EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
among
BMD VENTURE CAPITAL B.V.,
ELMIRA (BVI) UNLIMITED
and
XXXXX XXXXXXXX CORPORATION
Dated as of December 23, 2005
TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER
Section 1.1 The Merger.....................................................4
Section 1.2 Closing........................................................4
Section 1.3 Effective Time.................................................5
Section 1.4 Effects of the Merger..........................................5
Section 1.5 Memorandum and Articles of Association of the Surviving
Corporation................................................... 5
Section 1.6 Directors......................................................5
Section 1.7 Officers.......................................................5
ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.1 Effect on Shares...............................................5
Section 2.2 Exchange of Certificates.......................................7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Qualification, Organization, Subsidiaries, etc.................9
Section 3.2 Capital Stock.................................................10
Section 3.3 Corporate Authority Relative to this Agreement; No Violation..12
Section 3.4 Reports and Financial Statements..............................14
Section 3.5 Internal Controls and Procedures..............................14
Section 3.6 No Undisclosed Liabilities....................................15
Section 3.7 Compliance with Law; Permits..................................15
Section 3.8 Employee Benefit Plans..........................................
Section 3.9 Absence of Certain Changes or Events..........................18
Section 3.10 Investigations; Litigation....................................18
Section 3.11 Tax Matters...................................................18
Section 3.12 Labor Matters.................................................19
Section 3.13 Intellectual Property.........................................20
Section 3.14 Opinion of Financial Advisor..................................22
Section 3.15 Required Vote of the Company Shareholders.....................22
Section 3.16 Material Contracts............................................22
Section 3.17 Finders or Brokers............................................24
Section 3.18 Properties and Leases.........................................24
Section 3.19 Environmental Matters...........................................
Section 3.20 State Takeover Statutes.......................................26
Section 3.21 Insurance Policies............................................26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 4.1 Qualification; Organization, Subsidiaries, etc................27
Section 4.2 Corporate Authority Relative to this Agreement; No Violation..27
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Section 4.3 Compliance with Law; Permits..................................28
Section 4.4 Investigations; Litigation....................................29
Section 4.5 Available Funds...............................................29
Section 4.6 Capitalization of Merger Sub..................................29
Section 4.7 Guarantee.....................................................30
Section 4.8 No Vote of Parent Stockholders................................30
Section 4.9 Finders or Brokers............................................30
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of Business by the Company or Parent..................30
Section 5.2 Investigation.................................................34
Section 5.3 No Solicitation...............................................35
Section 5.4 Filings, Other Actions........................................37
Section 5.5 Stock Options and Other Stock Based Awards; Employee Matters..39
Section 5.6 Reasonable Best Efforts.......................................41
Section 5.7 Press Releases................................................44
Section 5.8 Indemnification and Insurance.................................44
Section 5.9 Section 16 Matters............................................45
Section 5.10 Control of Operations.........................................45
Section 5.11 Certain Transfer Taxes........................................45
Section 5.12 Financing.....................................................46
Section 5.13 Merger Sub....................................................47
Section 5.14 Intentionally Omitted.........................................47
Section 5.15 Existing Indebtedness.........................................47
Section 5.16 Notification..................................................48
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger....49
Section 6.2 Conditions to Obligation of the Company to Effect the Merger..49
Section 6.3 Conditions to Obligation of Parent and Merger Sub to Effect
the Merger....................................................50
ARTICLE VII
TERMINATION
Section 7.1 Termination or Abandonment....................................51
Section 7.2 Termination Fees..............................................53
Section 7.3 Amendment or Supplement.......................................55
Section 7.4 Extension of Time, Waiver, etc................................55
ARTICLE VIII
MISCELLANEOUS
Section 8.1 No Survival of Representations and Warranties.................56
Section 8.2 Expenses......................................................56
Section 8.3 Counterparts; Effectiveness...................................56
Section 8.4 Governing Law.................................................56
Section 8.5 Jurisdiction; Enforcement.....................................56
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Section 8.6 Notices.......................................................57
Section 8.7 Assignment; Binding Effect....................................58
Section 8.9 Severability..................................................58
Section 8.9 Entire Agreement; No Third-Party Beneficiaries................59
Section 8.10 Headings......................................................59
Section 8.11 Remedies......................................................59
Section 8.11 Interpretation................................................60
Section 8.12 Definitions...................................................60
Exhibit A Form of Guarantee
Exhibit B Consent of Sole Shareholder of Merger Sub
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AGREEMENT AND PLAN OF MERGER, dated as of December 23, 2005 (the
"AGREEMENT"), among BMD Venture Capital B.V., a Netherlands limited liability
company ("PARENT"), Elmira (BVI) Unlimited, an unlimited company organized under
the laws of the British Virgin Islands and a direct wholly-owned subsidiary of
Parent ("MERGER SUB"), and Xxxxx Xxxxxxxx Corporation, a company incorporated
under the laws of the British Virgin Islands (the "COMPANY").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have approved the merger of Merger Sub with and into the Company
upon the terms and subject to the conditions set forth in this Agreement and
pursuant to Section 170 of the BVI Companies Act, 2004 (the "BC ACT") of the
British Virgin Islands;
WHEREAS, the respective Boards of Directors of the Company and Merger
Sub have, by resolution and in accordance with Section 170 of the BC Act,
approved this Agreement and the merger of Merger Sub with and into the Company,
as set forth below (the "MERGER"), upon the terms and subject to the conditions
set forth in this Agreement;
WHEREAS, the Board of Directors of Parent has approved and declared
advisable this Agreement and the Merger, in accordance with the laws of the
Netherlands; and
WHEREAS, concurrently with the execution of this Agreement, and as a
condition to the willingness of the Company to enter into this Agreement, Apax
Europe VI A, L.P. and Apax Europe VI-1, L.P. (together, the "Guarantors") are
providing a guarantee (the "GUARANTEE") in favor of the Company, in the form set
forth in Exhibit A hereto, with respect to the performance by Parent and Merger
Sub, respectively, of their obligations under this Agreement in the event of a
breach by either Parent or Merger Sub of such obligations, subject to a cap as
further set forth in Section 8.11.
