The KT Merger.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the Delaware General Corporation Law
(the "DGCL"), SubKT shall merge with and into KT (the "KT Merger") at the
KT Effective Time (as defined in Section 1.5) and each outstanding share of
class A common stock, par value $.01 per share of KT (the "KT Class A
Common Stock"), shall be converted in the manner set forth in Section
2.1(b) hereof. KT shall be the surviving corporation in the KT Merger (the
"Surviving Corporation") and shall thereupon become a wholly owned
subsidiary of Parent. From and after the KT Effective Time, the identity
and separate existence of SubKT shall cease.
(b) In connection with the KT Merger, KT shall take such actions
as may be necessary to cause Parent to reserve, prior to the KT Merger, a
sufficient number of shares of class A common stock, par value $.01 per
share, of Parent (the "Parent Common Stock"), to permit the issuance of
shares of Parent Common Stock (i) to the holders of KT Class A Common Stock
as of the KT Effective Time in accordance with the terms of this Agreement,
and (ii) upon the exercise of KT Stock Options (as hereinafter defined)
being assumed by Parent in accordance with Section 5.6 hereof.
Section 1.2 The AH Merger.
(a) Upon the terms and subject to the conditions set forth in
this Agreement and in accordance with the Delaware Limited Liability
Company Act (the "DLLCA"), SubAH shall merge with and into AH (the "AH
Merger," and together with the KT Merger, the "Mergers") at the AH
Effective Time (as defined in Section 1.6) and each outstanding Class B
membership unit of AH (the "AH Membership Units") shall be converted in the
manner set forth in Section 2.2(b) hereof. AH shall be the surviving
limited liability company in the AH Merger (the "Surviving LLC," and
together with the Surviving Corporation, the "Surviving Subsidiaries") and
shall thereupon become a wholly owned subsidiary of Parent. From and after
the AH Effective Time, the identity and separate existence of SubAH shall
cease.
(b) In connection with the AH Merger, KT shall take such actions
as may be necessary to cause Parent to reserve a sufficient number of
shares of Parent Common Stock, prior to the AH Merger, to permit the
issuance of shares of Parent Common Stock to the holders of the AH
Membership Units as of the Effective Time in accordance with the terms of
this Agreement.
Section 1.3 KT Closing. The closing of the KT Merger (the "KT
Closing") will take place at a time and on a date to be specified by the
parties (the "KT Closing Date") as soon as reasonably practicable following
the satisfaction or waiver of the conditions set forth in Article VI (other
than those conditions that by their nature are to be satisfied at the AH
Closing, but which are reasonably expected by the parties to be so
satisfied), unless another time or date is agreed to by the parties hereto.
The KT Closing will be held at the offices of Skadden, Arps, Slate, Xxxxxxx
& Xxxx LLP in New York, New York, unless another place is agreed to by the
parties hereto.
Section 1.4 AH Closing. The closing of the AH Merger (the "AH
Closing") will take place following the satisfaction or waiver of the
conditions set forth in Article VI at a time and on a date to be specified
by the parties (the "AH Closing Date"), which time and date shall be the
later of four business days after the KT Closing or as soon as reasonably
practicable thereafter, unless another time or date is agreed to by the
parties hereto. The AH Closing will be held at the offices of Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP in New York, New York, unless another place
is agreed to by the parties hereto.
Section 1.5 KT Effective Time. Subject to the provisions of
this Agreement, as soon as practicable on or after the KT Closing Date,
the parties shall file with the Secretary of State of the State of Delaware
a certificate of merger (the "KT Certificate of Merger") executed in
accordance with the relevant provisions of the DGCL and shall make all
other filings or recordings required under the DGCL in order to effect the
KT Merger. The KT Merger shall become effective at such time as is
specified in the KT Certificate of Merger and in accordance with the DGCL
(the time at which the KT Merger has become fully effective being
hereinafter referred to as the "KT Effective Time").
Section 1.6 AH Effective Time. Subject to the provisions of
this Agreement, as soon as practicable on or after the AH Closing Date, the
parties shall file with the Secretary of State of the State of Delaware a
certificate of merger (the "AH Certificate of Merger") executed in
accordance with the relevant provisions of the DLLCA and shall make all
other filings required under the DLLCA to effect the AH Merger. The AH
Merger shall become effective at such time as is specified in the AH
Certificate of Merger and in accordance with the DLLCA (the time at which
the AH Merger has become fully effective being hereinafter referred to as
the "AH Effective Time"). The time at which both Mergers have become fully
effective is hereinafter referred to as the "Effective Time."
Section 1.7 Effects of the Mergers.
(a) DGCL. The KT Merger shall have the effects set forth in
Section 259 of the DGCL.
(b) DLLCA. The AH Merger shall have the effects set forth in
Section 18-209 of the DLLCA.
(c) Names of Surviving Corporations. The names of the Surviving
Corporation and the Surviving LLC from and after the KT Effective Time and
the AH Effective Time, respectively, shall be "Knight/Trimark, Inc." and
"Knight Financial Products, L.L.C." respectively, until changed or amended
in accordance with applicable Law (as hereinafter defined).
(d) Charter Documents. (i) At the KT Effective Time, the
Certificate of Incorporation and the Bylaws of KT, as in effect immediately
prior to the KT Effective Time, shall be the Certificate of Incorporation
and Bylaws, respectively, of the Surviving Corporation; provided, however,
that from and after the KT Effective Time, (x) paragraph (a) of Article
FOURTH shall be amended and restated and shall be read in its entirety as
follows: "FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is 3,000 shares of capital stock,
consisting of (i) 1,000 shares of class A common stock, par value $.01 per
share (the "Class A Common Stock"), (ii) 1,000 shares of class B common
stock, par value $.01 per share (the "Class B Common Stock" and, together
with the Class A Common Stock, the "Common Stock"), and (iii) 1,000 shares
of preferred stock, par value $.01 per share (the "Preferred Stock")"; and
(y) a new Article TWELFTH shall be added thereto which shall be and read in
its entirety as follows: "TWELFTH: Any act or transaction by or involving
this Corporation that requires for its adoption under the GCL or this
Amended and Restated Certificate of Incorporation the approval of the
stockholders of this Corporation (other than the election or removal of
directors of this Corporation) shall, pursuant to Section 251(g) of the
GCL, require, in addition, the approval of the stockholders of
Knight/Trimark Group, Inc., a Delaware corporation, or any successor
thereto by merger, by the same vote that is required by the GCL and/or the
Amended and Restated Certificate of Incorporation of this Corporation"; and
(ii) at the AH Effective Time, the Certificate of Formation and the
Agreement of Limited Liability Company of SubAH, as in effect immediately
prior to the AH Effective Time, shall be the Certificate of Formation and
Agreement of Limited Liability Company, respectively, of the Surviving LLC.
Section 1.8 Directors.
(a) SubKT. The directors of SubKT at the KT Effective Time
shall be the directors of the Surviving Corporation until the next annual
meeting of stockholders of the Surviving Corporation (or their earlier
resignation or removal) and until their respective successors are duly
elected and qualified, as the case may be.
(b) SubAH. The managers of SubAH at the AH Effective Time shall
be the managers of the Surviving LLC until their resignation or removal and
until their respective successors are duly elected and qualified, as the
case may be.
Section 1.9 Parent Charter Documents and Name. At the KT
Effective Time, the Certificate of Incorporation and Bylaws of Parent shall
be as set forth substantially in the form of Exhibit A and Exhibit B
hereto, respectively, and the name of Parent shall be changed to
"Knight/Trimark Group, Inc."
ARTICLE II
EFFECT OF THE MERGERS ON THE EQUITY SECURITIES OF
KT AND AH; CERTIFICATES
Section 2.1 Effect on KT Stock and SubKT Stock. As of the KT
Effective Time, by virtue of the KT Merger and without any action on the
part of SubKT, KT or the holders of any securities of SubKT or KT:
(a) Cancellation of Treasury Stock. Each share of KT Class A
Common Stock that is owned directly by KT (but not including any such
shares owned by employee benefit or pension plans) shall automatically be
cancelled and retired and shall cease to exist, and no consideration shall
be delivered in exchange therefor.
(b) Conversion of KT Class A Common Stock. Each issued and
outstanding share of KT Class A Common Stock (other than shares to be
cancelled in accordance with Section 2.1(a)) shall be converted into one
(the "KT Merger Exchange Ratio") validly issued, fully paid and
nonassessable share of Parent Common Stock (such consideration being
referred to herein as the "KT Merger Consideration"). As of the KT
Effective Time, all such shares of KT Class A Common Stock shall no longer
be outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of KT Class A
Common Stock (the "KT Certificates") shall cease to represent such shares
of KT Class A Common Stock and instead shall be deemed to be certificates
("Parent Certificates") representing the number of whole shares of Parent
Common Stock into which such shares have been converted.
(c) Conversion of Common Stock of SubKT. Each issued and
outstanding share of common stock, par value $.01 per share, of SubKT shall
be converted into one validly issued, fully paid and nonassessable share of
common stock of Surviving Corporation.
(d) Cancellation of Parent Common Stock Owned by KT. Each share
of Parent Common Stock that is owned by KT immediately prior to the KT
Effective Time shall automatically be cancelled and retired and shall cease
to exist, and no consideration shall be delivered in exchange therefor.
Section 2.2 Effect on AH Membership Units and SubAH Membership
Interests. As of the AH Effective Time, by virtue of the AH Merger and
without any action on the part of SubAH, AH or the holders of any
securities of SubAH or AH:
(a) Cancellation of Unissued Interests. Each unissued AH
Membership Unit shall automatically be cancelled and retired and shall
cease to exist, and no consideration shall be delivered in exchange
therefor.
(b) Conversion of AH Membership Units. Subject to Section
2.3(e), each issued and outstanding AH Membership Unit set forth in Section
3.2(a)(i) of the AH Disclosure Schedule (as hereinafter defined in Article
III) (other than membership units to be cancelled in accordance with
Section 2.2(a)) shall be converted into such fraction (the "AH Merger
Exchange Ratio") of a validly issued, fully paid and nonassessable share of
Parent Common Stock (such consideration being referred to herein as the "AH
Merger Consideration," and, collectively with the KT Merger Consideration,
the "Merger Consideration") as determined in accordance with the next
sentence. The AH Merger Exchange Ratio shall be determined as follows: (i)
if the Average Price (as defined below) is greater than or equal to
$23.450, but less than or equal to $35.175, then the AH Merger Exchange
Ratio will be the quotient determined by dividing 6.727 by the Average
Price; (ii) if the Average Price is less than $23.450, then the AH Merger
Exchange Ratio will be 0.287; and (iii) if the Average Price is greater
than $35.175, then the AH Merger Exchange Ratio will be 0.191. "Average
Price" means the average (rounded to the nearest 1/10,000) of the closing
prices on The Nasdaq Stock Market's National Market (the "NMS") as reported
in The Wall Street Journal (national edition) (or if not reported thereby,
any other authoritative source), of the KT Class A Common Stock for the ten
consecutive trading days ending on the third trading day immediately prior
to the KT Effective Time. In determining the AH Merger Exchange Ratio
pursuant to clause (i) as provided above, the final number will be rounded
to three decimal places, rounding up from 0.0005. Notwithstanding anything
elsewhere herein to the contrary, the aggregate number of shares of Parent
Common Stock to be issued to each holder of AH Membership Units shall be
rounded to the nearest whole number of shares. As of the AH Effective
Time, all such AH Membership Units shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
holder of an AH Membership Unit immediately prior to the AH Effective Time
shall cease to have any rights with respect thereto, except the right to
receive Parent Certificates.
(c) Cancellation of AH Class A Membership Units. Each issued
and outstanding class A membership unit of AH (the "Class A Membership
Units"), shall automatically be cancelled and retired and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
(d) Conversion of Membership Interests of SubAH. Each issued
and outstanding membership interest of SubAH shall be converted into one
validly issued, fully paid and nonassessable membership interest of the
Surviving LLC.
Section 2.3 Exchange of Certificates.
(a) No Surrender of KT Certificates. Until thereafter
surrendered for transfer or exchange in the ordinary course, each
outstanding stock certificate that, immediately prior to the KT Effective
Time, evidenced shares of KT Class A Common Stock shall be deemed and
treated for all corporate purposes to evidence the ownership of the number
of shares of Parent Common Stock into which such shares of KT Class A
Common Stock were converted pursuant to the provisions of Section 2.1(b).
(b) Exchange Agent. As of the AH Effective Time, Parent shall
enter into an agreement with such bank or trust company as may be
designated by KT (the "Exchange Agent"), which shall provide that Parent
shall deposit with the Exchange Agent as of the AH Effective Time, for the
benefit of the holders of AH Membership Units, for exchange in accordance
with this Article II, through the Exchange Agent, Parent Certificates
representing the number of whole shares of Parent Common Stock issuable
pursuant to Section 2.2(b) in exchange for outstanding AH Membership Units.
(c) Exchange Procedures. At the AH Effective Time and subject
to the provisions of Section 2.3(g) below, each holder of AH Membership
Units whose AH Membership Units were converted into AH Merger Consideration
pursuant to Section 2.2(b) hereof shall receive from the Exchange Agent a
Parent Certificate representing that number of whole shares of Parent
Common Stock which such holder has the right to receive pursuant to the
provisions of Section 2.2(b) hereof; provided, that each such holder shall
execute an acknowledgment, in form and substance reasonably satisfactory to
Parent, stating that receipt of such Parent Certificate by such holder
shall be deemed in full satisfaction of the obligations of Parent to such
holder under Article II. Until surrendered for exchange as contemplated by
this Section 2.3, each AH Membership Unit shall be deemed at any time after
the AH Effective Time to represent only the right to receive upon such
surrender, Parent Certificates representing the number of whole shares of
Parent Common Stock into which the AH Membership Units have been converted.
(d) No Further Ownership Rights in AH Membership Units. All
shares of Parent Common Stock issued upon the surrender for exchange of AH
Membership Units in accordance with the terms of this Article II shall be
deemed to have been issued in full satisfaction of all rights pertaining to
the AH Membership Units, and there shall be no further registration of
transfers on the transfer books of the Surviving LLC of the AH Membership
Units which were outstanding immediately prior to the AH Effective Time.
If, after the AH Effective Time, AH Membership Units are presented to the
Surviving LLC or the Exchange Agent for any reason, they shall be cancelled
and exchanged as provided in this Article II, except as otherwise provided
by Law.
(e) No Fractional Shares. No Parent Certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon
the surrender for exchange of AH Membership Units, no dividend or
distribution of Parent shall relate to such fractional share interests, and
such fractional share interests will not entitle the owner thereof to vote
or to any rights of a stockholder of Parent.
(f) No Liability. None of Parent, KT, AH or the Exchange Agent
shall be liable to any person in respect of any shares of Parent Common
Stock (or dividends or distributions with respect thereto), in each case
delivered to a public official pursuant to any applicable abandoned
property, escheat or similar Law.
(g) Escrow Indemnity Agreement. Each of the Members hereby
agrees to cause the Exchange Agent (by written instruction and such other
actions reasonably requested by the Exchange Agent and the Escrow Agent) to
deposit, at the AH Closing, with an escrow agent reasonably acceptable to
Parent and AH (the "Escrow Agent"), on behalf of the Members, a number of
shares of Parent Common Stock equal to 10% of the aggregate number of
shares of Parent Common Stock issuable to the Members pursuant to Section
2.2 hereof (the "Escrow Shares"), which Escrow Shares shall be held in an
escrow account in accordance with the terms of an escrow agreement between
the Members, Parent and the Escrow Agent, substantially in the form
attached as Exhibit C hereto (the "Escrow Indemnity Agreement"). The
obligations of each of the Members to cause the deposit of shares of Parent
Common Stock as Escrow Shares shall be pro rata to the number of shares of
Parent Common Stock to which such Member (directly or through any
affiliated entity) is entitled as a result of the AH Merger. The Escrow
Shares will secure the obligations of the Members pursuant to Article VIII.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AH AND THE MEMBERS
Except as set forth in the disclosure schedule delivered by AH
prior to the execution of this Agreement (the "AH Disclosure Schedule")
making reference to the particular section or subsection of this Agreement
to which an exception is being taken, AH and each of the Members hereby
represent and warrant, jointly and severally, to KT, as of the date hereof
and as of the AH Closing Date, as follows:
Section 3.1 Organization, Qualification, Etc.
(a) AH is a limited liability company duly organized, validly
existing and in good standing (or other equivalent status) under the laws
of the jurisdiction of its organization and has the limited liability
company power and authority to own, operate and lease all of its properties
and assets and to carry on its business as it is now being conducted or
presently proposed to be conducted and is duly qualified to do business and
is in good standing (or other equivalent status) in each jurisdiction in
which the ownership, operation or leasing of its properties or assets or
the conduct of its business requires such qualification, except for
jurisdictions in which the failure to be so qualified or in good standing
(or other equivalent status) could not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect on AH. As used in
this Agreement, any reference to any state of facts, event, change or
effect having a "Material Adverse Effect" on or with respect to AH, means
such state of facts, event, change or effect that, individually or in the
aggregate, has had or could reasonably be expected to have a material
adverse effect on the business, assets, results of operations or condition
(financial or otherwise) of AH and its Subsidiaries (as hereinafter
defined), taken as a whole (except for any state of facts, event, change or
effect (i) relating to general economic conditions in the geographic areas
in which AH and its Subsidiaries operate or invest or (ii) similarly
affecting persons in the industries in which AH and its Subsidiaries
operate), or that could reasonably be expected to materially impair the
ability of AH or any of the Members to perform its respective obligations
under this Agreement or consummate the Mergers and the other transactions
contemplated hereby. AH has made available to KT true, complete and
correct copies of AH's Certificate of Formation and Amended and Restated
Operating Agreement (the "AH Organizational Documents"), which AH
Organizational Documents are in full force and effect.
(b) Each of AH's Subsidiaries is a corporation or limited
liability company duly organized, validly existing and in good standing (or
other equivalent status) under the laws of its jurisdiction of
incorporation or organization, has the power and authority to own, operate
and lease its properties and to carry on its business as it is now being
conducted or presently proposed to be conducted, and is duly qualified to
do business and is in good standing (or equivalent status) in each
jurisdiction in which the ownership, operation or leasing of its properties
or assets or the conduct of its business requires such qualification,
except for jurisdictions in which the failure to be so qualified or in good
standing (or other equivalent status) could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on AH.
AH has made available to KT true, complete and correct copies of the
certificate of incorporation, bylaws or other similar governing documents
for each of AH's Subsidiaries, which organizational documents are in full
force and effect.