NOW THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, Parent, Merger Sub and the Company agree
as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. At the Effective Time (as defined in Section
1.3), upon the terms and subject to the conditions set forth in this Agreement
and in accordance with the applicable provisions of the BC Act, Merger Sub shall
be merged with and into the Company, whereupon the separate corporate existence
of Merger Sub shall cease, and the Company shall continue as the surviving
company in the Merger (the "SURVIVING CORPORATION") and a wholly-owned
subsidiary of Parent.
Section 1.2 CLOSING. The closing of the Merger (the "CLOSING") shall
take place at the offices of Wachtell, Lipton, Xxxxx & Xxxx, 00 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 a.m., local time, on a date to be specified
by the parties (the "CLOSING DATE")
which shall be no later than the second business day after the satisfaction or
waiver (to the extent permitted by applicable Law (as defined in Section 3.7(a))
of the conditions set forth in Article VI (other than those conditions that by
their nature are to be satisfied by action at the Closing, including Sections
6.3(d) and (e), but subject to the satisfaction or waiver of such conditions),
or at such other place, date and time as the Company and Parent may agree in
writing.
Section 1.3 EFFECTIVE TIME. On the Closing Date, immediately after
the Closing, the parties shall cause the merger to be consummated by executing
and filing articles of merger (the "ARTICLES OF MERGER") with the BVI Registrar
of Corporate Affairs (the "REGISTRAR") and make all other filings or recordings
required under the BC Act in connection with the Merger. The Merger shall become
effective at such time as the Articles of Merger are duly registered by the
Registrar, or at such later time as the parties shall agree (subject to the
requirements of the BC Act) and as shall be set forth in the Articles of Merger
(such date and time as the Merger becomes effective is referred to herein as the
"EFFECTIVE TIME").
Section 1.4 EFFECTS OF THE MERGER. The effects of the Merger shall be
as provided in this Agreement and in the applicable provisions of the BC Act.
Without limiting the generality of the foregoing, at the Effective Time, all the
assets of every description, including choses in actions and the business of
each of the Company and Merger Sub shall vest in the Surviving Corporation, and
all debts, claims, liabilities and obligations of the Company and Merger Sub
shall become the debts, claims, liabilities and obligations of the Surviving
Corporation, all as provided under the BC Act.
Section 1.5 MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE SURVIVING
CORPORATION. Subject to Section 5.8 of this Agreement, at the Effective Time,
the Memorandum and Articles of Association of the Company, as set forth in
Schedule 1.5 hereto shall be the memorandum and articles of association of the
Surviving Corporation, with such amendments as may be required in connection
with the re-registration contemplated by Section 5.4(d) until thereafter amended
in accordance with the provisions thereof and applicable Law.
Section 1.6 DIRECTORS. Subject to applicable Law, the directors of
Merger Sub immediately prior to the Effective Time shall be appointed as
directors of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal.
Section 1.7 OFFICERS. The officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation and
shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.1 EFFECT ON SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of the Company, Merger Sub or the
holders of any securities of the Company or Merger Sub:
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(a) CONVERSION OF COMPANY ORDINARY SHARES. Subject to Section 2.1(d),
each ordinary share, par value U.S.$0.01 per share, of the Company issued and
outstanding immediately prior to the Effective Time (such shares collectively,
"COMPANY ORDINARY SHARES" or "SHARES" and each, a "SHARE"), other than any
Cancelled Shares (as defined, and to the extent provided, in Section 2.1(b)) and
any Dissenting Shares (as defined, and to the extent provided, in Section
2.1(e)), shall thereupon be converted into a right to receive U.S.$16.80 in
cash, without interest thereon (the "MERGER CONSIDERATION"); and all Shares that
have been thus converted into the right to receive the Merger Consideration as
provided in this Section 2.1 shall be automatically cancelled and shall cease to
exist and the holders of certificates which immediately prior to the Effective
Time represented such Shares shall cease to have any rights with respect to such
Shares other than the right to receive the Merger Consideration, without
interest thereon, upon surrender of such certificates in accordance with this
Article II.
(b) PARENT AND MERGER SUB OWNED SHARES; TREASURY SHARES. Each Share
that is owned, directly or indirectly, by Parent or Merger Sub immediately prior
to the Effective Time or held by the Company as treasury shares (in each case,
other than any such Shares held on behalf of third parties) (the "CANCELLED
SHARES") shall, by virtue of the Merger and without any action on the part of
the holder thereof, be cancelled and retired and shall cease to exist, and no
consideration shall be delivered or deliverable in exchange therefor.
(c) CONVERSION OF MERGER SUB SHARES. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder thereof, each
ordinary share, par value U.S.$0.01 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one validly issued, fully paid and nonassessable ordinary share, par
value U.S.$0.01 per share, of the Surviving Corporation and shall constitute the
only outstanding shares of the Surviving Corporation. From and after the
Effective Time, all certificates representing the ordinary shares of Merger Sub
shall be deemed for all purposes to represent the number of ordinary shares of
the Surviving Corporation into which they were converted in accordance with the
immediately preceding sentence.
(d) ADJUSTMENTS. If at any time during the period between the date of
this Agreement and the Effective Time, any change in the outstanding Company
Ordinary Shares shall occur as a result of any reclassification,
recapitalization, stock split (including a reverse stock split) or combination,
exchange or readjustment of shares, or any stock dividend or stock distribution
with a record date during such period (it being understood that the right of the
Company to effect any of the foregoing shall be subject to Section 5.1 hereof),
the Merger Consideration shall be equitably adjusted to reflect such change.
(e) DISSENTING SHARES. For the purposes of this Agreement,
"DISSENTING SHARES" means Shares held by holders who duly exercise their right
of dissent in relation to the Merger and in accordance with the provisions of
Section 179 of the BC Act. At or from the Effective Time, all Dissenting Shares
shall automatically be cancelled and shall cease to exist or be outstanding, and
each holder of certificates representing Dissenting Shares shall cease to have
any rights with respect thereto (including any right to receive such holder's
portion of the Merger Consideration pursuant to Section 2.1(a) hereof), except
for such rights as are granted under Section 179 of the BC Act. Notwithstanding
the foregoing, if any holder of Dissenting Shares fails at any time prior to or
following the Effective Time to perfect or otherwise waives,
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withdraws or loses such holder's rights under Section 179 of the IBC Act, then
the rights of such holder to be paid "fair value" pursuant to Section 179 of the
BC Act shall cease to exist, and such Dissenting Shares shall entitle their
holder to receive the Merger Consideration pursuant to Section 2.1(a) hereof.
The Company shall give Parent (i) prompt notice of any notice received by the
Company of any shareholder's intent to exercise dissenter's rights pursuant to
Section 179 of the BC Act, the withdrawal of any such notice and any other
documents served upon the Company pursuant to Section 179 of the BC Act. The
Company shall not, except with the prior written consent of Parent or as
otherwise required by an order, decree, ruling or injunction of a court of
competent jurisdiction, make any payment with respect to any such exercise of
dissenter's rights or offer to settle or settle any such rights for an amount
higher than the Merger Consideration.
Section 2.2 EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. At or immediately following the Effective Time,
Parent shall deposit, or shall cause to be deposited, with a U.S. bank or trust
company that shall be appointed by Parent to act as a paying agent hereunder and
approved in advance by the Company in writing (the "PAYING AGENT"), in trust for
the benefit of holders of the Shares, the Company Stock Options (as hereinafter
defined) and the Company Stock-Based Awards (as hereinafter defined), cash in
U.S. dollars sufficient to pay (i) the aggregate Merger Consideration in
exchange for all of the Shares outstanding immediately prior to the Effective
Time (other than the Cancelled Shares and the Dissenting Shares), payable upon
due surrender of the certificates that immediately prior to the Effective Time
represented Shares ("CERTIFICATES") (or effective affidavits of loss accompanied
by any bond required by subsection (g) in lieu thereof) and Shares represented
by book-entry ("BOOK-ENTRY SHARES") pursuant to the provisions of this Article
II and (ii) the Option and Stock-Based Consideration (as hereinafter defined)
payable pursuant to Section 5.5 (such cash referred to in sub-section (a)(i) and
(a)(ii) being hereinafter referred to as the "EXCHANGE FUND").
(b) PAYMENT PROCEDURES. (i) As soon as reasonably practicable after
the Effective Time and in any event not later than the second business day
following the Effective Time, the Paying Agent shall mail (x) to each holder of
record of Shares whose Shares were converted into the Merger Consideration
pursuant to Section 2.1, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to Certificates shall
pass, only upon delivery of Certificates (or effective affidavits of loss
accompanied by any bond required by subsection (g) in lieu thereof) or
Book-Entry Shares to the Paying Agent and shall be in such form and have such
other provisions as Parent and the Company may reasonably specify), and (ii)
instructions for use in effecting the surrender of Certificates (or effective
affidavits of loss accompanied by any bond required by subsection (g) in lieu
thereof) or Book-Entry Shares in exchange for the Merger Consideration and (y)
to each holder of a Company Stock Option or a Company Stock-Based Award, a check
in an amount due and payable to such holder pursuant to Section 5.5 hereof in
respect of such Company Stock Option or Company Stock-Based Award.
(ii) Upon surrender of Certificates (or effective affidavits
of loss in lieu thereof) or Book-Entry Shares to the Paying Agent together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may customarily be
required by the Paying Agent, the holder of such Certificates
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or Book-Entry Shares shall be entitled to receive in exchange therefor a check
in an amount equal to the product of (x) the number of Shares represented by
such holder's properly surrendered Certificates (or effective affidavits of loss
in lieu thereof) or Book-Entry Shares multiplied by (y) the Merger
Consideration. No interest will be paid or accrued on any amount payable upon
due surrender of Certificates or Book-Entry Shares. In the event of a transfer
of ownership of Shares that is not registered in the transfer records of the
Company, a check for any cash to be paid upon due surrender of the Certificate
may be paid to such a transferee if the Certificate formerly representing such
Shares is presented to the Paying Agent, accompanied by all documents required
to evidence and effect such transfer and to evidence that any applicable stock
transfer Taxes have been paid or are not applicable. Until surrendered as
contemplated by this Section 2.2, each Certificate or Book-Entry Share shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the applicable Merger Consideration as contemplated
by this Article II.
(iii) For the avoidance of doubt, the Paying Agent shall be
entitled to deduct and withhold from the consideration otherwise payable under
this Agreement to any holder of Shares or holder of Company Stock Options or
Company Stock-Based Awards, such amounts as are required to be withheld or
deducted under the Internal Revenue Code of 1986, as amended (the "CODE") or any
provision of U.S. state, U.S. local or foreign Tax Law with respect to the
making of such payment. To the extent that amounts are so withheld or deducted
and paid over to the applicable Governmental Entity, such withheld or deducted
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Shares or holder of the Company Stock Options or Company
Stock-Based Awards, in respect of which such deduction and withholding were
made. If any withholding or deduction is required to be made under the Laws of
any jurisdiction from the consideration otherwise payable under this Agreement
to any holder of Shares or holder of Company Stock Options or Company
Stock-Based Awards, the amount of such payment shall be increased to an amount
which ensures that, after the making of that withholding or deduction, the
holder entitled to receive such payment receives and retains a net sum equal to
the payment which it would have received and retained had no such withholding or
deduction been required; provided, that this sentence shall not require that any
increase be made with respect to any withholding or deduction to the extent such
withholding or deduction would have been imposed had Parent and Merger Sub (or
their respective assignees pursuant to Section 8.7) been corporations organized
under the Laws of the United States (or any political subdivision thereof) or
the British Virgin Islands and not resident for Tax purposes in any other
jurisdiction.