(c) All of the issued and outstanding shares of capital stock
of, or other voting securities or ownership interests in, AH's Subsidiaries
have been validly issued and are fully paid and nonassessable and are owned
of record and beneficially by AH, directly or indirectly, free and clear of
all liens, encumbrances, security agreements, equities, options, charges,
pledges, mortgages or restrictions of any kind whatsoever ("Encumbrances").
There are no (i) securities of AH or any of its Subsidiaries convertible
into or exchangeable or exercisable for shares of capital stock or other
voting securities or ownership interests in any of AH's Subsidiaries, (ii)
warrants, calls, options or other rights to acquire from AH or any of its
Subsidiaries, or any obligations of AH or any of its Subsidiaries to issue,
any capital stock, voting securities or other ownership interests in, or
any securities convertible into or exchangeable or exercisable for, any
capital stock, voting securities or ownership interests in, any of AH's
Subsidiaries, or (iii) obligations of AH or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any outstanding securities of AH's
Subsidiaries or to issue, deliver or sell, or cause to be issued, delivered
or sold, any such securities.
(d) Section 3.1(d) of the AH Disclosure Schedule sets forth a
list of all Subsidiaries of AH, their respective jurisdictions of
organization and the percentage equity ownership of AH (direct or indirect)
in each of them. Except as set forth in Section 3.1(d) of the AH
Disclosure Schedule and other than securities acquired or investments made
in connection with trading activities or investments in capital market
securities, in each case, in the ordinary course of business consistent
with past practice, AH and its Subsidiaries do not own any securities of,
or have any debt or equity investment in, or loans outstanding to, any
person (other than the Subsidiaries of AH). AH and its Subsidiaries are
not subject to any contractual obligation under which any of them may be
required to advance or contribute capital to, or make any loan to, any
person or entity.
Section 3.2 Membership Units.
(a) AH has members holding the respective (i) AH Membership Units
and (ii) Class A Membership Units (collectively, the "Membership Units")
set forth in Section 3.2(a)(i) of the AH Disclosure Schedule. None of such
Membership Units are represented in physical form by any certificate or
other similar instrument. The Membership Units are validly issued, fully
paid and nonassessable and free of preemptive rights. Except as set forth
in Section 3.2(a)(ii) of the AH Disclosure Schedule, there are no
membership or limited liability company interests or other equity
securities or any security convertible into or exchangeable for any such
membership or limited liability company interests or other equity
securities of AH issued and outstanding; there are no issued and
outstanding options, warrants or rights to purchase or acquire any
membership or limited liability company interests or other equity
securities of AH or any security convertible into or exchangeable for any
such membership or limited liability company interests or other equity
securities of AH; and there are no contracts, commitments, understandings,
arrangements or restrictions by which AH is bound to issue additional
membership or limited liability company interests or other equity
securities or options, warrants or rights to purchase or acquire any
additional membership or limited liability company interests or other
equity securities or any security convertible into or exchangeable for any
such membership or limited liability company interests or other equity
securities of AH.
(b) The Members own, beneficially and of record, 100% of the
Membership Units free and clear of all Encumbrances.
Section 3.3 Authority Relative to this Agreement.
(a) AH has the limited liability company power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by the Members and no other limited liability company
proceedings on the part of AH are necessary to authorize this Agreement or
the consummation of the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by AH and each of the
Members and, assuming this Agreement constitutes a valid and binding
agreement of the other parties hereto, this Agreement constitutes a valid
and binding agreement of AH and each of the Members, enforceable against AH
and each of the Members in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally or by principles governing the availability of equitable
remedies).
Section 3.4 Non-Contravention; Consents and Approvals.
(a) None of the execution, delivery or performance of this
Agreement by AH and each of the Members or the consummation by AH and each
of the Members of the transactions contemplated hereby will (i) violate the
AH Organizational Documents or the certificate of incorporation, the bylaws
or other similar governing documents of any Subsidiaries of AH or any of
the Private Funds (as defined in Section 3.21(h) below), (ii) except for
all third party consents and approvals required to be obtained under any
note, bond, mortgage, deed of trust, security interest, indenture, lease,
license, contract, agreement, exchange membership, exchange allocation,
plan or other instrument or obligation to which AH, any of its
Subsidiaries, any of the Private Funds or any Member is a party or by which
any of them or any of their respective properties or assets may be bound
(the "AH Agreements") prior to the consummation of the transactions
contemplated by this Agreement the failure of which to obtain could
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on AH (the "Required Third Party Consents"), result
in the violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation, vesting, payment, exercise, acceleration, suspension or
revocation) under, any of the provisions of any AH Agreement, (iii) except
for all notices to, filings and registrations with, and permits,
authorizations, consents and approvals of, Governmental Entities (as
defined in Section 3.8(i) below) required to be made or obtained from
Governmental Entities prior to the consummation of the transactions
contemplated by this Agreement the failure of which to so make or obtain
could reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on AH (the "Required Statutory Approvals"), violate
any order, writ, injunction, decree, judgment, permit, license, statute,
law, ordinance, rule or regulation ("Law") of any Governmental Entity
applicable to AH, any of its Subsidiaries, any of the Private Funds or any
Member or any of their respective properties or assets, or (iv) result in
the creation or imposition of any Encumbrance on any asset of AH, any of
its Subsidiaries, any of the Private Funds or any Member, except in the
case of clauses (ii), (iii) and (iv) for violations, breaches, defaults,
terminations, cancellations, accelerations or creations which could not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on AH.
(b) Section 3.4(b)(i) of the AH Disclosure Schedule sets forth a
list of all of the Required Third Party Consents. Section 3.4(b)(ii) of
the AH Disclosure Schedule sets forth a list of all of the Required
Statutory Approvals.
Section 3.5 Financial Statements; Financial Condition.
(a) AH has previously delivered to KT true and complete copies
of the financial statements of AH and/or its predecessors (the "AH
Financial Statements") consisting of (i) an audited consolidated statement
of financial condition of AH at December 31, 1998, (ii) an audited
consolidated statement of income and statement of cash flows of AH for the
12 months ended December 31, 1998, (iii) unaudited statements of financial
condition at December 31, 1997 for each of Nu Twins, L.L.C., Tarmachan
Capital Management, Inc., Tarmachan Capital Co., Laboratory for
Computerized Trading LLC and Arbitrade UK Limited, and at September 30,
1999 for each of Deephaven Capital Management LLC, Deephaven Capital LLC,
Arbitrade, L.L.C., Arbitrade UK Limited, Deephaven Investment Advisers LLC
and Laboratory for Computerized Trading LLC, (iv) unaudited statements of
income for the 12 months ended December 31, 1997 for each of Nu Twins,
L.L.C., Tarmachan Capital Management, Inc., Tarmachan Capital Co.,
Laboratory for Computerized Trading LLC and Arbitrade UK Limited; and (v)
an unaudited consolidated statement of income of AH for the nine months
ended September 30, 1999. All of the audited AH Financial Statements
delivered to KT (including all notes and schedules contained therein or
annexed thereto) have been prepared in accordance with GAAP consistently
applied with past practices, and all of the unaudited AH Financial
Statements delivered to KT (including all notes and schedules contained
therein or annexed thereto) have been prepared on a basis consistent with
the accounting principles used in the preparation of the audited AH
Financial Statements. All of the AH Financial Statements delivered to KT
(including all notes and schedules contained therein or annexed thereto)
are consistent with the books and records of AH and its Subsidiaries, and
fairly present in all material respects the assets, liabilities and
financial condition, the results of operations and cash flows of the
relevant entities as of the dates and for the years and periods indicated.
The AH Financial Statements disclose all material changes in accounting
principles and practices adopted by the relevant entities during the
periods covered by such AH Financial Statements.
(b) The total Net Assets (as defined below) reflected on the
unaudited combined statement of financial condition of AH as of September
30, 1999 are, and the total Net Assets reflected on the unaudited combined
statement of financial condition of AH as of the AH Closing Date will be,
at least $38.0 million. "Net Assets" shall be calculated by subtracting
total liabilities from total assets. Each of the statements of financial
condition pursuant to which such calculations were made or will be made, as
applicable, was or will be prepared in accordance with GAAP consistently
applied with past practices and in a manner consistent with the audited
statement of financial condition of AH as of December 31, 1998, subject to
adjustment as set forth in Section 3.5(b) of the AH Disclosure Schedule.
Section 3.6 Environmental Matters.
(a) None of AH or any of its Subsidiaries is required to obtain
any licenses, permits, authorizations, approvals and consents from
Governmental Entities under any applicable Environmental Law (as defined
below) in respect of its business, properties, assets and operations,
except for such failures to obtain as could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on AH.
Each of AH and its Subsidiaries is in compliance with all applicable
Environmental Laws, except for such exceptions as could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect on AH.
(b) There is no Environmental Claim (as defined below) filed,
pending, or to the knowledge of AH, threatened or in process, against AH
or any of its Subsidiaries or any person whose liability for such
Environmental Claim AH or any of its Subsidiaries has retained or assumed
either contractually or by operation of Law, that could reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect on AH.
(c) Except as set forth in Section 3.6(c) of the AH Disclosure
Schedule, to the knowledge of AH, no Encumbrances have arisen under or
pursuant to any Environmental Law on any property, site or facility owned,
operated or leased by AH or any of its Subsidiaries, except for such
Encumbrances which could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on AH, and no action of any
Governmental Entity has been taken or, to the knowledge of the Company, is
threatened which could subject any of such properties to such Encumbrances,
except for such action which could not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect on AH.
(d) As used in this Agreement:
(i) "Environmental Claim" means any claim, action, cause of
action, order, investigation or notice (written or oral) by any person
alleging potential or actual liability (including, without limitation,
potential or actual liability for investigation, evaluation, cleanup,
removal actions, remedial actions, response actions, natural resources
damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from any Environmental Law, including any
claim under CERCLA, and shall include any request for information
under CERCLA or any comparable foreign, state or local Law.
(ii) "Environmental Law" means any Law relating to (a) the
environment or pollution, environmental matters, the protection of the
environment, or the protection of human health and safety from
environmental concerns, (b) actual or threatened emissions,
discharges, or releases of pollutants, contaminants, chemicals or
solid, industrial, toxic or hazardous substances, wastes or
constituents into the environment, and (c) the presence, manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials.
(iii) "Hazardous Materials" means (a) any petroleum or
petroleum products and radioactive materials, (b) any chemicals,
constituents, materials, or substances defined or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous substances," "toxic substances" and
related materials, as such materials are defined in any Environmental
Law, and (c) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any Governmental Entity.
Section 3.7 Employee Benefit Plans; ERISA.
(a) Except as could not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect on AH, (i) all Employee
Benefit Plans (as defined below) (other than any Employee Benefit Plan that
is a "multiemployer plan" within the meaning of Section 3(37) of ERISA (a
"Multiemployer Plan")) are in material compliance with all applicable
requirements of Law, including ERISA and the Code, and (ii) neither AH nor
any of its Subsidiaries nor any ERISA Affiliate (as defined below) has any
liabilities or obligations with respect to any such Employee Benefit Plans,
whether accrued, contingent or otherwise, that are not otherwise reflected
on the AH Financial Statements, nor to the knowledge of AH, are any such
liabilities or obligations expected to be incurred. The execution and
delivery of, and performance of the transactions contemplated by this
Agreement will not (either alone or upon the occurrence of any additional
or subsequent events) constitute an event under any Employee Benefit Plan
that will or may result in acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund benefits
with respect to any employee. The only severance agreements or severance
policies applicable to AH or any of its Subsidiaries are the agreements and
policies set forth in Section 3.7(a) of the AH Disclosure Schedule.
(b) With respect to each of its Plans, AH has heretofore made
available to KT complete and correct copies of each of the following
documents, as applicable: (i) a copy of the Plan (as defined below) and any
amendments thereto; (ii) a copy of the most recent annual report; (iii) a
copy of the most recent actuarial report; (iv) a copy of the most recent
Summary Plan Description and all material modifications; (v) a copy of the
trust or other funding agreement and any amendments thereto; and (vi) the
most recent determination letter received from the Internal Revenue Service
(the "IRS") with respect to each Plan that is intended to be qualified
under Section 401 of the Code.
(c) Section 3.7(c) of the AH Disclosure Schedule sets forth a
list of each employee of AH or any of its Subsidiaries who is a party to
any agreement (whether written or oral) with respect to such person's
employment by AH or any of its Subsidiaries for annual compensation in
excess of $120,000. AH has made available to KT a complete and correct
copy of each such written employment agreement and a complete and correct
written summary of each such oral agreement.
(d) None of the Employee Benefit Plans is either (i) subject to
Title IV of ERISA, or (ii) a money purchase plan, and neither AH, any of
its Subsidiaries nor any ERISA Affiliate has maintained, contributed to or
had an obligation to contribute to an employee benefit plan that is subject
to Title IV of ERISA within the six year period preceding the date of this
Agreement. None of the Employee Benefit Plans is a Multiemployer Plan.
Each of the Employee Benefit Plans that is intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified and the
trusts maintained thereunder are exempt from taxation under Section 501(a)
of the Code. Except as set forth in Section 3.7(d) of the AH Disclosure
Schedule, no Employee Benefit Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with respect
to current or former employees after retirement or other termination of
service (other than coverage mandated by applicable Law or benefits, the
full cost of which is borne by the current or former employee). There are
no material pending or threatened claims by or on behalf of any Employee
Benefit Plan, by any employee or beneficiary covered under any such
Employee Benefit Plan, or otherwise involving any such Employee Benefit
Plan (other than routine claims for benefits). No prohibited transaction
has occurred with respect to any Employee Benefit Plan that would result,
directly or indirectly, in the imposition of an excise Tax or other
liability under the Code or ERISA, except for such a Tax or other liability
that could not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect on AH. Except as could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect on AH, with respect to each foreign Plan: (i) all amounts required
to be reserved on account of each foreign Plan have been so reserved in
accordance with reasonable accounting practices prevailing in the country
where such foreign Plan is established and (ii) each foreign Plan required
to be registered with a Governmental Entity has been registered, has been
maintained in good standing with the appropriate Governmental Entities, and
has been maintained and operated in accordance with its terms and
applicable Law.
(e) Except as set forth in Section 3.7(e) of the AH Disclosure
Schedule, no director or officer or other employee of AH or any of its
Subsidiaries will become entitled to any termination, retirement, severance
or similar payment, benefit or enhanced or accelerated benefit (including
any acceleration of vesting or lapse of restrictions, repurchase rights or
obligations with respect to any benefit under any equity plan or incentive
or compensation plan or arrangement) as a result of the transactions
contemplated by this Agreement (either standing alone or in conjunction
with any additional or subsequent events).
(f) Any amount or other entitlement that could be received
(whether in cash or property or the vesting of property) as a result of any
of the transactions contemplated by this Agreement by any employee, officer
or director of AH or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation
Section 1.280G-1) under any employee benefit plan or other compensation
arrangement currently in effect would not be characterized as an "excess
parachute payment" or a "parachute payment" (as such terms are defined in
Section 280G(b)(1) of the Code).
(g) As used in this Agreement:
(i) "Employee Benefit Plan" means any material Plan entered
into, established, maintained, sponsored, contributed to or required
to be contributed to by AH or any of its Subsidiaries or ERISA
Affiliates for the benefit of the current or former employees or
directors of AH or any of its Subsidiaries and existing, or under
which AH or any of its Subsidiaries or ERISA Affiliates has any
liabilities on the date of this Agreement or at any time subsequent
thereto and on or prior to the Effective Time;
(ii) "Plan" means any employment, bonus, incentive
compensation, deferred compensation, pension, profit sharing,
retirement, equity purchase, equity option, equity ownership, equity
appreciation rights, phantom equity, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life,
health, medical, accident, disability, worker's compensation or other
insurance, severance, separation, termination, change of control or
other benefit plan, agreement, practice policy, program or arrangement
of any kind, whether written or oral, including, but not limited to,
any "employee benefit plan" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, and the
rules and regulations thereunder ("ERISA"); and
(iii) "ERISA Affiliate" means, with respect to AH, any
entity, trade or business that is a member of the same controlled
group as AH (within the meaning of Sections 414(b), (c), (m) or (o) of
the Code).
Section 3.8 Tax Matters. Except as set forth in Section 3.8 of
the AH Disclosure Schedule:
(a) All income and other material Tax Returns (as defined
below), which are required to be filed by AH or its Subsidiaries have been
timely filed (giving effect to any extensions) and all such Tax Returns are
true, complete and correct. All Taxes shown on such Tax Returns as owed by
AH or any of the Subsidiaries or claimed to be owed by AH or any of the
Subsidiaries by any Governmental Entity for any taxable period (whether or
not shown on any Tax Return) have been timely paid in full or are being
contested in good faith by appropriate proceedings (and for which the
relevant entity has set aside adequate reserves on its financial statements
in accordance with GAAP).
(b) Each of AH and each of its Subsidiaries has complied in all
material respects with all applicable Laws relating to the payment and
withholding of Taxes (including, without limitation, withholding of Taxes
pursuant to Sections 1441 and 1442 of the Code or similar provisions under
any foreign laws) and has, within the time and in the manner prescribed by
applicable Laws, withheld from employee wages or other compensation and
from any payments to independent contractors and paid over to the proper
Governmental Entity all amounts required to be so withheld and paid over
under all applicable Laws.
(c) (i) No deficiencies for any Taxes have been threatened,
proposed, asserted or assessed against AH or any of its Subsidiaries, (ii)
no Governmental Entity is conducting or proposing to conduct an audit with
respect to Taxes of or any Tax Return required to be filed with respect to
AH or any of its Subsidiaries, (iii) neither AH nor any of its Subsidiaries
is a party to any agreement or arrangement to allocate, share or indemnify
another party for Taxes, (iv) there are no Liens for Taxes upon the assets
of AH or any of its Subsidiaries, except for Statutory Liens for Taxes not
yet due, (v) no jurisdiction where either AH or any of its Subsidiaries
does not file a Tax Return has asserted or otherwise made a claim that AH
or any of its Subsidiaries is required to file a Tax Return for such
jurisdiction, and (vi) no power of attorney has been granted by or with
respect to AH or any of its Subsidiaries with respect to any matter
relating to Taxes.
(d) AH and each of its Subsidiaries is (and, during its entire
existence, has been) treated as either (i) an entity the separate existence
of which is disregarded for United States federal income tax purposes or
(ii) a domestic partnership for United States federal income tax purposes.
No Tax Return has been filed in any manner that is inconsistent with such
treatment.
(e) None of AH or any of its Subsidiaries has requested any
extension of time within which to file any Tax Return in respect of any
taxable year which has not since been filed, and no outstanding waivers or
comparable consents regarding the application of the statute of limitations
with respect to any Taxes or Tax Returns has been given by or on behalf of
AH or any of its Subsidiaries.