(c) CLOSING OF REGISTER OF MEMBERS. At the Effective Time, the
register of members of the Company shall be closed, and there shall be no
further registration of transfers on the register of members of the Surviving
Corporation of the Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for transfer, they shall be cancelled and exchanged for a
check in the proper amount pursuant to this Article II.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
(including the proceeds of any investments thereof) that remains undistributed
to the former holders of Shares, Company Stock Options or Company Stock-Based
Awards for six months after the Effective Time shall be delivered to the
Surviving Corporation upon demand, and any
8
former holders of Shares who have not theretofore complied with this Article II
shall thereafter look only to the Surviving Corporation (subject to abandoned
property, escheat or other similar laws) for payment of its claim for the Merger
Consideration, without any interest thereon, upon due surrender of their shares.
(e) NO LIABILITY. Notwithstanding anything herein to the contrary,
none of the Company, Parent, Merger Sub, the Surviving Corporation, the Paying
Agent or any other person shall be liable to any former holder of Shares for any
amount properly delivered to a public official pursuant to any abandoned
property, escheat or similar Law applicable to the Company or any of the
Company's Subsidiaries or any of their respective properties or assets. If any
Certificate or Book-Entry Share shall not have been surrendered prior to such
date on which any Merger Consideration payable to the holder of such Certificate
or Book-Entry Share pursuant to this Article II would otherwise escheat to or
become the property of any Governmental Entity, any such Merger Consideration in
respect of such Certificate or Book-Entry Share shall, to the extent permitted
by applicable Law, become the property of the Surviving Corporation, and any
former holder of Shares who has not theretofore complied with this Article II
shall thereafter look only to the Surviving Corporation for payment of his or
her claim for Merger Consideration.
(f) INVESTMENT OF EXCHANGE FUND. The Paying Agent shall invest all
cash included in the Exchange Fund as directed by Parent. Any interest and other
income resulting from such investments shall be paid to Parent.
(g) LOST CERTIFICATES. In the case of any Certificate that has been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Paying Agent or the Surviving Corporation, the posting by such
person of a bond in customary amount as indemnity against any claim that may be
made against it with respect to such Certificate, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate a check in the amount of
the number of Shares represented by such lost, stolen or destroyed Certificate
multiplied by the applicable Merger Consideration.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the corresponding numbered sections of the
Disclosure Schedule delivered by the Company to Parent immediately prior to the
execution of this Agreement (the "COMPANY DISCLOSURE SCHEDULE") (it being agreed
that disclosure of any item in any section of the Company Disclosure Schedule
shall be deemed disclosure with respect to any other section of this Agreement
to which the relevance of such item is reasonably apparent on its face), the
Company represents and warrants to Parent and Merger Sub as follows:
Section 3.1 QUALIFICATION, ORGANIZATION, SUBSIDIARIES, ETC. Each of
the Company and its Subsidiaries is a legal entity duly organized and validly
existing under the Laws of its respective jurisdiction of organization and has
all requisite corporate or similar power and authority to own, lease and operate
its properties and assets and to carry on its business as presently conducted,
and each of the Company and its Subsidiaries is qualified to do business
9
and is in good standing in each jurisdiction where the ownership, leasing or
operation of its assets or properties or conduct of its business requires such
qualification, except, in each case, where the failure to be so organized,
validly existing, qualified or in good standing, or to have such power or
authority, would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect. The Company has made available to
Parent prior to the date of this Agreement a true and complete copy of the
Company's Memorandum and Articles of Association and of the analogous
constitutive and governing documents of the Company's Subsidiaries, each as
amended through the date hereof. The Company's Memorandum and Articles of
Association are in full force and effect. Neither the Company nor any of its
Subsidiaries is in violation of the provisions of its governing documents. As
used in this Agreement, any reference to any state of facts, circumstances,
event or change having a "COMPANY MATERIAL ADVERSE EFFECT" means a material
adverse effect on the business, operations, assets, liabilities, condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole,
except to the extent arising out of, resulting from or relating to (i)(A) any
changes in general economic or political conditions or the financial, credit or
securities markets, in each case in (x) the United States or (y) Europe taken as
a whole, except, in either case, to the extent that such changes
disproportionately impact the Company and its Subsidiaries, taken as a whole,
relative to other participants in either (1) the retail apparel and wholesale
apparel industry in the United States or (2) the premium brand segment thereof
in Europe; (B) any events, circumstances, changes or effects that affect
generally the retail apparel or wholesale apparel industry (except to the extent
that such events, circumstances, changes or effects disproportionately impact
the Company and its Subsidiaries taken as a whole relative to other participants
in either (x) the retail apparel and wholesale apparel industry in the United
States or (y) the premium brand segment thereof in Europe); (C) any outbreak or
escalation of hostilities or war or any act of terrorism; (D) the Hong Kong tax
matter referred to in the Company SEC Documents (as defined herein), including
any claim relating thereto or the settlement, compromise or consent made in
compliance with the terms of this Agreement (the "HONG KONG TAX MATTER"); or (E)
the case entitled IN RE XXXXX XXXXXXXX SECURITIES LITIGATION, (Civil Action No.
04-CV-7678(RO)), including any settlement, compromise or consent made in
compliance with the terms of this Agreement (the "SECURITIES CLASS ACTION") or
(ii) any events, circumstances, changes or effects that the Company can
demonstrate are principally related to the announcement or the existence of this
Agreement and the transactions contemplated hereby; PROVIDED, that clause (ii)
shall not apply with respect to Section 3.3 (including for purposes of Section
6.3(a) insofar as Section 3.3 is concerned); PROVIDED, FURTHER, that "Material
Adverse Effect" shall not include the expected decline in U.S. wholesale
revenue, or the expected decrease in the continuing U.S. men's, women's and
children's businesses (which no longer includes young men's jeans and the
wholesale H Hilfiger businesses), described in the section entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Forward Outlook" of the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 2005.
Section 3.2 CAPITAL STOCK.
(a) As of December 15, 2005, the authorized share capital of the
Company consisted of (i) 150,000,000 Company Ordinary Shares, of which (A)
92,464,503 Company Ordinary Shares were issued and outstanding (which includes
all outstanding shares of restricted stock, but excludes treasury shares); (B)
6,192,600 Company Ordinary Shares were held in
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treasury; and (C) 8,851,830 Company Ordinary Shares were authorized and reserved
for future issuance upon exercise of outstanding options to purchase Company
Ordinary Shares under the Xxxxx Xxxxxxxx (Eastern Hemisphere) Limited 1992 Stock
Incentive Plan, as amended, the Xxxxx Xxxxxxxx U.S.A., Inc. 1992 Stock Incentive
Plan, as amended, the Xxxxx Xxxxxxxx Corporation 2001 Stock Incentive Plan, the
Xxxxx Xxxxxxxx Corporation Non-Employee Directors Stock Option Plan, as amended,
and the Xxxxx Xxxxxxxx Corporation 2003 Incentive Compensation Plan, as amended
(collectively, the "COMPANY INCENTIVE PLANS"); and (ii) 5,000,000 preference
shares, U.S.$0.01 par value per share (the "PREFERENCE SHARES"), of which none
were issued and outstanding. All the outstanding Company Ordinary Shares are and
all Company Ordinary Shares reserved for issuance as noted in clause (i)(C)
above shall be, when issued in accordance with the respective terms thereof, (i)
issued and granted in compliance with all applicable securities laws and other
applicable Laws and not in violation of any preemptive rights and (ii) duly
authorized, validly issued (or will be, in the case of shares referred to in
subclause (i)(C)) and are (or will be, in the case of shares referred to in
subclause (i)(C)) fully paid and non-assessable and are not subject to and were
not, and will not be, in the case of shares referred to in subclause (i)(C),
issued in violation of any preemptive or similar rights, purchase option, call
right, right of first refusal or similar rights. No Subsidiary of the Company
owns any Company Ordinary Shares.
(b) Except as set forth in subsection (a) above: (i) the Company does
not have any shares issued or outstanding, other than Company Ordinary Shares
that have become outstanding after December 15, 2005 (pursuant to the exercise
of outstanding options to purchase Company Ordinary Shares which options had
been outstanding on December 15, 2005) and that had been reserved for issuance
as set forth in subsection (a)(i)(C) above and (ii) there are no outstanding
subscriptions, options, warrants, calls, convertible or exchangeable securities
or other similar rights, agreements or commitments relating to the issuance of
shares, voting securities or other equity interests in the Company to which the
Company or any of the Company's Subsidiaries is a party obligating the Company
or any of the Company's Subsidiaries to (A) issue, transfer or sell any shares,
voting securities or other equity interests of the Company or any Subsidiary of
the Company or securities convertible or exercisable into, or exchangeable for,
such shares, voting securities or equity interests; (B) grant, extend or enter
into any such subscription, option, warrant, call, convertible or exchangeable
securities or other similar right, agreement, arrangement or commitment to
repurchase; or (C) redeem or otherwise acquire any such shares, voting
securities or other equity interests.
(c) Except for outstanding awards to acquire Company Ordinary Shares
under each of the Company Incentive Plans, neither the Company nor any of its
Subsidiaries has outstanding bonds, debentures, notes or other obligations, the
holders of which have the right to vote (or which are convertible into or
exchangeable or exercisable for securities having the right to vote) with the
shareholders of the Company on any matter.
(d) There are no voting trusts or other agreements or understandings
to which the Company or any of its Subsidiaries is a party with respect to the
voting of the shares or other equity interest of the Company or any of its
Subsidiaries.
(e) Section 3.2(e) of the Company Disclosure Schedule contains a true
and complete list of the Company's Subsidiaries, including its name, entity form
and jurisdiction of
11
organization. Except for the entities set forth in Section 3.2(e) of the Company
Disclosure Schedule, the Company has no Subsidiaries and owns no ownership
interest in any other partnership, corporation or other entity. All of the
outstanding equity interests, as applicable, of each Subsidiary of the Company
are validly issued, fully paid and nonassessable and are owned, directly or
indirectly, by the Company free and clear of any Liens, and none of such
outstanding equity interests have been issued in violation of any preemptive or
similar rights, purchase option, call or right of first refusal. There are no
outstanding options, warrants, calls, stock appreciation rights or other rights
or commitments or any other agreements of any character relating to the sale,
issuance or voting of, or the granting of rights to acquire any equity interests
of, any such Subsidiary of the Company, or any securities or other instruments
convertible into, exchangeable for or evidencing the right to purchase any
equity interests of any such Subsidiary of the Company.
(f) Section 3.2(f) of the Company Disclosure Schedule sets forth a
true and complete list of all outstanding restricted shares and options to
purchase Company Ordinary Shares as of the date hereof, including the holders
thereof and the applicable dates of grant, exercise prices and any conditions
precedent to vesting, in each case, related thereto.