(f) The reserves for Taxes (determined in accordance with GAAP
consistently applied) reflected in the most recent balance sheet included
in the AH Financial Statements are adequate for the payment of all Taxes
incurred or which may be incurred by AH or any of its Subsidiaries through
the date of this Agreement. Since the date of the most recent balance
sheet included in the AH Financial Statements, none of AH or any of its
Subsidiaries has incurred any liability for Taxes other than in the
ordinary course of business.
(g) Each of the Members is a United States Person (as defined in
Section 7701(a)(30) of the Code).
(h) AH and each of its Subsidiaries has previously delivered or
made available to KT complete and accurate copies of each of (i) all audit
reports, letter rulings, technical advice memoranda and similar documents
issued by a Governmental Entity relating to Taxes of, or with respect to,
AH or any of its Subsidiaries, (ii) all income Tax Returns, and those
state, local and foreign income Tax Returns filed by AH or any of its
Subsidiaries (or on their behalf) and (iii) any closing agreements entered
into by AH or any of its Subsidiaries with any Governmental Entity. AH
will deliver to KT all materials with respect to the foregoing for all
matters arising after the date of this Agreement.
(i) "Governmental Entity" means any (i) nation, state, county,
city, town, village, district, or other jurisdiction of any nature; (ii)
federal, state, local, municipal, foreign or other government; (iii)
governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or entity and any court
or other tribunal); or (iv) body exercising, or entitled to exercise, any
governmentally derived administrative, executive, judicial, legislative,
police, regulatory, or taxing authority or power of any nature.
(j) "Taxes" means any federal, state, local or foreign net
income, gross income, 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, 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 Entity.
(k) "Tax Returns" means all returns, reports, or statements
required to be filed with any Governmental Entity with respect to any Tax
(including any schedules or attachments thereto), including, without
limitation, any consolidated, unitary or similar return, information
return, claim for refund, amended return or declaration of estimated Tax.
Section 3.9 No Undisclosed Material Liabilities. There are no
liabilities, obligations or commitments of AH or any Subsidiary of AH of
any kind whatsoever, whether accrued, contingent, absolute, determined or
determinable, other than:
(a) liabilities the amounts of which could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect on AH;
(b) liabilities the amounts of which are expressly disclosed in
the AH Financial Statements or are set forth in Section 3.9(b) of the AH
Disclosure Schedule; and
(c) liabilities under or arising as a result of this Agreement.
Section 3.10 Labor Relations. Except as set forth in Section
3.10 of the AH Disclosure Schedule, (i) neither AH nor any of its
Subsidiaries is a party to any collective bargaining agreement, (ii) no
labor organization or group of employees of AH (or any of its Subsidiaries)
has made a pending demand for recognition or certification, and there are
no representation or certification proceedings or petitions seeking a
representation proceeding presently pending or, to the knowledge of AH,
threatened to be brought or filed, with the National Labor Relations Board
or any other labor relations tribunal or authority, and (iii) in the past
five years there have not been any, and, to the knowledge of AH, there are
no, organizing activities, strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances, or other material labor
disputes pending or, to the knowledge of AH, threatened against or
involving AH or any of its Subsidiaries.
Section 3.11 Permits. Each of AH, its Subsidiaries and the
Private Funds is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for
AH, any of its Subsidiaries or any of the Private Funds to own, lease and
operate its properties or to carry on its business as it is now being or is
proposed to be conducted (collectively, the "AH Permits"), except where the
failure to have, or the suspension or cancellation of, any of the AH
Permits, could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on AH, and no suspension or
cancellation of any of the AH Permits is pending or, to the knowledge of
AH, threatened, except where the failure to have, or the suspension or
cancellation of, any of the AH Permits could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on AH.
Neither AH nor any of its Subsidiaries or any of the Private Funds is in
conflict with, or in default or violation of, any AH Permits, except for
any such conflicts, defaults or violations which, could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect on AH.
Section 3.12 Absence of Certain Changes or Events. Except as
set forth in Section 3.12 of the AH Disclosure Schedule, since December
31, 1998, AH and each of its Subsidiaries and each of the Private Funds
have conducted their businesses in the ordinary course and in a manner
consistent with past practice and, since such date, except as expressly
permitted by Section 5.1(A) of this Agreement with respect to clauses (c-i)
below there has not been:
(a) any Material Adverse Effect on AH;
(b) any damage, destruction or other casualty loss with respect
to any asset or property owned, leased or otherwise used by AH or any of
its Subsidiaries, whether or not covered by insurance, which damage,
destruction or loss could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on AH;
(c) any material change by AH in its or any of its Subsidiaries'
or any of the Private Funds' accounting methods, principles or practices,
except as required by GAAP or by applicable Law;
(d) any redemption, purchase or other acquisition of any of AH's
securities;
(e) any increase in the compensation or benefits or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, option (including, the granting of
options or performance awards), or other employee benefit plan, or any
other increase in the compensation payable or to become payable to any
executive officers of AH or any of its Subsidiaries, in each case other
than (i) as required by applicable Law and (ii) annual increases in the
ordinary course of business consistent with past practice;
(f) (i) any incurrence or assumption by AH or any of its
Subsidiaries or any of the Private Funds of any indebtedness for borrowed
money or (ii) any guarantee, endorsement or other incurrence or assumption
of any material liability (whether directly, contingently or otherwise) by
AH or any of its Subsidiaries or any of the Private Funds for the
obligations of any other person (other than any wholly owned Subsidiary),
in each case other than in the ordinary course of business consistent with
past practice;
(g) any creation or assumption by AH or any of its Subsidiaries
or any of the Private Funds of any Encumbrance on any material asset of AH
or any of its Subsidiaries or any of the Private Funds, other than in the
ordinary course of business consistent with past practice;
(h) any making of any loan, advance or capital contribution to,
or investment in, any person or entity by AH or any of its Subsidiaries or
any of the Private Funds, other than in connection with trading activities
or investments in capital market securities, in each case, in the ordinary
course of business consistent with past practice; or
(i) (i) any AH Agreements entered into by AH or any of its
Subsidiaries relating to any material acquisition or disposition of any
assets or business, or (ii) any modification, amendment, assignment or
termination of or relinquishment by AH or any of its Subsidiaries of any
rights under any other material AH Agreement (including any insurance
policy naming it as a beneficiary or a loss payable payee) other than
transactions, commitments, contracts or agreements in the ordinary course
of business consistent with past practice or those contemplated by this
Agreement.
Section 3.13 No Defaults. Except as set forth in Section 3.13
of the AH Disclosure Schedule, there is no AH Agreement that is material to
the business, financial condition or results of operations of AH and its
Subsidiaries taken as a whole. Neither AH nor any of its Subsidiaries is
and, to the knowledge of AH, none of the other parties to such AH
Agreements are, in violation of or in default under (nor does there exist
any condition which with the passage of time or the giving of notice would
cause such a violation of or default under) any AH Agreement to which AH or
any of its Subsidiaries is a party or by which AH or any of its
Subsidiaries or any of their respective properties or assets is or may be
bound or affected, except for violations or defaults that could not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on AH.
Section 3.14 Litigation. Except as set forth in Section 3.14 of
the AH Disclosure Schedule, there is no suit, claim, action, or proceeding
(collectively, the "Claims") pending or, to the knowledge of AH, threatened
against AH or any of its Subsidiaries before any Governmental Entity nor to
the knowledge of AH are there any investigations or reviews by any
Governmental Entity pending or threatened against, relating to or affecting
AH or any of its Subsidiaries, in each case, that, if adversely determined
could reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on AH. Neither AH nor any of its Subsidiaries is
subject to any outstanding order, writ, injunction or decree of any court
or Governmental Entity which could reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect on AH.
Section 3.15 Intellectual Property.
(a) (i) Section 3.15(a)(i) of the AH Disclosure Schedule
sets forth all material United States and foreign patents and patent
applications, trademark and service xxxx registrations and
applications, Internet domain names, and copyright registrations and
applications owned by AH and its Subsidiaries, specifying as to each
item, as applicable: (A) the jurisdictions in which the item is issued
or registered or in which an application for issuance or registration
has been filed; and (B) the issuance, registration and application
numbers, and dates thereof.
(ii) Section 3.15(a)(ii) of the AH Disclosure Schedule sets
forth all material licenses, material sublicenses, and other material
agreements or permissions ("IP Licenses") pursuant to which AH or any
of its Subsidiaries is a licensor or licensee of or otherwise is
authorized to use or practice under any third party rights in any
Intellectual Property (as defined below) on an exclusive basis and any
non-exclusive IP License that, to the knowledge of AH, is not
available to parties other than AH or any of its Subsidiaries on
comparable commercial terms to which it is licensed to AH or such
Subsidiary. To the knowledge of AH, all such IP Licenses are valid,
enforceable and in full force and effect in accordance with their
respective terms, and, to the knowledge of AH, there exists no event
or condition which will result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a
default by AH or any of its Subsidiaries (or, to the knowledge of AH,
any other party thereto) under any IP License. For purposes of this
Agreement, "Intellectual Property" means all of the following as they
exist in all jurisdictions throughout the world, in each case, to the
extent owned by, licensed to, or otherwise used by AH or any of its
Subsidiaries: (A) patents, patent applications, invention
disclosures, and other patent rights (including any divisions,
continuations, continuations-in-part, substitutions, or reissues
thereof, whether or not patents are issued on any such applications
and whether or not any such applications are modified, withdrawn, or
resubmitted); (B) registered and unregistered trademarks, service
marks, slogans, trade dress, trade names, brand names, Internet domain
names, designs, logos, or corporate names; (C) registered or
unregistered copyrights, including all renewals and extensions
thereof; (D) trade secrets, concepts, ideas, designs, research,
processes, procedures, techniques, methods, know-how, data, mask
works, discoveries, inventions, modifications, extensions,
improvements, and other proprietary rights (whether or not patentable
or subject to copyright, mask work, or trade secret protection), and
technical manuals and documentation with respect to any of the
foregoing (collectively, the "Technology"); and (E) computer software
programs and databases, including all source code, object code, and
documentation related thereto (the "Software"). References in this
Agreement to "Owned Intellectual Property," "Owned Software" and
"Owned Technology" shall refer to Intellectual Property, Software or
Technology, as applicable, owned by, or exclusively licensed to, AH or
any of its Subsidiaries. References to "Leased Intellectual Property"
shall refer to Intellectual Property non-exclusively licensed to, or
otherwise used by, AH or any of its Subsidiaries.
(b) AH and its Subsidiaries own or license, free and clear of
all Encumbrances, all Owned Intellectual Property and, to the knowledge of
AH, have valid rights to use all Licensed Intellectual Property used in or
necessary for the conduct of their respective businesses and operations as
currently conducted and as presently proposed to be conducted.
(c) All of the registrations and applications set forth in
Section 3.15(a)(i) of the AH Disclosure Schedule are, to the knowledge of
AH, in good standing and are valid and enforceable. No such registrations
or applications are subject to any pending or, to the knowledge of AH,
threatened opposition, cancellation, interference or similar adversarial
proceedings before any registration authority, and either AH or one of its
Subsidiaries is the record owner of each such registration and application.
(d) None of AH or any of its Subsidiaries has been, during the
three years preceding the date of this Agreement, a party to any Claim,
nor, to the knowledge of AH, is any Claim threatened against AH or any of
its Subsidiaries, that challenges the validity, enforceability, ownership,
or right to use, sell, or license any Intellectual Property, which Claims,
if adversely determined, could reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect on AH. To the knowledge
of AH, no third party is infringing upon or diluting any Owned Intellectual
Property material to AH and its Subsidiaries' respective businesses and
operations.
(e) There are no settlement agreements to which AH or any of its
Subsidiaries is a party, consents to which AH or any of its Subsidiaries
are subject, judgments against AH or any of its Subsidiaries, orders to
which AH or any of its Subsidiaries are subject, forebearances to xxx or
similar obligations with respect to AH or any of its Subsidiaries, in each
case, which restrict in any material respect AH's and its Subsidiaries'
rights to (i) use, sell or license any Owned Intellectual Property or (ii)
conduct its business in order to accommodate a third party's Intellectual
Property rights.
(f) AH has taken commercially reasonable actions (which the
parties expressly agree may include treating such Owned Intellectual
Property as trade secrets, without seeking any trademark or copyright
registrations or applications or patent protection) to maintain and protect
each item of Owned Intellectual Property that is material to AH's or any of
its Subsidiaries' businesses and operations and, except as set forth in
Section 3.15(f) of the AH Disclosure Schedule, has obtained customary
confidentiality agreements in respect of such Owned Intellectual Property
from each employee or consultant of AH or any of its Subsidiaries.
(g) AH has taken commercially reasonable precautions (which the
parties expressly agree may include treating such Owned Technology as trade
secrets, without seeking any trademark or copyright registrations or
applications or patent protection) to protect the secrecy, confidentiality,
and value of its and its Subsidiaries' trade secrets and the proprietary
nature and value of the Owned Technology material to its or any of its
Subsidiaries' respective businesses and operations.
(h) Except as set forth in Section 3.15(h) of the AH Disclosure
Schedule, to the knowledge of AH, all Owned Software that is currently used
by AH and its Subsidiaries that is material to AH or any of its
Subsidiaries' businesses and operations performs or is reasonably expected
to perform in all material respects the functions for which such Owned
Software is used by AH or such Subsidiary.
(i) To the knowledge of AH, none of the Software, hardware
(whether general or special purpose), embedded control systems and other
similar or related items of automated, computerized, and/or software
system(s) that are used or relied on by AH and its Subsidiaries in the
conduct of their businesses (collectively, the "Systems") will malfunction,
will cease to function, will generate incorrect data, and will provide
incorrect results when processing, calculating, comparing, sequencing,
displaying, storing, providing, and/or receiving (i) date-related data into
and between the twentieth and twenty-first centuries, and (ii) date-related
data in connection with any valid date in the twentieth and twenty-first
centuries, except as could not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect on AH.
(j) None of AH or any of its Subsidiaries is, nor, as a result
of the execution and delivery of this Agreement or the performance of its
obligations under this Agreement, will be, in material violation of any
agreement relating to any Owned Intellectual Property or, to the knowledge
of AH, any Licensed Intellectual Property, in each case, material to their
respective business and operations. After the completion of the
transactions contemplated by this Agreement, AH and its Subsidiaries will
continue to own all right, title, and interest in and to or have a license
to use all Owned Intellectual Property (including all Owned Software) and,
to the knowledge of AH, all Licensed Intellectual Property, in each case,
material to their respective businesses and operations on terms and
conditions identical in all material respects to those enjoyed by them
immediately prior to such transactions.
Section 3.16 Non-Competition Agreements. Except as set forth in
Section 3.16 of the AH Disclosure Schedule, neither AH nor any of its
Subsidiaries is a party to any agreement which purports to restrict or
prohibit in any material respect AH and its Subsidiaries collectively from,
directly or indirectly, engaging in any business. None of the officers,
members or key employees of AH or any of its Subsidiaries is a party to any
agreement which, by virtue of such person's relationship with AH or any of
its Subsidiaries, restricts in any material respect AH or any of its
Subsidiaries or any affiliate of any of them from, directly or indirectly,
engaging in any business.
Section 3.17 Certain Agreements. Except as set forth in
Section 3.17 of the AH Disclosure Schedule, neither AH nor any of its
Subsidiaries is a party to any oral or written (i) agreement with any
executive officer or other key employee of AH or its Subsidiaries the
benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving AH of the nature
contemplated by this Agreement, or (ii) plan, including any option plan or
other benefits plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or the value of any
of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement.
Section 3.18 Real Property. Neither AH nor any of its
Subsidiaries owns any fee interest in real estate. Except as set forth in
Section 3.18 of the AH Disclosure Schedule, none of AH or any of its
Subsidiaries is a party to any material leases, subleases and other
agreement (the "AH Real Property Leases") under which AH or any of it
Subsidiaries uses or occupies or has the right to use or occupy, now or in
the future, any real property. AH has heretofore made available to KT
true, correct and complete copies of all written, and true, complete and
correct written summaries of all oral, AH Real Property Leases (and all
modifications, amendments and supplements thereto and all side letters to
which AH or any of its Subsidiaries is a party affecting the obligations of
any party thereunder). Assuming the due authorization, execution and
delivery by the other parties thereto, each AH Real Property Lease
constitutes the valid and legally binding obligation of AH or the relevant
Subsidiary, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to creditors' rights generally or to general
principles of equity, and is in full force and effect. All material
amounts payable by AH and its Subsidiaries as tenants under each AH Real
Property Lease are current, and no termination event or condition or
uncured default of a material nature on the part of AH or any of its
Subsidiaries exists under any AH Real Property Lease. To the knowledge of
AH, the leasehold interests of AH and its Subsidiaries in each parcel of
real property leased by them are held free and clear of all Encumbrances,
except (i) Taxes and general and special assessments not in default and
payable without penalty and interest, (ii) Encumbrances under applicable
Law and (iii) other Encumbrances which do not materially interfere with
AH's or any of its Subsidiaries' use and enjoyment of such real property or
materially detract from or diminish the value thereof.
Section 3.19 Investment Company Act. Each of AH and its
Subsidiaries either (i) is not an "investment company," or a company
"controlled" by, or an "affiliated company" with respect to, an "investment
company," each within the meaning of the Investment Company Act (as
hereinafter defined) or (ii) satisfies all conditions for an exemption from
the Investment Company Act, and, accordingly, neither AH nor any of its
Subsidiaries is required to be registered under the Investment Company Act.
Section 3.20 Brokers. Except as set forth in Section 3.20 of
the AH Disclosure Schedule, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the Mergers or the other transactions contemplated by this
Agreement based upon arrangements made by or on behalf of AH or any of the
Members. Prior to the date of this Agreement, AH has made available to KT
a complete and correct copy of all agreements between AH or any of the
Members and any advisor under which such advisor would be entitled to any
payment relating to the Mergers or any other transactions hereunder.
Section 3.21 Certain Representations and Warranties as to
Private Funds.
(a) True, correct and complete copies of all of the current
investment advisory agreements and distribution or underwriting contracts,
administrative services and other services agreements, if any, and
organizational and offering documents, pertaining to each of the Private
Funds (i) have been made available to KT and (ii) are in full force and
effect. Such offering materials did not, at the respective dates thereof,
or at any time at which such materials were distributed or made available
to investors or prospective investors, 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. Except for the
Private Funds, neither AH nor any of its Subsidiaries is affiliated with,
or otherwise provides investment advisory or other Investment Management
Services to, any person.
(b) Each of the Private Funds is duly organized, validly
existing and in good standing in the jurisdiction in which it is organized
and has all requisite power and authority to conduct its business in the
manner and in the places where such business is currently conducted. Each
Private Fund is and, since its inception, has been engaged solely in the
business of investing and reinvesting in securities and, in the case of the
Investment Funds, in the manner described in its offering documents. Each
Private Fund is and, since its inception, has been in compliance in all
material respects with all Investment Laws and Regulations (as defined
below) to the extent such laws and regulations are applicable to such
Private Fund.
(c) Each of the Private Funds has timely filed all Tax Returns
(the "Private Fund Tax Returns") required to be filed by it and all such
Private Fund Tax Returns are true, complete and correct. All Taxes owed by
the Private Funds or claimed to be owed by the Private Funds by any
Governmental Entity for any taxable period (whether or not shown on any
Private Fund Tax Return) have been timely paid in full or are being
contested in good faith by appropriate proceedings. With respect to each
Private Fund, there are no liabilities for Taxes which have not been paid
in prior periods or for which an adequate reserve for such liability does
not exist. To the knowledge of AH, no deficiencies for any Taxes have been
threatened, proposed, asserted or assessed against any of the Private Funds
and no Governmental Entity is conducting or proposing to conduct an audit
with respect to Taxes of or any Private Fund Tax Return required to be
filed with respect to any Private Fund.
(d) AH has made available to KT true, correct and complete
copies of the (i) unaudited financial statements of each of the Non-
Investment Funds (the "Non-Investment Fund Financial Statements") and (ii)
audited financial statements for each of the Investment Funds (the
"Investment Fund Financial Statements," and, together with the Non-
Investment Fund Financial Statements, the "Private Fund Financial
Statements"), in each case, for the current and the past three fiscal years
or such shorter period since inception. Each of the Investment Fund
Financial Statements (including all notes and schedules contained therein
or annexed thereto) has been prepared in accordance with GAAP consistently
applied with past practices, and each of the Non-Investment Fund Financial
Statements (including all notes and schedules contained therein or annexed
thereto) has been prepared on a basis consistent with the accounting
principles used in the preparation of the Investment Fund Financial
Statements. Each of the Private Fund Financial Statements (including all
notes and schedules contained therein or annexed thereto) is consistent
with the books and records of the applicable Private Fund, and fairly
presents the assets, liabilities and financial condition, the results of
operations and cash flows of the applicable Private Fund as of the dates
and for the years and periods indicated. The Private Fund Financial
Statements reflect and disclose all material changes in accounting
principles and practices adopted by the applicable Private Fund during the
periods covered by each Private Fund Financial Statement. The books of
account of each of the Private Funds fairly reflect their respective
transactions.
(e) There are no consent judgments or regulatory orders on, or
with regard to, any of the Private Funds. Since inception, each of the
Private Funds has been excluded from the definition of an investment
company under the Investment Company Act by virtue of the respective
exemptions thereto set forth in Section 3.21(e) of the AH Disclosure
Schedule and, except as could not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect on AH, has been duly
registered and in good standing under the Laws of each jurisdiction in
which such qualification is necessary.
(f) All interests of each of the Private Funds were sold
pursuant to a valid and effective exemption from registration under
applicable Investment Laws and Regulations, including, without limitation,
the Securities Act of 1933, as amended (the "Securities Act") and the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and have
been duly authorized and are validly issued. Each of the Private Funds'
investments have been made in accordance with its respective investment
policies and restrictions in effect at the time the investments were made
and have been held in accordance with its respective investment policies
and restrictions, to the extent applicable and in effect at the time such
investments were held.
(g) There is no litigation or legal action, suit, proceeding or
investigation at law or in equity pending or, to the knowledge of AH,
threatened in any court or before or by any Governmental Entity by or
against any arbitrator, by or against any of the Private Funds. There are
no judgments, injunctions, orders or other judicial or administrative
mandates outstanding against or affecting any of the Private Funds.
(h) For the purposes of this Agreement:
"Advisers Act" shall mean the Investment Advisers Act of 1940, as
the same may be amended from time to time, and any successor to such act.
"Commodity Exchange Act" shall mean the Commodity Exchange Act, 7
U.S.C. section1 et. seq., as the same may be amended from time to time, and
any successor to such act.
"Investment Company Act" shall mean the Investment Company Act of
1940, as the same may be amended from time to time, and any successor to
such act.
"Investment Funds" shall mean Deephaven Market Neutral Fund
Limited and Deephaven Opportunity Fund Limited, each a British Virgin
Islands corporation; Deephaven Opportunity Fund LLC and Deephaven Incentive
Fund LLC, each a Delaware limited liability company; and Deephaven Market
Neutral Master Fund LP, a British Virgin Island limited partnership.
"Investment Laws and Regulations" shall mean all Laws, domestic
or foreign, applicable to the Investment Management Services business
including, without limitation: (i) the Advisers Act, the Investment Company
Act, the Exchange Act, ERISA, the Commodity Exchange Act and the Securities
Act and the regulations promulgated under each of them; (ii) the bylaws,
rules and regulations of applicable Self-Regulatory Authorities (as
hereinafter defined in Section 3.23) and each applicable securities and
commodities exchange on which AH or any of its affiliates is a member or on
which any transactions for any account is effected for any of them; and
(iii) all other foreign, federal or state securities laws and regulations
applicable to the Investment Management Services business, affairs,
properties or assets of AH and its Subsidiaries or any of the Private
Funds.
"Investment Management Services" shall mean any services which
involve (a) the management of an investment account or fund (or portions
thereof or a group of investment accounts or funds), or (b) the giving of
advice for compensation with respect to the investment and/or reinvestment
of assets or funds (or any group of assets or funds).
"Non-Investment Funds" means Private Funds which are not
Investment Funds.
"Private Funds" means Deephaven Market Neutral Fund Limited,
Deephaven Opportunity Fund Limited, Deephaven Market Neutral Trading
Limited, Deephaven Domestic Convertible Trading Ltd., Deephaven
International Convertible Trading Ltd., Deephaven Fixed Income Trading
Ltd., Deephaven Private Placement Trading Ltd., Deephaven Statistical Arb
Trading Ltd., and Deephaven Risk Arb Trading Ltd., each a British Virgin
Islands corporation; Deephaven Opportunity Fund LLC and Deephaven Incentive
Fund LLC, each a Delaware limited liability company; Deephaven Market
Neutral Master Fund LP and Deephaven Opportunity Trading Fund LP, each a
British Virgin Island limited partnership; KA Investments LDC, a Cayman
Islands limited duration corporation; and Deephaven Market Neutral Trading
LP, an Illinois limited partnership.
Section 3.22 Compliance with Law.
(a) AH and all of its Subsidiaries and the Private Funds have
complied with all Laws, and are not in default with respect to any order,
writ, judgment, award, injunction or decree of any Governmental Entity,
applicable to them or to their respective businesses or any of their
respective assets, properties or operations, except such failures to comply
or defaults as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on AH.
(b) Neither AH nor any of its Subsidiaries acts as investment
advisor for any registered investment company.
(c) Each of AH and its Subsidiaries and the Private Funds, if so
required by the nature of its business or assets, is duly registered with
the SEC and any applicable Governmental Entities and Self Regulatory
Authorities as a broker-dealer and/or an exchange member. Each of AH and
its Subsidiaries and the Private Funds have made available to KT true,
complete and correct copies of their respective Form BD and such other
regulatory filings as may be required by any Governmental Entity (the
"Regulatory Filings"). As of its respective filing date, each Regulatory
Filing complied as to form and substance in all material respects with the
applicable Law requiring such Regulatory Filing to be filed and each
Regulatory Filing complied in all material respects with applicable
regulatory requirements and accounting principles applicable to such
Regulatory Filing. Each such Regulatory Filing contained all material
information required to be included therein and did not omit any material
information so required in order that such Regulatory Filing be true,
complete and correct in all material respects.
(d) AH has made available to KT (i) copies of all Regulatory
Filings made since January 1, 1997, (ii) copies of all inspection reports
provided to AH or any of its Subsidiaries or any Private Fund by the SEC or
any state securities regulatory authority or any self regulatory
organization and all written responses thereto since January 1, 1997, (iii)
all correspondence, memoranda or other documentation received by AH or any
of its Subsidiaries or any Private Fund from the SEC or any state
securities regulatory authority or any self regulatory organization since
January 1, 1997, and (iv) copies of all correspondence relating to any
inquiry or investigation by any foreign Governmental Entity or self
regulatory authority or to any customer complaint provided to AH or any of
its Subsidiaries or any Private Fund since January 1, 1997.
(e) Except as set forth in Section 3.22(e) of the AH Disclosure
Schedule, neither AH nor any of its Subsidiaries or any Private Fund is
required by the nature of its business or assets to register (i) with the
Commodity Futures Trading Commission and the various states as required as
a commodities trading advisor or commodity pool operator or futures
commission merchant or (ii) with the SEC or any applicable Governmental
Entities or Self Regulatory Authorities as an investment advisor.
Section 3.23 Agreements with Regulatory Agencies. Neither AH
nor any of its Subsidiaries or any Private Fund is subject to any cease-
and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a
party to any commitment letter or similar undertaking to, or is subject to
any order or directive by, or is a recipient of any supervisory letter from
or has adopted any resolutions at the request of any Self Regulatory
Authority (as defined below) or Governmental Entity that restricts the
conduct of its business or that in any manner relates to its capital
adequacy, its credit policies, its management or its business (each, a
"Regulatory Agreement"), nor has AH or any of its Subsidiaries or any
Private Fund: (i) been advised by any Self Regulatory Authority or
Governmental Entity that it is considering issuing or requesting any such
Regulatory Agreement, or (ii) to the knowledge of AH, received knowledge or
notice of any pending or threatened regulatory investigation, except any
such cease-and-desist or other orders, restrictions, Regulatory Agreements
or regulatory investigations as could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on AH.
"Self Regulatory Authority" shall mean any securities exchange or other
self regulatory organization in the securities, investment and commodities
fields.
Section 3.24 Investment Securities. Except as set forth in
Section 3.24 of the AH Disclosure Schedule, each of AH and its Subsidiaries
and the Private Funds has good and marketable title to all securities held
by it (except securities sold under repurchase agreements or held in any
fiduciary or agency capacity), free and clear of any Encumbrance, except to
the extent such securities are pledged in the ordinary course of business
consistent with reasonable past business practices to secure obligations of
AH or its Subsidiaries or the Private Funds.
Section 3.25 Interest Rate Risk Management Instruments. All of
AH's and its Subsidiaries' and the Private Funds' interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements (other than bank repurchase agreements with a duration of
fewer than thirty (30) days), whether entered into for the account of AH or
any of its Subsidiaries or any of the Private Funds or for the account of a
customer of any such entity, were entered into in the usual and ordinary
course of business and in accordance, in all material respects, with
prudent business practice and applicable rules, regulations and policies of
any Self Regulatory Authority and, to the knowledge of AH, with
counterparties believed to be financially responsible at the time.
Section 3.26 Pooling.
(a) AH and the Members intend that the Mergers be accounted for
under the "pooling-of-interests" method under the requirements of Opinion
No. 16 (Business Combinations) of the Accounting Principles Board of the
American Institute of Certified Public Accountants, the Financial
Accounting Standards Board, and the rules and regulations of the SEC.
(b) None of AH, the Members or any of their affiliates has taken
or failed to take or agreed to take or fail to take any action or is aware
of any fact or circumstance that would prevent the Mergers from qualifying
for "pooling-of-interests" accounting treatment as described in Section
3.26(a) above.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF KT
Except as set forth in the disclosure schedule delivered by KT
prior to the execution of this Agreement (the "KT Disclosure Schedule")
making reference to the particular section or subsection of this Agreement
to which an exception is being taken, KT hereby represents and warrants to
AH, as of the date hereof and as of the KT Closing Date, as follows:
Section 4.1 Organization, Qualification, Etc. Each of KT,
Parent, SubKT, SubAH and each Significant Subsidiary (as defined below) is
a corporation or limited liability company duly organized, validly existing
and in good standing (or other equivalent status) under the laws of the
jurisdiction of its incorporation or organization and has the corporate or
limited liability company power and authority to own, operate and lease all
of its properties and assets and to carry on its business as it is now
being conducted or presently proposed to be conducted and is duly qualified
to do business and is in good standing (or other equivalent status) in each
jurisdiction in which the ownership, operation or leasing of its properties
or assets or the conduct of its business requires such qualification,
except for jurisdictions in which the failure to be so qualified or in good
standing (or other equivalent status) could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on KT
and its Subsidiaries, taken as a whole. As used in this Agreement, any
reference to any state of facts, event, change or effect having a "Material
Adverse Effect" on or with respect to KT, means such state of facts, event,
change or effect that, individually or in the aggregate, has had or could
reasonably be expected to have a material adverse effect on the business,
assets, results of operations or condition (financial or otherwise) of KT
and its Subsidiaries, taken as a whole (except for any state of facts,
event, change or effect (i) relating to general economic conditions in the
geographic areas in which KT and its Subsidiaries operate or invest or
(ii) similarly affecting other persons in the industries in which KT and
its Subsidiaries operate), or that could reasonably be expected to
materially impair the ability of KT to perform its obligations under this
Agreement or consummate the Mergers or the other transactions contemplated
hereby. For purposes of this Agreement, "Significant Subsidiary" shall
mean any Subsidiary of KT which is a "significant subsidiary" of KT (as
such term is defined in Rule 1-02 of Regulation S-X under the Securities
Act).
Section 4.2 Capital Stock.
(a) Section 4.2(a) of the KT Disclosure Schedule sets forth as
of November 12, 1999:
(i) the number of authorized shares of each class or series
of capital stock of KT;
(ii) the number of shares of each class or series of capital
stock of KT which are issued and outstanding;
(iii) the number of shares of each class or series of
capital stock which are held in the treasury of KT;
(iv) the number of shares of each class or series of capital
stock of KT which are reserved for issuance, indicating each specific
reservation; and
(v) the number of shares of each class or series of capital
stock of KT which are subject to employee stock options or other
rights to purchase or receive capital stock granted under KT's stock
option or other stock based employee or non-employee director benefit
plans.
(b) All of the issued and outstanding shares of capital stock of
KT have been validly issued and are fully paid and nonassessable. Except
as set forth in Section 4.2(a) of the KT Disclosure Schedule, there are no
authorized, issued, reserved for issuance or outstanding (i) shares of
capital stock or voting securities of KT, (ii) securities convertible into
or exchangeable for shares of capital stock or voting securities of KT,
(iii) warrants, calls, options or other rights to acquire from KT or any of
its Subsidiaries, or any obligation of KT or any of its Subsidiaries to
issue, any shares of capital stock or voting securities or securities
convertible into or exchangeable or exercisable for capital stock or voting
securities of KT, and (iv) there are no outstanding obligations of KT to
repurchase, redeem or otherwise acquire any such securities or to issue,
deliver or sell, or cause to be issued, delivered or sold, any such
securities.
(c) All of the issued and outstanding shares of capital stock
of, or other voting securities or ownership interests in, each Significant
Subsidiary have been validly issued and are fully paid and nonassessable
and are owned of record and beneficially by KT, directly or indirectly.
There are no (i) securities of KT or any Significant Subsidiary convertible
into or exchangeable or exercisable for shares of capital stock or other
voting securities or ownership interests in any Significant Subsidiary,
(ii) warrants, calls, options or other rights to acquire from KT or any
Significant Subsidiary, or any obligations of KT or any of Significant
Subsidiary to issue, any capital stock, voting securities or other
ownership interests in, or any securities convertible into or exchangeable
or exercisable for, any capital stock, voting securities or ownership
interests in, any Significant Subsidiary, or (iii) obligations of KT or any
Significant Subsidiary to repurchase, redeem or otherwise acquire any
outstanding securities of any Significant Subsidiary or to issue, deliver
or sell, or cause to be issued, delivered or sold, any such securities.
(d) All of the issued and outstanding shares of capital stock
of, or other voting securities or ownership interests in, each of SubKT and
SubAH have been validly issued and are fully paid and nonassessable and are
owned of record and beneficially by Parent. All of the outstanding shares
of capital stock of Parent have been validly issued and are fully paid and
nonassessable and are owned of record and beneficially by KT. All shares
of Parent Common Stock to be issued as part of the Merger Consideration,
when issued in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable.
Section 4.3 Corporate Authority Relative to this Agreement.
Each of KT and Parent has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of KT and no other corporate proceedings on the part
of KT are necessary to authorize this Agreement or the consummation of the
transactions contemplated hereby. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors and
the sole stockholder of Parent and no other corporate proceedings on the
part of Parent are necessary to authorize this Agreement or the
consummation of the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by KT and Parent and, assuming
this Agreement constitutes a valid and binding agreement of the other
parties hereto, this Agreement constitutes a valid and binding agreement of
KT and Parent, enforceable against KT and Parent in accordance with its
terms (except insofar as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally or by principles governing the
availability of equitable remedies).
Section 4.4 Non-Contravention; Consents and Approvals.
(a) None of the execution, delivery or performance of this
Agreement by KT or the consummation by KT of the transactions contemplated
hereby will (i) violate the certificate of incorporation, the bylaws or
other similar governing documents of KT or any of its Subsidiaries, (ii)
except for all third party consents and approvals required to be obtained
under any note, bond, mortgage, deed of trust, security interest,
indenture, lease, license, contract, agreement, plan or other instrument or
obligation to which KT or any of its Subsidiaries is a party or by which
any of them or any of their properties or assets may be bound (the "KT
Agreements") prior to the consummation of the transactions contemplated by
this Agreement the failure of which to obtain could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on KT
(the "KT Required Third Party Consents"), result in the violation or breach
of or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, vesting,
payment, exercise, acceleration, suspension or revocation) under any of the
provisions of any KT Agreement, (iii) except for all notices to, filings
and registrations with, and permits, authorizations, consents and approvals
of, Governmental Entities required to be made or obtained from Governmental
Entities prior to the consummation of the transactions contemplated by this
Agreement the failure of which to obtain could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on KT
(the "KT Required Statutory Approvals"), violate any Law of any
Governmental Entity applicable to KT or any of its Subsidiaries or any of
their respective property or assets, or (iv) result in the creation or
imposition of any Encumbrance on any asset of KT or any of its
Subsidiaries, except in the case of clauses (ii), (iii) and (iv) for
violations, breaches, defaults, terminations, cancellations, accelerations
or creations which could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on KT.
(b) Section 4.4(b)(i) of the KT Disclosure Schedule sets forth a
list of all KT Required Third Party Consents. Section 4.4(b)(ii) of the KT
Disclosure Schedule sets forth a list of all KT Required Statutory
Approvals.