(g) Section 3.2(g) of the Company Disclosure Schedule is a true and
complete schedule of the Company's outstanding Indebtedness as of the close of
business on November 30, 2005. As of November 30, 2005, the unused commitment
under the Company's cash-collateralized letter of credit facility was
approximately U.S.$97 million. As used in this Agreement, "INDEBTEDNESS" means,
without duplication, (i) all indebtedness, notes payable (including, without
limitation, notes payable in connection with acquisitions), accrued interest
payable or other obligations of the Company and its Subsidiaries for borrowed
money, whether current, short-term, or long-term, secured or unsecured, other
than intercompany indebtedness, (ii) all indebtedness of the Company and its
Subsidiaries for the deferred purchase price for purchases of property or
assets, (iii) all lease obligations of the Company and its Subsidiaries under
leases which are capital leases in accordance with GAAP, (iv) any obligations of
the Company or its Subsidiaries in respect of banker's acceptances or letters of
credit (other than stand-by letters of credit in the ordinary course or
documentary letters of credit in support of trade payables), (v) any
indebtedness referred to in clauses (i) through (iv) above of any person or
entity other than the Company or any of its Subsidiaries which is either
guaranteed by, or secured by any Lien (other than Permitted Liens) upon any
material property or assets owned by, the Company or any of its Subsidiaries.
Section 3.3 CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO
VIOLATION.
(a) The Company has requisite corporate power and authority to enter
into this Agreement and, subject to receipt of the Company Shareholder Approval,
to consummate the transactions contemplated hereby, including the Merger. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of the Company and, except for (i) the Company Shareholder
Approval and (ii) the filing with, and acceptance by the Registrar of, the
documents of re-registration as contemplated by Section 5.4(d) and the Articles
of Merger, no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or the consummation of the transactions
contemplated hereby. The Board of Directors of the
12
Company has approved this Agreement by way of a board resolution adopted
pursuant to Section 170 of the BC Act and determined that this Agreement is
advisable. This Agreement has been duly and validly executed and delivered by
the Company and, assuming this Agreement constitutes the valid and binding
agreement of the Parent and Merger Sub, this Agreement constitutes the valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms.
(b) Other than in connection with or in compliance with (i) the
provisions of the BC Act and the International Business Companies Act, 1984,
(ii) the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") ,
(iii) the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR ACT"), (iv) the European Community Merger Regulation ("ECMR") and (v) the
approvals set forth on Section 3.3(b) of the Company Disclosure Schedule
(collectively, the "COMPANY APPROVALS"), no authorization, consent, clearance or
approval of, or filing or notification with, any United States (whether federal,
state or local) or foreign, provincial or supranational governmental or
regulatory agency, commission, court, body, entity or authority or works council
or similar governmental or regulatory body (each, a "GOVERNMENTAL ENTITY") is
necessary, under any Law (as hereinafter defined) applicable to the Company or
any of the Company's Subsidiaries or any of their respective properties or
assets, for the consummation by the Company of the transactions contemplated by
this Agreement, except for such authorizations, consents, approvals or filings
that, if not obtained or made, would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(c) The execution and delivery by the Company of this Agreement does
not, and the consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not (i) result in any violation of, or default
(with or without notice or lapse of time, or both) under, or any increased cost
or loss of benefit to the Company or any Subsidiary thereof or increased benefit
to another party thereto under, or result in the, or give rise to a right of,
termination, cancellation or acceleration of any obligation under, any loan,
guarantee of Indebtedness or credit agreement, note, bond, mortgage, indenture,
lease, agreement, contract, instrument, permit, concession, franchise, right,
license, arrangement or other obligation (each, a "CONTRACT") to which the
Company or any of the Company's Subsidiaries is a party or by which the Company
or any of the Company's Subsidiaries is bound or result in the creation of any
liens, claims, mortgages, encumbrances, pledges, security interests, equities or
charges of any kind or any restriction on transfer or, in the case of
securities, voting rights (each, a "LIEN") upon any of the properties or assets
of the Company or any of the Company's Subsidiaries, (ii) conflict with or
result in any violation in any respect of any provision of the Memorandum and
Articles of Association or other equivalent organizational document, in each
case as amended, of the Company or any of the Company's Subsidiaries or (iii)
conflict with or violate any Laws applicable to the Company or any of the
Company's Subsidiaries or any of their respective properties or assets or any
order, injunction, decree, or judgment (each, an "ORDER") applicable to the
Company or any of its Subsidiaries in existence as of the date hereof, other
than, in the case of clauses (i) and (iii), any such violation, conflict,
default, termination, cancellation, acceleration, Lien or other circumstance
that would not (x) prevent or materially delay the Company from performing its
obligations under this Agreement or taking any action necessary to consummate
the transactions contemplated by this Agreement or (y) reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
13
Section 3.4 REPORTS AND FINANCIAL STATEMENTS.
(a) The Company has timely filed or furnished all forms, documents
and reports (the "COMPANY SEC DOCUMENTS") required to be filed or furnished
prior to the date hereof by it with the Securities and Exchange Commission (the
"SEC") since March 31, 2004. As of their respective dates, or, if amended, as of
the date of the last such amendment, the Company SEC Documents complied in all
material respects with the requirements of the Securities Act and the Exchange
Act, as the case may be, and the applicable rules and regulations promulgated
thereunder, and none of the Company SEC Documents contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, or are to be made, not misleading.
None of the Company's Subsidiaries, other than Xxxxx Xxxxxxxx U.S.A., Inc.
(whose obligation is satisfied by disclosures provided in the filings made by
the Company), is required to file with, or furnish to, the SEC any form,
document or report.