(c) None of the execution, delivery or performance of this
Agreement by Parent or the consummation by Parent of the transactions
contemplated hereby will violate the certificate of incorporation or the
bylaws of Parent.
Section 4.5 Reports and Financial Statements. KT has made
available to AH complete and correct copies of:
(a) KT's Annual Report on Form 10-K filed with the SEC for the
year ended December 31, 1998;
(b) KT's Quarterly Reports on Form 10-Q filed with the SEC for
each of the fiscal quarters ended following KT's last fiscal year end;
(c) each definitive proxy statement filed by KT with the SEC;
and
(d) all Current Reports on Form 8-K filed by KT with the SEC
since January 1, 1999.
As of their respective dates, such reports and proxy statements
(collectively, with any amendments, supplements and schedules thereto, the
"SEC Reports") (i) complied as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act, and the
rules and regulations promulgated thereunder, and (ii) 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.
Except to the extent that information contained in any SEC Report of KT has
been revised or superseded by an SEC Report subsequently filed by KT, none
of the SEC Reports contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The audited consolidated
financial statements and unaudited consolidated interim financial
statements included in the SEC Reports (including all notes and schedules
contained therein or annexed thereto) have been prepared in accordance with
GAAP consistently applied with past practices, are consistent with the
books and records of KT and its Subsidiaries, and fairly present in all
material respects the assets, liabilities and financial condition, the
results of operations and cash flows of KT as of the dates and for the
years and periods indicated. KT has timely filed all reports, registration
statements and other filings required to be filed by it with the SEC under
the rules and regulations of the SEC.
Section 4.6 No Prior Activities. Parent, SubKT and SubAH were
each formed for the purpose of engaging in the transactions contemplated by
this Agreement, and, to the knowledge of KT, none of them has any
Subsidiaries or has undertaken any business or other activities other than
in connection with entering into this Agreement and engaging in the
transactions contemplated hereby.
Section 4.7 Brokers. Except as set forth in Section 4.7 of the
KT Disclosure Schedule, no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with
the Mergers or the other transactions contemplated by this Agreement based
upon arrangements made by or on behalf of KT.
Section 4.8 Absence of Certain Changes or Events. Since
September 30, 1999 and through the date hereof, there has not occurred any
event, development or change which could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on KT.
Section 4.9 Pooling.
(a) KT intends that the Mergers be accounted for as a "pooling-
of-interests" as described in Section 3.26(a).
(b) Neither KT nor any of its affiliates has taken or failed to
take or agreed to take or fail to take any action or is aware of any fact
or circumstance that would prevent the Mergers from qualifying for
"pooling-of-interests" accounting treatment as described in Section
3.26(a).
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of Business Pending the Effective Time.
(A) Except as set forth in Section 5.1(A) of the AH Disclosure
Schedule, from and after the date hereof and prior to the Effective Time or
the date, if any, on which this Agreement is earlier terminated pursuant to
Section 7.1 (the "Termination Date"), and except as may be agreed in
writing by KT or as may be expressly provided for or permitted pursuant to
this Agreement:
(a) AH shall, and shall cause each of its Subsidiaries and each
of the Private Funds to, conduct its business in the ordinary course of
business consistent with past practice;
(b) AH shall use its reasonable best efforts, and shall cause
each of its Subsidiaries to use its reasonable best efforts, to preserve
intact its business organizations and goodwill, keep available the services
of its current officers and other key employees and preserve its
relationships with those persons having business dealings with it
(including its relationships with customers, suppliers, employees and
business partners);
(c) AH shall confer at such times as KT may reasonably request
with one or more representatives of KT to report material operational
matters and the general status of ongoing operations (to the extent KT
reasonably requires such information);
(d) AH shall notify KT of any emergency or other change in the
normal course of its, its Subsidiaries' or any of the Private Funds'
respective businesses or in the operation of its, its Subsidiaries, or any
of the Private Funds' respective properties and of any complaints or
hearings (or communications indicating that the same may be contemplated)
of any Governmental Entity;
(e) AH shall not, and shall not permit any of its Subsidiaries
to, split, combine or reclassify any of its shares of capital stock or
other equity securities or interests;
(f) AH shall not, and shall not permit any of its Subsidiaries
to, except (i) in the ordinary course of business consistent with past
practice, (ii) as otherwise provided in this Agreement, or (iii) as
required by applicable Law, adopt or amend any Employee Benefit Plan;
(g) AH shall not, and shall not permit any of its Subsidiaries
or any of the Private Funds to, authorize, propose or announce an intention
to authorize or propose, or enter into an agreement with respect to, any
acquisition of a material amount of assets or securities, any disposition
of a material amount of assets or securities or any release or
relinquishment of any material contract rights, other than securities
acquired or disposed of in connection with trading activities or
investments in capital market securities, in each case, in the ordinary
course of business consistent with past practice;
(h) AH shall not, and shall not permit its Subsidiaries or any
of the Private Funds to, propose or adopt any amendments to their
respective certificates of incorporation, bylaws or other similar governing
documents;
(i) AH shall not, and shall not permit any of its Subsidiaries
to, issue or authorize the issuance of, or agree to issue or sell any
shares of their capital stock of any class or other equity securities or
interests (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase, or otherwise);
(j) AH shall not, and shall not permit any of its Subsidiaries
or any of the Private Funds to, purchase, or redeem any shares of its stock
or other equity securities or interests or any rights, warrants or options
to acquire any such shares, securities or interests, except for redemptions
of interests in any of the Private Funds in the ordinary course of business
and in accordance with the terms of their respective governing instruments
as in effect on the date hereof;
(k) AH shall not, and shall not permit any of its Subsidiaries
or any of the Private Funds to, incur, assume or prepay any indebtedness or
any other material liabilities;
(l) AH shall not, and shall not permit any of its Subsidiaries
or any of the Private Funds to, sell, lease, license, mortgage or otherwise
encumber or subject to any Encumbrance or otherwise dispose of any of its
properties or assets (including securitization), other than in the ordinary
course of business consistent with past practice;
(m) AH shall not, and shall not permit any of its Subsidiaries
or any of the Private Funds to, take any action or fail to take any action,
which action or failure could reasonably be expected to cause the Mergers
not to constitute transactions described in Section 351 or, in the case of
the KT Merger, Section 368(a) of the Code;
(n) AH shall not, and shall not permit any of its Subsidiaries
or any of the Private Funds to, make any material Tax election, file any
amended Tax Return or settle or compromise any material Tax liability;
(o) AH shall not, and shall not permit any of it Subsidiaries or
any of the Private Funds to, waive, release, assign, settle or compromise
any material claims or litigation;
(p) AH shall not, and shall not permit any of its Subsidiaries
or any of the Private Funds to, take any action or fail to take any action,
which action or failure could reasonably be expected to prevent accounting
for the Mergers in accordance with the "pooling-of-interests" method of
accounting as described in Section 3.26(a); and
(q) AH shall not, and shall not permit any of its Subsidiaries
or any of the Private Funds to, and the Members shall not, agree, in
writing or otherwise, to take any of the foregoing actions or take any
action which would (i) make any representation or warranty made by AH or
any of the Members in Article III hereof untrue or incorrect or (ii) result
in any of the conditions to the Mergers set forth in Article VI not being
satisfied.
(B) Except as set forth in Section 5.1(B) of the KT Disclosure
Schedule, from and after the date hereof and prior to the Effective Time or
the Termination Date, and except as may be agreed in writing by AH or as
may be expressly provided for or permitted pursuant to this Agreement:
(a) KT shall not, and shall not permit any of its Subsidiaries
to, take any action or fail to take any action, which action or failure
could reasonably be expected to cause the Mergers not to constitute
transactions described in Section 351 or, in the case of the KT Merger,
Section 368(a) of the Code;
(b) KT shall not, and shall not permit any of its Subsidiaries
to, take any action or fail to take any action, which action or failure
could reasonably be expected to prevent accounting for the Mergers in
accordance with the "pooling-of-interests" method of accounting as
described in Section 3.26(a);
(c) KT shall not, and shall not permit any of its Subsidiaries
to, make any sale, transfer or disposition of material assets, securities
or businesses (whether by merger, consolidation or otherwise) or enter into
an agreement to acquire material assets of, or enter into a material joint
venture with, another person, in each case, that would cause a material
delay in the completion of the transactions contemplated by this Agreement;
and
(d) KT shall not, and shall not permit any of its Subsidiaries
to, agree, in writing or otherwise, to take any of the foregoing actions or
take any action which would (i) make any representation or warranty made by
KT in Article IV hereof untrue or incorrect or (ii) result in any of the
conditions to the Mergers set forth in Article VI not being satisfied.
Section 5.2 Investigation. Each of AH and KT shall (and shall
cause its respective Subsidiaries to) afford to one another and to one
another's officers, employees, accountants, counsel and other authorized
representatives full and complete access on reasonable prior notice during
normal business hours, throughout the period prior to the earlier of the
Effective Time or the Termination Date, to its and its Subsidiaries'
properties, contracts, commitments, books, and records (including but not
limited to Tax Returns) and any report, schedule or other document filed or
received by it or any of its Subsidiaries pursuant to the requirements of
federal or state securities laws or filed with or sent to the SEC, the
Department of Justice, the Federal Trade Commission or any other
Governmental Entity and shall use their reasonable best efforts to cause
their respective representatives and Subsidiaries to furnish promptly to
one another such additional financial and operating data and other
information as to its and its Subsidiaries' respective businesses and
properties as the other or its duly authorized representatives may from
time to time reasonably request; provided, that nothing herein shall
require either AH or KT or any of their respective Subsidiaries to disclose
any information to the other that would cause significant competitive harm
to such disclosing party or its affiliates if the transactions contemplated
by this Agreement are not consummated. The parties hereby agree that each
of them will treat any such information in accordance with the
Confidentiality Agreement, dated as of September 14, 1999, between AH and
KT (the "Confidentiality Agreement"). Notwithstanding any provision of
this Agreement to the contrary, no party shall be obligated to make any
disclosure in violation of applicable Laws.
Section 5.3 NASDAQ Filings and Other Cooperation.
(a) As promptly as reasonably practicable following the date of
this Agreement, KT shall prepare and file with the NMS application for
approval for quotation on the NMS of the shares of Parent Common Stock
issuable in the Mergers or upon exercise of KT stock options, warrants,
conversion rights or other rights or vesting or payment of other KT equity-
based awards, and use its reasonable best efforts to obtain, prior to the
KT Effective Time, approval for such quotation of such Parent Common Stock,
subject only to official notice of issuance.
(b) AH and its Subsidiaries shall promptly provide to KT and
Parent any information and materials (including audited and unaudited
financial statements) reasonably requested by KT or Parent.
(c) KT and AH shall cooperate with one another in order to lift
any injunctions or remove any other impediment to the consummation of the
transactions contemplated herein.
(d) Subject to the limitations contained in Section 5.2, AH and
KT shall each furnish to one another and to one another's counsel all such
information as may be required in order to effect the foregoing actions and
each represents and warrants to the other that no information furnished by
it in connection with such actions or otherwise in connection with the
consummation of the transactions contemplated by this Agreement will
contain any untrue statement of a material fact or omit to state a material
fact required to be stated in order to make any information so furnished,
in light of the circumstances under which it is so furnished, not
misleading.
(e) KT shall cause Parent, SubKT and SubAH to adopt this
Agreement and take all additional actions as may be necessary to cause
Parent, SubKT and SubAH to effect the transactions contemplated hereby.
Section 5.4 Affiliate Agreements. AH shall, as soon as
reasonably practicable, deliver to KT a list (reasonably satisfactory to
counsel for KT), setting forth the names and addresses of all persons who
as of the date hereof, to the knowledge of AH, may be deemed "affiliates"
(as hereinafter defined) of AH for purposes of Rule 145 under the
Securities Act or under applicable SEC accounting releases with respect to
pooling-of-interests accounting treatment. AH shall furnish such
information and documents as KT may reasonably request for the purpose of
reviewing such list. AH and the Members shall deliver to Parent a written
agreement on or prior to the twentieth day after the date of this
Agreement, in substantially the form of Exhibit D hereto (the "Affiliate
Letters"), executed by each person who is identified as an "affiliate" (as
hereinafter defined) in the list furnished pursuant to this Section 5.4 (an
"AH Affiliate").
Section 5.5 AH Employee Benefit Plans.
(a) Parent and its Subsidiaries and affiliates agree to honor in
accordance with their terms the Employee Benefit Plans or to provide
substantially similar rights and benefits under comparable plans of Parent
or any of its Subsidiaries.
(b) Parent shall take, and shall cause the Surviving LLC and its
Subsidiaries and all other affiliates of Parent to use their reasonable
best efforts to take, the following actions: (i) waive any limitations
regarding pre-existing conditions and eligibility waiting periods under any
welfare or other employee benefit plan maintained by any of them for the
benefit of employees of AH or any of its Subsidiaries immediately prior to
the Effective Time (the "AH Employees") or in which AH Employees
participate after the Effective Time except to the extent any such
limitations or waiting periods in effect under comparable Employee Benefit
Plans have not been satisfied as of the Effective Time, (ii) provide each
AH Employee with credit for any co-payments and deductibles paid prior to
the Effective Time for the calendar year in which the Effective Time
occurs, in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that such employees are eligible to
participate in after the Effective Time, and (iii) for all purposes (other
than for purposes of benefit accruals under any defined benefit pension
plan) under all compensation and benefit plans and policies applicable to
AH Employees, treat all service by AH Employees with AH or any of its
Subsidiaries or affiliates before the Effective Time as service with Parent
and its Subsidiaries and affiliates.
(c) From and after the Effective Time, Parent agrees that the AH
Employees will be eligible to participate in employee incentive or benefit
plans, programs or arrangements of Parent, including stock option plans, on
the same terms as other employees of Parent and its Subsidiaries.
Section 5.6 KT Employee Stock Options, Incentive and Benefit
Plans.
(a) Simultaneously with the KT Merger, (i) each outstanding
option ("KT Stock Options") to purchase or acquire a share of KT Class A
Common Stock under employee incentive or benefit plans, programs or
arrangements and non-employee director plans presently maintained by KT
("KT Option Plans") shall be converted into an option to purchase the
number of shares of Parent Common Stock equal to the number of shares of KT
Class A Common Stock which could have been obtained prior to the KT
Effective Time upon the exercise of each such option, at an exercise price
per share equal to the exercise price for each such share of KT Class A
Common Stock subject to an option under the KT Option Plans, and all
references in each such option to KT shall be deemed to refer to Parent,
where appropriate, and (ii) Parent shall assume the obligations of KT under
the KT Option Plans. The other terms of each such KT Stock Option, and the
plans under which they were issued, shall continue to apply in accordance
with their terms, including any provisions providing for acceleration of
vesting or payment.
(b) Simultaneously with the KT Merger, each outstanding award
including restricted stock and phantom stock or common stock equivalents
("KT Award") under any employee incentive or benefit plans, programs or
arrangements and non-employee director plans presently maintained by KT
which provide for grants of equity-based awards shall be amended or
converted into a similar instrument of Parent, in each case with such
adjustments to the terms of such KT Awards as are appropriate to preserve
the value inherent in such KT Awards with no detrimental effects on the
holders thereof. The other terms of each KT Award, and the plans or
agreements under which they were issued, shall continue to apply in
accordance with their terms, including any provisions providing for
acceleration of vesting or payment. With respect to any restricted stock
awards as to which the restrictions shall have lapsed on or prior to the KT
Effective Time in accordance with the terms of the applicable plans or
award agreements, shares of such previously restricted stock shall be
converted in accordance with the provisions of Section 2.1(b).
(c) KT agrees that each of its employee incentive or benefit
plans, programs and arrangements and non-employee director plans shall be
amended, to the extent necessary and appropriate, to reflect the
transactions contemplated by this Agreement, including, but not limited to
the conversion of shares of KT Class A Common Stock held or to be awarded
or paid pursuant to such benefit plans, programs or arrangements into
shares of Parent Common Stock on a basis consistent with the transactions
contemplated by this Agreement. At or prior to the KT Effective Time,
Parent shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of Parent Common Stock for delivery upon
exercise of the KT Stock Options. As soon as practicable after the KT
Effective Time, Parent shall either (i) file one or more registration
statements on Form X-0, Xxxx X-0 or Form S-8, as the case may be (or any
successor or other appropriate forms), or (ii) take such action as is
required under Rule 414 under the Securities Act (or any successor
provision) to permit Parent to succeed to the existing registration
statement on Form S-8 of KT, in each case, with respect to the Parent
Common Stock subject to such KT Stock Options, and shall maintain the
effectiveness of such registration statements and the current status of the
prospectus or prospectuses contained therein, for so long as such KT Stock
Options remain outstanding.
Section 5.7 Filings; Other Action. Subject to the terms and
conditions herein provided, AH and KT shall (a) promptly make all filings
necessary in connection with the Required Statutory Approvals and the KT
Required Statutory Approvals (including, without limitation, filing the
notifications provided for under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act")), (b) use reasonable
efforts to cooperate with one another in (i) determining whether any
filings are required to be made with, or consents, permits, authorizations
or approvals are required to be obtained from, any third party or other
governmental or regulatory bodies or authorities of federal, state, local
and foreign jurisdictions in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
and thereby and (ii) timely making all such filings and timely seeking all
such consents, permits, authorizations or approvals, including the Required
Third Party Consents and the KT Required Third Party Consents, and (c) use
reasonable best efforts to take, or cause to be taken, all other actions
and do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective the transactions contemplated
hereby. Without limiting the foregoing, each of the parties shall take all
necessary action to cause the expiration of the notice periods under the
HSR Act with respect to the Mergers as promptly as reasonably practicable
after the date of this Agreement.
Section 5.8 Further Assurances. Subject to the terms and
conditions provided in this Agreement and to applicable legal requirements,
each of the parties hereto agrees to use its best efforts, in the case of
KT consistent with the fiduciary duties of KT's Board of Directors, to
take, or cause to be taken, all action, and to do, or cause to be done, and
to assist and cooperate with the other parties hereto in doing, as promptly
as practicable, all things necessary, proper or advisable under applicable
Laws to ensure that the conditions set forth in Article VI are satisfied
and to consummate and make effective the transactions contemplated by this
Agreement. In case at any time after the Effective Time any further action
is necessary or desirable to carry out the purposes of this Agreement, the
proper officers and directors of each of the parties to this Agreement
shall take all such necessary action.
Section 5.9 Notification of Certain Matters. AH and the
Members, on the one hand, and KT, on the other hand, shall promptly notify
each other of (a) the occurrence or non-occurrence of any fact or event
which could reasonably be expected (i) to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Time,
(ii) to cause any material covenant, condition or agreement hereunder not
to be complied with or satisfied in all material respects or (iii) to
result in, in the case of AH, a Material Adverse Effect on AH, and, in the
case of KT, a Material Adverse Effect on KT, (b) any failure of AH or KT,
as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder in any material
respect; provided, however, that no such notification shall affect the
representations or warranties of any party or the conditions to the
obligations of any party hereunder, (c) any notice or other material
communications from any Governmental Entity in connection with the
transactions contemplated by this Agreement, and (d) the commencement of
any suit, action or proceeding that seeks to prevent or seek damages in
respect of, or otherwise relates to, the consummation of the transactions
contemplated by this Agreement.
Section 5.10 No Solicitation by AH.
(a) AH shall not, nor shall it authorize or permit any of its
Subsidiaries to, authorize or permit any of its directors, officers,
employees or affiliates or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
Subsidiaries to, directly or indirectly through another person, (i)
solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed to facilitate or encourage,
any inquiries or the making of any proposal which constitutes any Takeover
Proposal (as defined below) (or could be expected to lead to a Takeover
Proposal) or (ii) participate in any discussions or negotiations regarding
any Takeover Proposal. For purposes of this Agreement, "Takeover Proposal"
means any inquiry, proposal or offer (or any improvement, restatement,
amendment, renewal or reiteration thereof) from any person relating to any
direct or indirect acquisition or purchase of a business, material assets
or any equity securities or interests of AH or any of its Subsidiaries, any
tender offer or exchange offer that if consummated would result in any
person beneficially owning any equity securities or interests of AH or any
of its Subsidiaries, any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
AH or any of its Subsidiaries, or any other transaction the consummation of
which could reasonably be expected to impede, interfere with, prevent or
delay the transactions contemplated hereby or which could reasonably be
expected to dilute the benefits to Parent and KT of the transactions
contemplated hereby, in each case other than the transactions contemplated
by this Agreement.
(b) In addition to the obligations of AH set forth in paragraph
(a) of this Section 5.10, AH shall immediately advise KT orally and in
writing of any request for information or of any Takeover Proposal, the
material terms and conditions of such request or Takeover Proposal and the
identity of the person making such request or Takeover Proposal. AH will
promptly keep Parent and KT informed of the status and details (including
amendments or proposed amendments) of any such request or Takeover
Proposal.
(c) Immediately after the execution and delivery of this
Agreement, AH will, and will cause its Subsidiaries and affiliates, and
their respective directors, officers, employees, investment bankers,
financial advisors, attorneys, accountants and other representatives to,
cease and terminate any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any possible Takeover
Proposal. AH agrees that it will take the necessary steps to promptly
inform the individuals or entities referred to in the first sentence of
Section 5.10(a) of the obligations undertaken in this Section 5.10.
(d) The Members of AH have resolved by unanimous written consent
to adopt and approve this Agreement and the Mergers.
Section 5.11 Public Announcement. From and after the date of
this Agreement until the Effective Time or the Termination Date, AH and KT
will, to the extent practicable, consult with and provide each other the
reasonable opportunity to review and comment upon any press release
relating to AH and the transactions contemplated by this Agreement prior to
the issuance of such press release and shall not issue such press release
prior to such consultation except as may be required by Law or by
obligations pursuant to any agreement with any national securities exchange
or quotation system.
Section 5.12 Indemnification and Insurance.
(a) Parent agrees that all rights to exculpation and
indemnification for acts or omissions occurring prior to the AH Effective
Time now existing in favor of the current or former members or officers of
AH (the "AH Indemnified Parties") as provided in its organizational
documents or in any agreement shall survive the AH Merger and shall
continue in full force and effect in accordance with their terms. For six
years from the Effective Time, Parent shall indemnify the AH Indemnified
Parties to the same extent as such AH Indemnified Parties are entitled to
indemnification pursuant to the preceding sentence.
(b) For three years from the Effective Time, Parent shall
maintain in effect AH's current members' and officers' liability insurance
policy (the "AH Policy") covering those persons who are currently covered
by the AH Policy (a copy of which has been heretofore delivered to Parent
and KT); provided, however, that in no event shall Parent be required to
expend in any one year an amount in excess of 150% of the annual premiums
currently paid by AH for such insurance, and, provided, further, that if
the annual premiums of such insurance coverage exceed such amount, Parent
shall be obligated to obtain a policy with the greatest coverage available
for a cost not exceeding such amount; and provided, further, that Parent
may meet its obligations under this paragraph by covering the above people
under Parent's or one of its Significant Subsidiaries' insurance policy or
policies on the terms described above.
(c) Parent agrees that all rights to exculpation and
indemnification for acts or omissions occurring prior to the KT Effective
Time now existing in favor of the current or former directors or officers
of KT (the "KT Indemnified Parties") as provided in its charter or bylaws
or in any agreement shall survive the KT Merger and shall continue in full
force and effect in accordance with their terms. For six years from the KT
Effective Time, Parent shall indemnify the KT Indemnified Parties to the
same extent as such KT Indemnified Parties are entitled to indemnification
pursuant to the preceding sentence.
(d) For three years from the KT Effective Time, Parent shall
maintain in effect KT's current directors' and officers' liability
insurance policy (the "KT Policy"), covering those persons who are covered
by the KT Policy (a copy of which has been heretofore delivered to Parent
and AH); provided, however, that in no event shall Parent be required to
expend in any one year an amount in excess of 150% of the annual premiums
to be paid by KT for such insurance, and, provided, further, that if the
annual premiums of such insurance coverage exceed such amount, Parent shall
be obligated to obtain a policy with the greatest coverage available for a
cost not exceeding such amount; and provided, further, that Parent may meet
its obligations under this paragraph by covering the above people under
Parent's or one of its Significant Subsidiaries' insurance policy or
policies on the terms described above.
Section 5.13 Section 16(b). KT and Parent shall take all steps
reasonably necessary to cause the transactions contemplated hereby and any
other dispositions of equity securities of KT (including derivative
securities) or acquisitions of Parent equity securities (including
derivative securities) in connection with this Agreement by each individual
who (a) is a director or officer of KT or (b) at the KT Effective Time,
will become a director or officer of Parent, to be exempt under Rule 16b-3
promulgated under the Exchange Act.
Section 5.14 Members' Non-Compete.
(a) Each of the Members acknowledges that the covenants in this
Section 5.14 are an essential element of the Mergers and a fundamental
inducement to Parent to enter into this Agreement. Moreover, each of the
Members acknowledges that the business of AH or KT is or can be conducted
in any location throughout the United States, Europe or anywhere else in
the world.
(b) Without the express prior written consent of Parent, none of
the Members shall, at any time during the five-year period immediately
following the AH Closing Date, directly or indirectly, engage in, or
otherwise directly or indirectly be employed by or act as a consultant or
lender to, or be a director, officer, principal, agent, stockholder,
member, owner or partner of, or permit his name to be used in connection
with the activities of, or be related to or otherwise affiliated in any
manner with, any other business or organization anywhere in the world which
competes, directly or indirectly, with the business of AH or KT; provided,
that the foregoing shall not prohibit (i) the Members from, individually or
collectively, owning as a passive investment 5% or less of the equity of
any publicly-traded entity or (ii) each Member from providing investment
consulting services to such Member and the members of his family (and
employing up to five individuals in trading activities related thereto), in
the case of clause (ii), to the extent that such provision or employment
does not violate or interfere with any obligations of such Member to Parent
or any of its Subsidiaries.
(c) If it is ever held that the restriction placed on any Member
by this Section 5.14 is too onerous and is not necessary for the protection
of the other party or parties hereto, each party to this Agreement agrees
that any court of competent jurisdiction may impose lesser restrictions
which such court may consider to be necessary or appropriate to properly
protect the other party of parties hereto.
Section 5.15 Non-Solicitation of Employees.
(a) Each of the Members acknowledges that the covenants in this
Section 5.15 are an essential element of the Mergers and a fundamental
inducement to Parent to enter into this Agreement.
(b) From and after the date hereof, none of the Members shall,
without the express prior written consent of Parent, for a period of five
(5) years from the AH Closing Date, directly or indirectly solicit,
encourage, entice or induce any person who is an employee or consultant of
AH or any of its Subsidiaries at or subsequent to the date hereof, to
terminate his or her employment or consultancy with Parent or any of its
Subsidiaries or directly or indirectly hire or employ any person who is an
employee or consultant of AH or any of the Subsidiaries at the date hereof
or who become an employee or consultant of AH or any of the Subsidiaries
after the date hereof; provided, that the foregoing shall not in any manner
restrict managerial determinations regarding employment matters by Members
who are then employees of Parent or any of its Subsidiaries.
(c) If it is ever held that the restriction placed on any Member
by this Section 5.15 is too onerous and is not necessary for the protection
of the other party or parties hereto, each party to this Agreement agrees
that any court of competent jurisdiction may impose lesser restrictions
which such court may consider to be necessary or appropriate to properly
protect the other party or parties hereto.
Section 5.16 Pooling Letters. Each of AH and KT will use its
reasonable best efforts to cause its respective independent public
accountants to deliver a customary "pooling-of-interests" letter, dated as
of the AH Closing Date.
Section 5.17 Resale Registration. Upon written request by the
Members, Parent shall use its reasonable best efforts to cause to become
effective, as soon as reasonably practicable after receipt of such request
(but in no event prior to the expiration of the Pooling Period (as defined
in the Affiliate Letter)), one shelf registration statement on Form S-3 for
the purpose of permitting resale (in accordance with the methods of
distribution reasonably requested by the Members) of up to 2,500,000 shares
of Parent Common Stock received pursuant hereto by the Members (to be
allocated pro rata among the Members or pursuant to such other allocation
agreed upon by the Members). The effectiveness of the Registration
Statement shall be maintained for so long as is necessary after the
Effective Time in order to permit such resales by the relevant Members, but
in no event beyond the first anniversary of the AH Effective Time. The
obligations of Parent to cause or maintain the effectiveness of such
registration statement and the ability of the relevant Members to execute
any transaction pursuant to such registration statement shall be subject to
reasonable delay if the Board of Directors and/or President of Parent
reasonably and in good faith determines that such effectiveness would (i)
require the disclosure of material information that the Company has a bona
fide business purpose for preserving as confidential or (ii) materially
interfere in a pending material transaction involving Parent and/or its
Subsidiaries.
ARTICLE VI
CONDITIONS TO THE MERGERS
Section 6.1 Conditions to Each Party's Obligation to Effect the
Mergers. The respective obligations of each party to effect the Mergers
shall be subject to the fulfillment at or prior to the KT Effective Time
and the AH Effective Time, as applicable, of the following conditions:
(a) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
enforced by any United States federal or state court or governmental body
which prohibits the consummation of the Mergers and which remains in
effect.
(b) The shares of Parent Common Stock issuable in the Mergers
shall have been approved for quotation on the NMS, subject only to official
notice of issuance.
(c) (i) Any applicable waiting period under the HSR Act shall
have expired or been terminated and (ii) any other Required Statutory
Approval and KT Required Statutory Approval shall have been granted or
obtained.
Section 6.2 Conditions to Obligations of AH to Effect the AH
Merger. The obligation of AH to effect the AH Merger is further subject to
the conditions that:
(a) The representations and warranties of KT set forth herein
shall be true and correct both when made and at and as of the KT Effective
Time and, in the case of Sections 4.5 and 4.8, at and as of the AH
Effective Time, as if made at and as of such times (except to the extent
expressly made as of an earlier date, in which case as of such date).
(b) KT shall have performed in all material respects all
obligations and complied in all material respects with all covenants
required by this Agreement to be performed or complied with by it prior to
the AH Effective Time.
(c) KT shall have delivered to AH a certificate, dated the AH
Effective Time and signed by its President and Chief Executive Officer,
certifying to the effects of Section 6.2(a) and Section 6.2(b).
(d) All third party consents or approvals required to be
obtained under any KT Agreement, the failure of which to obtain prior to
the AH Effective Time could reasonably be expected, individually or in the
aggregate, to materially impair the ability of KT to perform its
obligations under this Agreement or consummate the Mergers or the other
transactions contemplated hereby, shall have been obtained.
Section 6.3 Conditions to Obligations of KT to Effect the KT
Merger and of Parent to Effect the AH Merger. The obligations of KT to
effect the KT Merger (other than those conditions that by their nature are
to be satisfied at the AH Closing, but which are reasonably expected by the
parties to be so satisfied) and of Parent to effect the AH Merger are
further subject to the conditions that:
(a) The representations and warranties of each of AH and the
Members set forth herein shall be true and correct both when made and at
and as of the AH Effective Time, as if made at and as of such times (except
to the extent expressly made as of an earlier date, in which case as of
such date).
(b) Each of AH and the Members shall have performed in all
material respects all obligations and complied in all material respects
with all covenants required by this Agreement to be performed or complied
with by it prior to the AH Effective Time.
(c) The total Net Assets reflected on the unaudited consolidated
statement of financial condition of AH as of the AH Closing Date shall be
at least $38.0 million.
(d) AH and the Members shall have delivered to KT a certificate,
dated the AH Effective Time and signed by AH's Chief Executive Officer and
each of the Members, certifying to the effects of Section 6.3(a), (b) and
(c) above.
(e) All Required Third Party Consents shall have been obtained.
(f) Parent and KT shall have received a letter, dated the AH
Closing Date, from PricewaterhouseCoopers LLP and addressed to Parent and
KT, in form and substance reasonably satisfactory to KT, that the Mergers
can properly be accounted for as a "pooling-of-interests" transaction.
(g) Each Member shall have delivered to Parent and KT a
certificate as contemplated under and meeting the requirements of Section
1.1445-2(b)(2)(i) of the Treasury regulations, to the effect that such
Member is not a "foreign person" within the meaning of the Code and
applicable Treasury regulations.
(h) Parent and the Members shall have entered into the Escrow
Indemnity Agreement to secure certain indemnification obligations of the
Members pursuant to Article VIII hereof and, contemporaneously with the AH
Closing, the Members shall have deposited the Escrow Shares with the Escrow
Agent as required by Section 2.3(g) hereof.
(i) Each of the AH Affiliates shall have delivered an Affiliate
Letter to Parent.
(j) The New Employment Agreements entered into between AH and
each of the Members on the date hereof shall be in full force and effect on
the AH Closing Date and none of the Members shall have refused to perform
services under such New Employment Agreements in violation of such
agreements or be in material breach of such New Employment Agreements, and
none of Messrs. Xxxxx Xxxxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxx shall have
died or become permanently incapacitated.
(k) AH shall have delivered to Parent: (i) if the AH Effective
Time is on or prior to January 31, 2000, audited consolidated statements of
financial condition, income and cash flows of AH at and for the nine months
ended September 30, 1999, or (ii) if the AH Effective Time is after January
31, 2000, audited consolidated statements of financial condition, income
and cash flows of AH at and for the 12 months ended December 31, 1999.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.1 Termination or Abandonment. This Agreement may be
terminated at any time prior to the AH Effective Time:
(a) by the mutual written consent of AH and KT;
(b) by either KT or AH if the AH Effective Time shall not have
occurred on or before September 30, 2000; provided, that the party seeking
to terminate this Agreement pursuant to this Section 7.1(b) shall not have
breached in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the failure to
consummate the Mergers on or before such date;
(c) by either KT or AH if (i) a statute, rule, regulation or
executive order shall have been enacted, entered or promulgated by a United
States federal or state governmental body prohibiting the consummation of
the Mergers substantially on the terms contemplated hereby or (ii) an
order, decree, ruling or injunction shall have been entered by a United
States federal or state court permanently restraining, enjoining or
otherwise prohibiting the consummation of the Mergers substantially on the
terms contemplated hereby and such order, decree, ruling or injunction
shall have become final and non-appealable;
(d) by KT, if AH shall breach Section 5.10;
(e) by AH, if there shall have been a material breach by KT of
any of its representations, warranties, covenants or agreements contained
in this Agreement such that the conditions set forth in Section 6.2(a) or
6.2(b) would not be satisfied, and such breach (if curable) shall not have
been cured within 30 days after notice thereof shall have been received by
KT; or
(f) by KT, if there shall have been a material breach by AH or
any of the Members of their respective representations, warranties,
covenants or agreements contained in this Agreement such that the
conditions set forth in Section 6.3(a) or 6.3(b) would not be satisfied,
and such breach (if curable) shall not have been cured within 30 days after
notice thereof shall have been received by AH.
Section 7.2 Effect of Termination. In the event of termination
of this Agreement pursuant to Section 7.1, this Agreement shall terminate
(except for the provisions of the penultimate sentence of Section 5.2 and
Sections 7.3 and 9.1), and there shall be no other liability on the part of
KT, on the one hand, and AH and the Members, on the other hand, to the
other except liability arising out of a wilful and material breach of this
Agreement or as provided for in the Confidentiality Agreement.
Section 7.3 Termination Fee.
(a) In the event that (i) this Agreement is terminated by KT
pursuant to Section 7.1(d), or (ii) this Agreement is terminated by KT
pursuant to Section 7.1(f) as a result of any wilful and material breach by
AH or any of its Subsidiaries or any Member of any representation,
warranty, covenant or agreement set forth in this Agreement, then AH and
the Members, jointly and severally, shall be obligated to promptly pay to
KT a fee equal to $10.0 million; provided, that if within twelve (12)
months after the date this Agreement is terminated under circumstances
described in clause (i) or (ii) above, AH, any of its Subsidiaries, any of
the Members or any of their respective affiliates enters into any letter of
intent, agreement in principle, acquisition agreement or other agreement
related to any Takeover Proposal or a Takeover Proposal is consummated with
any third party, then AH and the Members, jointly and severally, shall be
obligated to pay to KT an additional fee equal to $40.0 million (either
such fee, the "Termination Fee"), in each case payable by wire transfer of
same day funds. AH and the Members expressly acknowledge that the
agreements contained in this Section 7.3(a) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, KT would not enter into this Agreement; accordingly, if AH and
the Members fail promptly to pay the Termination Fee, and, in order to
obtain such payment, KT commences a suit which results in a judgment
against AH and/or the Members for the Termination Fee, AH and the Members
expressly shall be obligated, jointly and severally, to pay to KT its costs
and expenses (including attorneys' fees and expenses) in connection with
such suit, together with interest on the amount of the Termination Fee at
the prime rate of Citibank N.A. in effect on the date such payment was
required to be made.