(b) The Company has made available to Parent true, correct and
complete copies of all written correspondence between the SEC, on the one hand,
and the Company or any of its Subsidiaries, on the other hand, occurring since
March 31, 2004. As of the date hereof, there are no outstanding or unresolved
comments in the comment letters received from the SEC staff with respect to any
Company SEC Documents. The consolidated financial statements (as restated, if
applicable, and including all related notes and schedules) of the Company
included in the Company SEC Documents (i) were prepared from the books and
records of the Company and its Subsidiaries, (ii) complied in all material
respects with all applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, (iii) fairly present in
all material respects the consolidated financial position of the Company and its
consolidated Subsidiaries, as at the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows and
changes in shareholders' equity for the respective periods then ended (subject,
in the case of the unaudited statements, to normal year-end audit adjustments
and to any other adjustments described therein including the notes thereto) and
(iv) were prepared in accordance with United States generally accepted
accounting principles ("GAAP") (except, in the case of the unaudited statements,
as permitted by Form 10-Q of the SEC or other SEC rules and/or regulations)
applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto).
Section 3.5 INTERNAL CONTROLS AND PROCEDURES.
(a) The Company is in compliance in all material respects with (i)
the applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 (the "XXXXXXXX-XXXXX
ACT") and (ii) the applicable listing and corporate governance rules and
regulations of the New York Stock Exchange. The Company has established and
maintains disclosure controls and procedures and internal controls over
financial reporting (as such terms are defined in paragraphs (e) and (f),
respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15
under the Exchange Act. The Company's disclosure controls and procedures are
reasonably designed to ensure that all material information required to be
disclosed by the Company in the reports that it files or furnishes under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC, and that all such material
14
information is accumulated and communicated to the Company's management as
appropriate to allow timely decisions regarding required disclosure and to make
the certifications required pursuant to Sections 302 and 906 of the
Xxxxxxxx-Xxxxx Act.
(b) The Company has disclosed, based on its most recent evaluation
prior to the date hereof, to the Company's auditors and the audit committee of
the Board of Directors of the Company (i) any significant deficiencies and
material weaknesses in the design or operation of internal controls over
financial reporting, which are reasonably likely to materially adversely affect
the Company's ability to record, process, summarize and report financial data
and (ii) any fraud or allegation of fraud, whether or not material, known to
management that involves management or other employees who have a significant
role in the Company's internal controls over financial reporting. The Company
carried out an evaluation, under the supervision and with the participation of
management, including the Company's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures as of March 31, 2005, and such assessment
concluded that the Company's disclosure controls and procedures were not
effective as of March 31, 2005, at the reasonable assurance level, because of
the material weakness related to accounting for income taxes described in
Management's Report on Internal Control over Financial Reporting in the
Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2005.
As of the date hereof, management has taken actions that it believes should
address such material weakness.
Section 3.6 NO UNDISCLOSED LIABILITIES. Except (a) as reflected or
reserved against in the Company's consolidated balance sheet as of March 31,
2005 (or the notes thereto) included in the Company SEC Documents and (b) for
liabilities or obligations incurred in the ordinary course of business since
March 31, 2005, neither the Company nor any Subsidiary of the Company has any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, that would be required by GAAP to be reflected on a consolidated
balance sheet (or the notes thereto) of the Company and its Subsidiaries, other
than those which are disclosed in the Company SEC Documents or which,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect.
Section 3.7 COMPLIANCE WITH LAW; PERMITS.
(a) The Company and each of the Company's Subsidiaries are in
compliance with and are not in default under or in violation of any (i) any
federal, state, local or foreign law, statute, ordinance, rule, regulation,
decree, agency requirement, license or permit of any Governmental Entity
(collectively, "LAWS" and each, a "LAW") or (ii) Order, in each case, applicable
to the Company, such Subsidiaries or any of their respective properties or
assets and have not received any written notice of any non-compliance, default
or violation of such Laws or Orders, except in the case of each of (i) and (ii)
above, where such non-compliance, default or violation of Laws or Orders would
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Notwithstanding anything contained in this Section
3.7(a), no representation or warranty shall be deemed to be made in this Section
3.7(a) in respect of the matters referenced in Section 3.5, or in respect of
environmental, Tax, employee benefits or labor Laws matters.
15
(b) The Company and the Company's Subsidiaries are in possession of
all authorizations, licenses, permits, consents, certificates, approvals and
orders of any Governmental Entity necessary for the Company and the Company's
Subsidiaries to own, lease and operate their properties and assets or to carry
on their businesses as they are now being conducted (the "COMPANY PERMITS"),
except where the failure to have any of the Company Permits would not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect. All Company Permits are in full force and effect, except where
the failure to be in full force and effect would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. The
Company and the Company's Subsidiaries are, and at all times since April 1, 2004
have been, in compliance with the terms and conditions of the Company Permits,
and neither the Company nor any of the Company's Subsidiaries has received
written notice of any violation of the terms or conditions of the Company
Permits, or alleging the failure to hold or obtain any Company Permits required
to own, lease and operate their properties and assets or to carry on their
businesses as they are now being conducted, except violations or failures that
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. Neither the Company nor any of the Company's
Subsidiaries has received written notice that any of the Company Permits will
not be renewed, and there are no actions, suits, inquiries, investigations or
proceedings pending to revoke or withdraw any such Company Permits, except for
such non-renewals, revocations or withdrawals that would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 3.8 EMPLOYEE BENEFIT PLANS.