(b) In the event that this Agreement is terminated by AH
pursuant to Section 7.1(e) as a result of any wilful and material breach by
KT or any of its Subsidiaries of any representation, warranty, covenant or
agreement set forth in this Agreement, then KT shall be obligated to
promptly pay to AH a fee equal to $10.0 million (the "KT Termination Fee"),
payable by wire transfer of same day funds. KT expressly acknowledges that
the agreements contained in this Section 7.3(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, AH would not enter into this Agreement; accordingly, if KT
fails promptly to pay the KT Termination Fee, and, in order to obtain such
payment, AH commences a suit which results in a judgment against KT for the
KT Termination Fee, KT expressly shall be obligated to pay to AH its costs
and expenses (including attorneys' fees and expenses) in connection with
such suit, together with interest on the amount of the KT Termination Fee
at the prime rate of Citibank N.A. in effect on the date such payment was
required to be made.
(c) The payment of any fee pursuant to this Section 7.3 shall be
made to an account designated in writing by the party entitled to receive
such fee.
Section 7.4 Amendment or Supplement. At any time prior to the
Effective Time, this Agreement may be amended or supplemented in writing by
the parties with respect to any of the terms contained in this Agreement.
Section 7.5 Extension of Time, Waiver, Etc. At any time prior
to the Effective Time, any party may:
(a) extend the time for the performance of any of the
obligations or acts of any other party;
(b) waive any inaccuracies in the representations and warranties
of any other party contained herein or in any document delivered pursuant
hereto; or
(c) subject to the proviso of Section 7.4, waive compliance with
any of the agreements or conditions of the other party contained herein.
Notwithstanding the foregoing no failure or delay by any party in
exercising any right hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right hereunder. Any
agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnification by the Members. Subject to Section
8.3 below and the terms of the Escrow Indemnity Agreement, each of the
Members shall jointly and severally indemnify Parent and its Subsidiaries
and their respective successors and permitted assigns and their respective
officers, directors, employees, agents and affiliates (other than the
Members and their affiliates) (collectively, the "Parent Indemnified
Parties") from and against and shall reimburse the same for and in respect
of any and all losses, reasonable costs, fines, liabilities, claims,
penalties, damages and reasonable expenses (including all legal fees and
expenses) of any nature or kind (collectively "Losses") which may be
claimed or assessed against any of them or to which any of them may be
subject, in connection with any and all claims, suits or asserted Losses
which are related to the inaccuracy or incompleteness of any representation
or warranty made by AH or any of the Members that is contained in or made
pursuant to Article III of this Agreement, any breach of any agreement or
covenant of AH or any of the Members contained in this Agreement, or any
claim of any former member of AH arising out of this Agreement and any
agreements executed in connection herewith and the transactions
contemplated hereby and thereby. Notwithstanding the preceding sentence,
the Members shall not be obligated under this Article VIII to indemnify the
Parent Indemnified Parties in respect of trading losses resulting from the
ordinary course of business trading activities.
Section 8.2 Indemnification Procedures.
(a) Notice. A party entitled to indemnification under this
Article VIII (an "Indemnified Party") agrees to give each party obligated
to provide indemnification pursuant to this Article VIII (an "Indemnifying
Party") prompt written notice (the "Claim Notice") of any claim, assertion,
event, condition or proceeding by or in respect of any third party (each, a
"Third Party Claim") of which it has knowledge concerning any liability or
damage as to which it may request indemnification hereunder. The Claim
Notice shall describe in reasonable detail the nature of the claim,
including an estimate, if practicable, of the amount of Losses that have
been or may be suffered or incurred by the Indemnified Party attributable
to such claim and the basis of the Indemnified Party's request for
indemnification under this Agreement.
(b) Conduct of Defense. An Indemnifying Party shall have the
right, upon written notice to the Indemnified Party (the "Defense Notice")
within ten business days of its receipt from the Indemnified Party of the
Claim Notice, to conduct at its expense the defense against such Third
Party Claim in its own name, or, if necessary, in the name of the
Indemnified Party. When the Indemnifying Party assumes the defense, the
Indemnified Party shall have the right to reasonably approve the defense
counsel and no such claim may be compromised or settled without the express
prior written consent of the Indemnified Party; provided, however, that in
any case in which the Indemnified Party withholds consent to any such
proposed compromise or settlement, thereafter the maximum liability of the
Indemnifying Party under this Article VIII to such Indemnified Party with
respect to the relevant Third Party Claim shall not exceed the amounts set
forth in such proposed compromise or settlement. In the event that the
Indemnifying Party does deliver a Defense Notice and thereby elects to
conduct the defense of such Third Party Claim, the Indemnified Party will
cooperate with and make available to the Indemnifying Party such
assistance, personnel, witnesses and materials as the Indemnifying Party
may reasonably request. Regardless of which party defends such Third Party
Claim, the other party shall have the right at its expense to participate
in the defense assisted by counsel of its own choosing. In the event that
the Indemnifying Party shall fail to give the Defense Notice within the
time prescribed by Section 8.2(b), the Indemnified Party shall have the
sole right to conduct such defense and the Indemnified Party may pay,
compromise or defend such claim or proceeding at the Indemnifying Party's
expense. In the event any Indemnified Party should have a claim against
any Indemnifying Party hereunder which does not involve a Third Party
Claim, the Indemnified Party shall promptly transmit to the Indemnifying
Party a written notice describing in reasonable detail the nature of the
claim and the basis of the Indemnified Party's request for indemnification
under this Agreement.
Section 8.3 Limitations on Indemnification. Any liabilities of
the Members pursuant to this Article VIII shall be satisfied pursuant to
the terms of the Escrow Indemnity Agreement, which shall be the exclusive
remedy available for satisfaction of any obligation of the Members pursuant
to this Article VIII. Notwithstanding anything to the contrary in the
charter, bylaws, other organizational documents, agreements (including,
without limitation, the New Employment Agreements), insurance policies
(including, without limitation, any directors' and officers' liability or
other similar insurance policy) or other instruments of Parent or any of
its Subsidiaries, no Member (or any of their respective affiliates) shall
have any right to indemnification or other recovery thereunder or otherwise
(whether as an officer, member, director, stockholder or in any other
capacity) from Parent or any of its Subsidiaries with respect to any matter
to the extent that the Members are liable, or would be liable but for the
limitations on indemnification and limitations on survival of
representations, warranties, covenants and agreements contained herein, to
any of the Parent Indemnified Parties under this Article VIII with respect
to such matter. The Members shall not be obligated to indemnify any of the
Parent Indemnified Parties pursuant to this Article VIII until the
aggregate Losses suffered by the Parent Indemnified Parties exceed $1.0
million, except to the extent that such Losses result from a wilful breach
of a representation, warranty, agreement or covenant of AH or any of the
Members; provided, however, that if at any time the aggregate Losses exceed
$1.0 million, the Members shall be obligated to indemnify the relevant
Parent Indemnified Parties for the full amount of such Losses in excess of
$500,000.
Section 8.4 Survival of Representations, Warranties and
Covenants. The representations and warranties of AH and the Members
contained in Article III hereof shall survive until the first anniversary
of the AH Effective Time (the "Expiration Date"), and no party may seek
indemnification under this Article VIII with respect to a breach of such a
representation or warranty after the Expiration Date. Notwithstanding
anything to the contrary contained herein, all representations and
warranties made by AH and the Members pursuant to Article III of this
Agreement, and the liability with respect thereto, shall not terminate with
respect to any claim, whether or not fixed as to liability or liquidated as
to amount, with respect to which such party has been given written notice
stating the nature of the claim prior to the date on which such
representation or warranty expires. The parties' respective covenants and
agreements contained in this Agreement or in any certificate, schedule,
list, exhibit, agreement, document or other writing delivered pursuant
hereto or in connection with the transactions contemplated hereby shall
survive indefinitely unless otherwise set forth herein or therein;
provided, however, that no party may seek indemnification under this
Article VIII with respect to any breach of such a covenant or agreement
after the Expiration Date, except with respect to any claim, whether or not
fixed as to liability or liquidated as to amount, with respect to which
such party has given written notice stating the nature of the claim prior
to the Expiration Date. Notwithstanding anything to the contrary in this
Agreement, (a) no investigation by a party shall affect the
representations, warranties, covenants and agreements of the other parties
under this Agreement or in any certificate, schedule, list, exhibit,
agreement, document or other writing delivered pursuant hereto or in
connection with the transactions contemplated hereby furnished or to be
furnished to the other parties and (b) such representations, warranties,
covenants and agreements shall not be affected or deemed waived by reason
of the consummation of the Mergers or of the fact that the other party or
parties knew or should have known that any of the same is or might be
inaccurate in any respect.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Expenses. Whether or not the Mergers are
consummated, all costs and expenses incurred by AH, its Subsidiaries and
the Members in connection with the Mergers, this Agreement and the
transactions contemplated hereby (including, without limitations, all fees
and expenses of Xxxxxxx, Xxxxx & Co., Ernst & Young LLP, and Xxxxxx &
Xxxxxxx), shall be paid by AH and all costs and expenses incurred by KT and
its Subsidiaries in connection with the Mergers, this Agreement and the
transactions contemplated hereby shall be paid by KT.
Section 9.2 Counterparts; Effectiveness. This Agreement may be
executed in two or more consecutive counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument, and shall become effective when one or more
counterparts have been signed by each of the parties and delivered (by
telecopy or otherwise) to the other parties.
Section 9.3 Governing Law and Venue; Waiver of Jury Trail.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL
RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE
WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES. The parties irrevocably submit to the jurisdiction of the
courts of the State of Delaware solely in respect of the interpretation and
enforcement of the provisions of this Agreement and of the documents
referred to in this Agreement, and in respect of the transactions
contemplated by this Agreement and by those documents, and hereby waive,
and agree not to assert, as a defense in any action, suit or proceeding for
the interpretation or enforcement of this Agreement or of any such
document, that it is not subject to this Agreement or that such action,
suit or proceeding may not be brought or is not maintainable in said courts
or that the venue thereof may not be appropriate or that this Agreement or
any such document may not be enforced in or by such courts, and the parties
hereto irrevocably agree that all claims with respect to such action or
proceeding shall be heard and determined in such a court. The parties
hereby consent to and grant any such court jurisdiction over the person of
such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 9.4 or in such other manner as
may be permitted by Law, shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.3.
Section 9.4 Notices. All notices and other communications
hereunder shall be in writing (including telecopy or similar writing) and
shall be effective (a) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Section 9.4 and the
appropriate telecopy confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section 9.4:
To KT, Parent, SubKT or SubAH:
Knight/Trimark Group, Inc.
Newport Tower
000 Xxxxxxxxxx Xxxx.
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Telecopy: (000) 000-0000
copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
To AH or the Members:
Arbitrade Holdings LLC
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
copy to:
Xxxxxx & Xxxxxxx
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
Section 9.5 Assignment; Binding Effect. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned
by any of the parties hereto (whether by operation of Law or otherwise)
without the express prior written consent of the other parties; provided,
however, that Parent may assign its rights under Sections 5.14 and 5.15 and
Article VIII of this Agreement in connection with direct or indirect sale
or other disposition of a business, material assets or any equity
securities or interests of Parent or any of its Subsidiaries, or any
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Parent or any of its
Significant Subsidiaries. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
Section 9.6 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as
to that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.
Section 9.7 Enforcement of Agreement. The parties hereto agree
that money damages or other remedy at law would not be sufficient or
adequate remedy for any breach or violation of, or a default under, this
Agreement by them and that in addition to all other remedies available to
them, each of them shall be entitled to the fullest extent permitted by Law
to an injunction restraining such breach, violation or default or
threatened breach, violation or default and to any other equitable relief,
including, without limitation, specific performance, without bond or other
security being required.
Section 9.8 Entire Agreement; No Third-Party Beneficiaries.
This Agreement (and the exhibits and schedules hereto) and the
Confidentiality Agreement constitute the entire agreement, and supersede
all other prior agreements and understandings, both written and oral,
between the parties, or any of them, with respect to the subject matter
hereof and thereof and, except for the provisions of Section 5.12 and
Article VIII hereof and except as set forth in the proviso to the first
sentence of Section 9.5, is not intended to and shall not confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 9.9 Headings. Headings of the Articles and Sections of
this Agreement are for convenience of the parties only, and shall be given
no substantive or interpretive effect whatsoever.
Section 9.10 Definitions. References in this Agreement to
"Subsidiaries" of any person shall mean (a) any corporation, association,
partnership, limited liability company or other business entity of which
more than 50% of the total voting power of shares of capital stock or other
interests (including partnership interests) entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly
or indirectly, by such person, (b) any limited partnership of which such
person is a general partner, or (c) any other person (other than a
corporation or limited partnership) in which such person, directly or
indirectly, has more than 50% of the outstanding partnership or similar
interests or has the power, by contract or otherwise, to direct or cause
the direction of the policies, management and affairs thereof; provided,
however, that references to Subsidiaries of AH shall not include the
Private Funds. For the purposes of Sections 3.1(c), 3.1(d) (other than the
first sentence thereof), 3.5, 3.6 through 3.8, 3.10, 3.11, 3.13 through
3.19, 3.21 through 3.24, and 3.26, references in this Agreement to any
person shall include all predecessors of such person. References in this
Agreement (except as specifically otherwise defined) to "affiliates" shall
mean, as to any person, any other person which, directly or indirectly,
controls, or is controlled by, or is under common control with, such
person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of management or policies of a person, whether
through the ownership of securities or partnership of other ownership
interests, by contract or otherwise. References in this Agreement to a
"person" shall mean an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or
organization, including, without limitation, a governmental body or
authority. Notwithstanding the foregoing, none of Parent, SubKT and SubAH
shall be deemed to be an "affiliate" or a "Subsidiary" of KT. References
in this Agreement to the "knowledge" of AH shall refer to the knowledge of
each of the Members and the members of senior management of AH and its
Subsidiaries. Reference in this Agreement to the "knowledge" of KT shall
refer to the knowledge of each of the members of senior management of KT
and its Subsidiaries.
Section 9.11 Obligations of AH and KT. Whenever this Agreement
requires a Subsidiary of AH or a Private Fund to take any action, that
requirement shall be deemed to include an undertaking on the part of AH to
cause that Subsidiary or Private Fund to take that action. Whenever this
Agreement requires a Subsidiary of KT to take any action, that requirement
shall be deemed to include an undertaking on the part of KT to cause that
Subsidiary to take that action.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the date first above written.
KT HOLDING COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer and President
KT ACQUISITION I CORP.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer and President
AH ACQUISITION I L.L.C.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer and President
KNIGHT/TRIMARK GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer and President
ARBITRADE HOLDINGS LLC
By: /s/ Xxxxx Xxxxxxx
------------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Managing Director
/s/ Xxxxx Xxxxx
------------------------------------------------
XXXXX XXXXX
/s/ Xxxxxxx Xxxxxxxx
------------------------------------------------
XXXXXXX XXXXXXXX
/s/ Xxxx Xxxxx
------------------------------------------------
XXXX XXXXX
/s/ Xxxxx Xxxxxxx
------------------------------------------------
TARMACHAN CAPITAL MANAGEMENT, INC.
/s/ Xxxxx Xxxxxxx
------------------------------------------------
TARMACHAN CAPITAL CO.
/s/ Xxxxx Xxxxxxx
------------------------------------------------
DEEPHAVEN INC.
/s/ Xxxxxx Xxxxxx
------------------------------------------------
GILDOR TRADING, INC.
Other than for
purposes of Articles I,
II (except Section
2.3(g)) and IV: /s/ Xxxxx Xxxxxxx
------------------------------------------------
XXXXX XXXXXXX
Other than for
purposes of Articles I,
II (except Section
2.3(g)() and IV: /s/ Xxxxxx Xxxxxx
------------------------------------------------
XXXXXX XXXXXX
TABLE OF CONTENTS
PAGE
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ARTICLE I
THE MERGERS; CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 The KT Merger . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 The AH Merger . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 KT Closing . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.4 AH Closing . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.5 KT Effective Time . . . . . . . . . . . . . . . . . . . . . 3
Section 1.6 AH Effective Time . . . . . . . . . . . . . . . . . . . . . 3
Section 1.7 Effects of the Mergers . . . . . . . . . . . . . . . . . . . 4
Section 1.8 Directors . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.9 Parent Charter Documents and Name . . . . . . . . . . . . . 5
ARTICLE II
EFFECT OF THE MERGERS ON THE EQUITY SECURITIES
OF KT AND AH; CERTIFICATES .. . . . . . . . . . . 5
Section 2.1 Effect on KT Stock and SubKT Stock . . . . . . . . . . . . . 5
Section 2.2 Effect on AH Membership Units and SubAH Membership Interests 6
Section 2.3 Exchange of Certificates . . . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF AH AND THE MEMBERS . . . . . . . . . . . 9
Section 3.1 Organization, Qualification, Etc . . . . . . . . . . . . . . 9
Section 3.2 Membership Units . . . . . . . . . . . . . . . . . . . . . 10
Section 3.3 Authority Relative to this Agreement . . . . . . . . . . . 11
Section 3.4 Non-Contravention; Consents and Approvals . . . . . . . . 11
Section 3.5 Financial Statements; Financial Condition . . . . . . . . 12
Section 3.6 Environmental Matters. . . . . . . . . . . . . . . . . . . 13
Section 3.7 Employee Benefit Plans; ERISA. . . . . . . . . . . . . . . 14
Section 3.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.9 No Undisclosed Material Liabilities . . . . . . . . . . . 19
Section 3.10 Labor Relations . . . . . . . . . . . . . . . . . . . . . 19
Section 3.11 Permits . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.12 Absence of Certain Changes or Events . . . . . . . . . . 20
Section 3.13 No Defaults . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.14 Litigation . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.15 Intellectual Property . . . . . . . . . . . . . . . . . . 22
Section 3.16 Non-Competition Agreements . . . . . . . . . . . . . . . 24
Section 3.17 Certain Agreements . . . . . . . . . . . . . . . . . . . 25
Section 3.18 Real Property . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.19 Investment Company Act . . . . . . . . . . . . . . . . . 25
Section 3.20 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.21 Certain Representations and Warranties as to Private Funds.26
Section 3.22 Compliance with Law. . . . . . . . . . . . . . . . . . . 29
Section 3.23 Agreements with Regulatory Agencies . . . . . . . . . . . 30
Section 3.24 Investment Securities. . . . . . . . . . . . . . . . . . 30
Section 3.25 Interest Rate Risk Management Instruments. . . . . . . 30
Section 3.26 Pooling . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF KT . . . . . . . 31
Section 4.1 Organization, Qualification, Etc. . . . . . . . . . . . . 31
Section 4.2 Capital Stock . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.3 Corporate Authority Relative to this Agreement . . . . . . 33
Section 4.4 Non-Contravention; Consents and Approvals. . . . . . . . . 34
Section 4.5 Reports and Financial Statements . . . . . . . . . . . . . 34
Section 4.6 No Prior Activities . . . . . . . . . . . . . . . . . . . 35
Section 4.7 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.8 Absence of Certain Changes or Events . . . . . . . . . . . 35
Section 4.9 Pooling . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE V
COVENANTS AND AGREEMENTS . . . . . . . . . . 36
Section 5.1 Conduct of Business Pending the Effective Time . . . . . . 36
Section 5.2 Investigation . . . . . . . . . . . . . . . . . . . . . . 39
Section 5.3 NASDAQ Filings and Other Cooperation . . . . . . . . . . . 39
Section 5.4 Affiliate Agreements . . . . . . . . . . . . . . . . . . . 40
Section 5.5 AH Employee Benefit Plans . . . . . . . . . . . . . . . . 40
Section 5.6 KT Employee Stock Options, Incentive and Benefit Plans . . 41
Section 5.7 Filings; Other Action . . . . . . . . . . . . . . . . . . 42
Section 5.8 Further Assurances . . . . . . . . . . . . . . . . . . . . 42
Section 5.9 Notification of Certain Matters . . . . . . . . . . . . . 43
Section 5.10 No Solicitation by AH . . . . . . . . . . . . . . . . . . 43
Section 5.11 Public Announcement . . . . . . . . . . . . . . . . . . . 44
Section 5.12 Indemnification and Insurance . . . . . . . . . . . . . . 44
Section 5.13 Section 16(b) . . . . . . . . . . . . . . . . . . . . . . 45
Section 5.14 Members' Non-Compete . . . . . . . . . . . . . . . . . . 45
Section 5.15 Non-Solicitation of Employees . . . . . . . . . . . . . . 46
Section 5.16 Pooling Letters . . . . . . . . . . . . . . . . . . . . . 47
Section 5.17 Resale Registration . . . . . . . . . . . . . . . . . . . 47
ARTICLE VI
CONDITIONS TO THE MERGERS . . . . . . . . . . 47
Section 6.1 Conditions to Each Party's Obligation to Effect the Mergers 47
Section 6.2 Conditions to Obligations of AH to Effect the AH Merger . 48
Section 6.3 Conditions to Obligations of KT to Effect the KT Merger
and of Parent to Effect the AH Merger . . . . . . . . . . . 48
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT . . . . . . . . 50
Section 7.1 Termination or Abandonment . . . . . . . . . . . . . . . . 50
Section 7.2 Effect of Termination . . . . . . . . . . . . . . . . . . 50
Section 7.3 Termination Fee . . . . . . . . . . . . . . . . . . . . . 51
Section 7.4 Amendment or Supplement . . . . . . . . . . . . . . . . . 52
Section 7.5 Extension of Time, Waiver, Etc. . . . . . . . . . . . . . 52
ARTICLE VIII
INDEMNIFICATION . . . . . . . . . . . . . 52
Section 8.1 Indemnification by the Members . . . . . . . . . . . . . . 52
Section 8.2 Indemnification Procedures . . . . . . . . . . . . . . . . 53
Section 8.3 Limitations on Indemnification . . . . . . . . . . . . . . 54
Section 8.4 Survival of Representations, Warranties and Covenants . . 54
ARTICLE IX
MISCELLANEOUS . . . . . . . . . . . . . 55
Section 9.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.2 Counterparts; Effectiveness . . . . . . . . . . . . . . . 55
Section 9.3 Governing Law and Venue; Waiver of Jury Trail . . . . . . 55
Section 9.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.5 Assignment; Binding Effect . . . . . . . . . . . . . . . . 57
Section 9.6 Severability . . . . . . . . . . . . . . . . . . . . . . . 57
Section 9.7 Enforcement of Agreement . . . . . . . . . . . . . . . . . 57
Section 9.8 Entire Agreement; No Third-Party Beneficiaries . . . . . . 58
Section 9.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 9.10 Definitions . . . . . . . . . . . . . . . . . . . . . . . 58
Section 9.11 Obligations of AH and KT . . . . . . . . . . . . . . . . 59
INDEX OF DEFINED TERMS
Term Section
Advisers Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.21(h)
affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
Affiliate Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
affiliated company . . . . . . . . . . . . . . . . . . . . . . . . . 3.19
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
AH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
AH Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
AH Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 3.4(a)(ii)
AH Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . 1.6
AH Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
AH Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
AH Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . 3
AH Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6
AH Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5(b)(i)
AH Financial Statements . . . . . . . . . . . . . . . . . . . . . . 3.5(a)
AH Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . 5.12(a)
AH Membership Units . . . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
AH Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
AH Merger Consideration . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
AH Merger Exchange Ratio . . . . . . . . . . . . . . . . . . . . . 2.2(b)
AH Organizational Documents . . . . . . . . . . . . . . . . . . . . 3.1(a)
AH Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11
AH Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(b)
AH Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . 3.18
Average Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.14
Claim Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2(a)
Class A Common Stock . . . . . . . . . . . . . . . . . . . . . . . 1.7(d)
Class A Membership Units . . . . . . . . . . . . . . . . . . . . . 2.2(c)
Class B Common Stock . . . . . . . . . . . . . . . . . . . . . . . 1.7(d)
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Commodity Exchange Act . . . . . . . . . . . . . . . . . . . . . . 3.21(h)
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7(d)
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . 5.2
control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
controlled by . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
DLLCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
Defense Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2(b)
disqualified individual . . . . . . . . . . . . . . . . . . . . . . 3.7(f)
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6
Employee Benefit Plan . . . . . . . . . . . . . . . . . . . . . . 3.7(g)(i)
Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)
Environmental Claim . . . . . . . . . . . . . . . . . . . . . . . 3.6(d)(i)
Environmental Law . . . . . . . . . . . . . . . . . . . . . . . 3.6(d)(ii)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7(g)(ii)
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . 3.7(g)(iii)
Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(g)
Escrow Indemnity Agreement . . . . . . . . . . . . . . . . . . . . 2.3(g)
Escrow Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(g)
excess parachute payment . . . . . . . . . . . . . . . . . . . . . 3.7(f)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.21(f)
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(b)
Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4
extremely hazardous substances . . . . . . . . . . . . . . . . 3.6(d)(iii)
foreign person . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3(g)
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . 3.8(i)
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . 3.6(d)(iii)
hazardous substances . . . . . . . . . . . . . . . . . . . . . 3.6(d)(iii)
hazardous wastes . . . . . . . . . . . . . . . . . . . . . . . 3.6(d)(iii)
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . 8.2(a)
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . 8.2(a)
Intellectual Property . . . . . . . . . . . . . . . . . . . . . 3.15(a)(ii)
investment company . . . . . . . . . . . . . . . . . . . . . . . . . 3.19
Investment Company Act . . . . . . . . . . . . . . . . . . . . . . 3.21(h)
Investment Fund Financial Statements . . . . . . . . . . . . . . . 3.21(d)
Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . 3.21(h)
Investment Laws and Regulations . . . . . . . . . . . . . . . . . . 3.21(h)
Investment Management Services . . . . . . . . . . . . . . . . . . 3.21(h)
IP Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . 3.15(a)(ii)
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7(b)(vi)
KT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
KT Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 4.4(a)(ii)
KT Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6(b)
KT Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . 1.5
KT Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
KT Class A Common Stock . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
KT Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
KT Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
KT Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . 4
KT Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5
KT Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . 5.12(c)
KT Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
KT Merger Consideration . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
KT Merger Exchange Ratio . . . . . . . . . . . . . . . . . . . . . 2.1(b)
KT Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . 5.6(a)(i)
KT Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(d)
KT Required Statutory Approvals . . . . . . . . . . . . . . . . 4.4(a)(iii)
KT Required Third Party Consents . . . . . . . . . . . . . . . 4.4(a)(ii)
KT Stock Options . . . . . . . . . . . . . . . . . . . . . . . . 5.6(a)(i)
KT Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . 7.3(b)
Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4(a)(iii)
Leased Intellectual Property . . . . . . . . . . . . . . . 3.16(a)(ii)(E)
Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1
Material Adverse Effect of AH . . . . . . . . . . . . . . . . . . . 3.1(a)
Material Adverse Effect of KT . . . . . . . . . . . . . . . . . . . . . 4.1
Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Membership Units . . . . . . . . . . . . . . . . . . . . . . . . . 3.2(a)
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
Multiemployer Plan . . . . . . . . . . . . . . . . . . . . . . . 3.7(a)(i)
NMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5(b)
New Employment Agreements . . . . . . . . . . . . . . . . . . . . Recitals
Non-Investment Fund Financial Statements . . . . . . . . . . . . . 3.21(d)
Non-Investment Funds . . . . . . . . . . . . . . . . . . . . . . . 3.21(h)
Owned Intellectual Property . . . . . . . . . . . . . . . . 3.15(a)(ii)(E)
Owned Software . . . . . . . . . . . . . . . . . . . . . . 3.15(a)(ii)(E)
Owned Technology . . . . . . . . . . . . . . . . . . . . . 3.15(a)(ii)(E)
parachute payment . . . . . . . . . . . . . . . . . . . . . . . . . 3.7(f)
pooling-of-interests . . . . . . . . . . . . . . . . . . . . . . . 3.26(a)
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Parent Certificates . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Parent Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . 8.1
person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7(g)(ii)
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7(d)
Private Fund Financial Statements . . . . . . . . . . . . . . . . . 3.21(d)
Private Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.21(h)
Private Fund Tax Returns . . . . . . . . . . . . . . . . . . . . . 3.21(c)
qualified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7 (d)
Regulatory Agreement . . . . . . . . . . . . . . . . . . . . . . . . 3.23
Regulatory Filings . . . . . . . . . . . . . . . . . . . . . . . . 3.22(c)
Required Statutory Approvals . . . . . . . . . . . . . . . . . 3.4(a)(iii)
Required Third Party Consents . . . . . . . . . . . . . . . . . 3.4(a)(ii)
SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . 3.21(f)
Self Regulatory Authority . . . . . . . . . . . . . . . . . . . . . . 3.23
Significant Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . 4.1
Software . . . . . . . . . . . . . . . . . . . . . . . . . 3.15(a)(ii)(E)
SubAH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
SubKT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Surviving LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
Surviving Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.15(i)
Takeover Proposal . . . . . . . . . . . . . . . . . . . . . . . 5.10(a)(ii)
Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8(k)
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8(j)
Technology . . . . . . . . . . . . . . . . . . . . . . . . 3.15(a)(ii)(D)
Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(A)
Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
Third Party Claim . . . . . . . . . . . . . . . . . . . . . . . . . 8.2(a)
toxic substances . . . . . . . . . . . . . . . . . . . . . . . 3.6(d)(iii)
under common control with . . . . . . . . . . . . . . . . . . . . . . 9.10
LIST OF EXHIBITS
Exhibit A Form of Certificate of Incorporation of Parent
Exhibit B Form of Bylaws of Parent
Exhibit C Form of Escrow Indemnity Agreement
Exhibit D Form of AH Affiliate Letter
=============================================================================
AMENDMENT NUMBER ONE
to the
AGREEMENT AND PLAN OF MERGER
among
KT HOLDING COMPANY
KT ACQUISITION I CORP.
AH ACQUISITION I L.L.C.
KNIGHT/TRIMARK GROUP, INC.
ARBITRADE HOLDINGS LLC
TARMACHAN CAPITAL MANAGEMENT, INC.
TARMACHAN CAPITAL CO.
DEEPHAVEN INC.
GILDOR TRADING, INC.
XXXXX XXXXXXX
XXXXXX XXXXXX
XXXXX XXXXX
XXXXXXX XXXXXXXX
and
XXXX XXXXX
Dated as of December 14, 1999
============================================================================
AMENDMENT NUMBER ONE, dated as of December 14, 1999 (the
"Amendment") to the AGREEMENT AND PLAN OF MERGER, dated as of November 17,
1999 (the "Agreement"), among KT HOLDING COMPANY, a Delaware corporation
("Parent"), KT ACQUISITION I CORP., a Delaware corporation ("SubKT"), AH
ACQUISITION I L.L.C., a Delaware limited liability company ("SubAH"),
KNIGHT/TRIMARK GROUP, INC., a Delaware corporation ("KT"), ARBITRADE
HOLDINGS LLC, a Delaware limited liability company ("AH") and TARMACHAN
CAPITAL MANAGEMENT, INC., TARMACHAN CAPITAL CO., DEEPHAVEN INC., GILDOR
TRADING, INC., XXXXX XXXXXXX, XXXXXX XXXXXX, XXXXX XXXXX, XXXXXXX XXXXXXXX
and XXXX XXXXX (together, the "Members").
WHEREAS, Parent, SubKT, SubAH, KT, AH and the Members have
entered into the Agreement; and
WHEREAS, the parties wish to amend the Agreement as follows.
NOW, THEREFORE, fully intending to be legally bound hereby, the
parties agree as follows:
ARTICLE X
DEFINITIONS
Section 10.1 Definitions.
All capitalized terms used in this Amendment that are not defined
herein shall have the definitions ascribed thereto in the Agreement.
ARTICLE XI
AMENDMENTS
Section 11.1 Amendments to the Agreement.
(a) Section 1.5 of the Agreement is hereby deleted in its
entirety and the following shall be substituted in lieu thereof:
"Section 1.5 KT Effective Time. Subject to the provisions
of this Agreement, as soon as practicable on or after the KT
Closing Date, the parties shall file with the Secretary of State
of the State of Delaware this Agreement and the related
certificates of the respective secretaries of KT and SubKT as
required by Section 251(g) of the DGCL, executed in accordance
with the relevant provisions of the DGCL, and shall make all
other filings or recordings required under the DGCL in order to
effect the KT Merger. The KT Merger shall become effective at
such time as this Agreement is so filed with the Secretary of
State of the State of Delaware (the time at which the KT Merger
has become fully effective being hereinafter referred to as the
"KT Effective Time")."
(b) Section 1.7(d) of the Agreement is hereby deleted in its
entirety and the following shall be substituted in lieu thereof:
"(d) Charter Documents. (i) At the KT Effective Time,
the Certificate of Incorporation and the Bylaws of KT, as in
effect immediately prior to the KT Effective Time, shall be the
Certificate of Incorporation and Bylaws, respectively, of the
Surviving Corporation; provided, however, that, with respect to
the Certificate of Incorporation, from and after the KT Effective
Time, (x) Article FIRST shall be amended and restated in its
entirety as follows "FIRST: The name of the Corporation is
Knight/Trimark, Inc. (the "Corporation")"; (y) paragraph (a) of
Article FOURTH shall be amended and restated and shall be read in
its entirety as follows: "FOURTH: The total number of shares of
stock which the Corporation shall have authority to issue is
3,000 shares of capital stock, consisting of (i) 1,000 shares of
class A common stock, par value $.01 per share (the "Class A
Common Stock"), (ii) 1,000 shares of class B common stock, par
value $.01 per share (the "Class B Common Stock" and, together
with the Class A Common Stock, the "Common Stock"), and (iii)
1,000 shares of preferred stock, par value $.01 per share (the
"Preferred Stock")"; and (z) a new Article TWELFTH shall be added
thereto which shall be and read in its entirety as follows:
"TWELFTH: Any act or transaction by or involving this
Corporation that requires for its adoption under the GCL or this
Amended and Restated Certificate of Incorporation the approval of
the stockholders of this Corporation (other than the election or
removal of directors of this Corporation) shall, pursuant to
Section 251(g) of the GCL, require, in addition, the approval of
the stockholders of Knight/Trimark Group, Inc., a Delaware
corporation, or any successor thereto by merger, by the same vote
that is required by the GCL and/or the Amended and Restated
Certificate of Incorporation of this Corporation"; and (ii) at
the AH Effective Time, the Certificate of Formation and the
Agreement of Limited Liability Company of SubAH, as in effect
immediately prior to the AH Effective Time, shall be the
Certificate of Formation and Agreement of Limited Liability
Company, respectively, of the Surviving LLC."
(c) Section 1.9 of the Agreement is hereby deleted in its
entirety and the following shall be substituted in lieu thereof:
"Section 1.9 Parent Charter Documents and Name. At the
KT Effective Time, the provisions of the Certificate of
Incorporation and Bylaws of Parent shall be as set forth
substantially in the form of Exhibit A and Exhibit B hereto,
respectively, with such changes as are necessary so that the name
of Parent as of the KT Effective Time shall be changed to
"Knight/Trimark Group, Inc."
(d) The following entry in the "Index of Defined Terms" set
forth in the Agreement is hereby deleted in its entirety:
"KT Certificate of Merger..................................... 1.5"
ARTICLE XII
MISCELLANEOUS
Section 12.1 Counterparts; Effectiveness. This Amendment may be
executed in two or more consecutive counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument, and shall become effective when one or more
counterparts have been signed by each of the parties and delivered (by
telecopy or otherwise) to the other parties.
Section 12.2 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO
BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED
BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD
TO THE CONFLICT OF LAW PRINCIPLES.
Section 12.3 Continuing Effect. Except to the extent amended
hereby, the provisions of the Agreement shall remain unmodified and
effective as of their respective dates, and the Agreement, as amended by
this Amendment, hereby is confirmed as being in full force and effect in
accordance with its terms. This Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver of any other
provision of the Agreement. From and after the date hereof, except as the
context otherwise requires, all references in the Agreement to the
"Agreement" shall be deemed to be references to the Agreement as amended
hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered as of the date first above written.
KT HOLDING COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer and President
KT ACQUISITION I CORP.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer and President
AH ACQUISITION I L.L.C.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer and President
KNIGHT/TRIMARK GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer and President
ARBITRADE HOLDINGS LLC
By: /s/ Xxxxx Xxxxxxx
------------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Managing Director
/s/ Xxxxx Xxxxx
------------------------------------------------
XXXXX XXXXX
/s/ Xxxxxxx Xxxxxxxx
------------------------------------------------
XXXXXXX XXXXXXXX
/s/ Xxxx Xxxxx
------------------------------------------------
XXXX XXXXX
/s/ Xxxxx Xxxxxxx
------------------------------------------------
TARMACHAN CAPITAL MANAGEMENT, INC.
/s/ Xxxxx Xxxxxxx
------------------------------------------------
TARMACHAN CAPITAL CO.
/s/ Xxxxx Xxxxxxx
------------------------------------------------
DEEPHAVEN INC.
/s/ Xxxxxx Xxxxxx
------------------------------------------------
GILDOR TRADING, INC.
Other than for
purposes of Articles I,
II (except Section
2.3(g)) and IV of the
Agreement as amended
by this Amendment /s/ Xxxxx Xxxxxxx
------------------------------------------------
XXXXX XXXXXXX
Other than for purpose
of Article I, II
(except Section 2.3(g))
and IV of the Agreement
as amended by this
Agreement /s/ Xxxxxx Xxxxxx
------------------------------------------------
XXXXXX XXXXXX