(a) Section 3.8(a) of the Company Disclosure Schedule lists all
material Company Benefit Plans. "COMPANY BENEFIT PLANS" means all employee
benefit plans, compensation arrangements and other benefit arrangements, whether
or not "employee benefit plans" (within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), whether
or not subject to ERISA), providing cash- or equity-based incentives, profit
sharing, health, medical, dental, disability, accident or life insurance
benefits or vacation, paid time off, severance, retirement, pension or savings
benefits, that are sponsored, maintained or contributed to by the Company or any
of its ERISA Affiliates for the benefit of any current or former employees,
directors or consultants of the Company or its Subsidiaries and all employee
agreements providing cash- or equity-based compensation, vacation, retention,
severance, change of control, savings contribution or other benefits or
commitments to any current or former officer, director, employee, or consultant
of the Company or its Subsidiaries, except to the extent providing benefits
imposed by applicable foreign Law. The Company has made available to Parent a
true and complete copy (where applicable) of: (i) each material Company Benefit
Plan, (ii) each trust or funding arrangement prepared in connection with each
such Company Benefit Plan, (iii) the most recently filed annual report on
Internal Revenue Service Form 5500 or any other annual report required by
applicable Law, (iv) the most recently received determination or opinion letter
for each such Company Benefit Plan, (v) the most recently prepared actuarial
report and financial statement in connection with each such Company Benefit
Plan, (vi) the most recent summary plan description, any material summaries of
material modification, any employee handbooks, and (vii) any material written
communications (or a description of any material oral communications) by the
Company or the Subsidiaries to any current or former employee, consultant, or
director of the Company or any Subsidiary
16
concerning the extent of the benefits provided under a material Company Benefit
Plan. Neither the Company nor any Subsidiary has any commitment to establish any
new material Company Benefit Plan or to materially modify any Company Benefit
Plan.
(b) None of the Company or any Subsidiary or any other person or
entity that, together with the Company or any Subsidiary, is or was treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code (each,
together with the Company and any Subsidiary, an "ERISA AFFILIATE"), has now or
at any time within the past six years (and in the case of any such other person
or entity, only during the period within the past six years that such other
person or entity was an ERISA Affiliate) contributed to, was required to
contribute to, sponsored, or maintained, with respect to ERISA Affiliates, while
being an ERISA Affiliate: (i) a pension plan (within the meaning of Section 3(2)
of ERISA) subject to Section 412 of the Code or Title IV of ERISA; (ii) a
multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA);
or (iii) a single employer pension plan (within the meaning of Section
4001(a)(15) of ERISA) for which an ERISA Affiliate would reasonably be expected
to incur liability under Section 4063 or 4064 of ERISA.
(c) Except, in each case, where it would not be reasonably expected
to have a Company Material Adverse Effect, (i) each Company Benefit Plan
intended to be qualified under Section 401(a) or 401(k) of the Code has received
a favorable determination letter from the Internal Revenue Service that the
Company Benefit Plan is so qualified, (ii) each trust established in connection
with any Company Benefit Plan which is intended to be exempt from federal income
taxation under Section 501(a) of the Code has received a determination letter
from the Internal Revenue Service that it is so exempt, and, (iii) to the
knowledge of the Company, no fact or circumstance exists that would reasonably
be expected to adversely affect the qualified status of any such Company Benefit
Plan or the exempt status of any such trust.
(d) Each Company Benefit Plan and each related trust agreement has
been established, maintained and administered in compliance with its terms, and
in compliance with the applicable provisions of ERISA, the Code and other
applicable Laws, except for such non-compliance which would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. Neither the Company nor its Subsidiaries maintains or contributes to any
plan or arrangement which, and no Company Benefit Plan provides, or has any
liability to provide medical benefits to any Company Employee following his
retirement, except as required by applicable Law or as provided in individual
agreements upon a severance event.
(e) Except as set forth in Section 3.8 of the Company Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not, either alone or in combination with another event, (i) entitle any
current or former employee, consultant or officer of the Company or any its
Subsidiaries to severance pay, unemployment compensation or any other payment,
except as required by applicable Law, (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee,
consultant or officer or (iii) result in an excess parachute payment under
Section 280G of the Code.
(f) Section 3.8 of the Company Disclosure Schedule sets forth a
complete and accurate list of each Company Benefit Plan (x) that is not subject
to United States Law and (y) in
17
which Company participation is not mandatory under applicable foreign Law (a
"FOREIGN BENEFIT PLAN"), except as has not had, and would not reasonably be
expected to have, a Company Material Adverse Effect: (i) all employer and
employee contributions to each Foreign Benefit Plan required by Law or by the
terms of such Foreign Benefit Plan have been made or, if applicable, accrued in
accordance with GAAP, except for such contributions or accruals, the failure of
which to make or accrue would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect; (ii) the fair market
value of the assets of each funded Foreign Benefit Plan, the liability of each
insurer for any Foreign Benefit Plan funded through insurance or the book
reserve established for any Foreign Benefit Plan, together with any accrued
contributions, is sufficient to procure or provide for the accrued benefit
obligations, as of the date of this Agreement, with respect to all current and
former participants in such plan according to the actuarial assumptions and
valuations most recently used and consistent with applicable Law to determine
employer contributions to such Foreign Benefit Plan; (iii) each Foreign Benefit
Plan required to be registered has been registered and has been maintained in
good standing with applicable regulatory authorities; and (iv) each Foreign
Benefit Plan is in compliance in all material respects with all applicable Laws.
Section 3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31,
2005, except as otherwise specifically contemplated or permitted by this
Agreement, the businesses of the Company and its Subsidiaries have been
conducted in all material respects in the ordinary course of business consistent
with past practice and there has not been any event, development or state of
circumstances that has had or would reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect. The Company and its
Subsidiaries have not taken any action between March 31, 2005 and the date of
this Agreement, that, if taken after the date of this Agreement, would be
proscribed by subparagraphs (i), (ii), (iv), (v), (vi), (xvii) of Section 5.1(a)
or agrees, in writing or otherwise, to take any of the foregoing actions.
Section 3.10 INVESTIGATIONS; LITIGATION. (a) The Company has not
received written notice of any investigation or review pending (and, to the
knowledge of the Company, no such investigation or review is threatened) by any
Governmental Entity with respect to the Company or any of the Company's
Subsidiaries which would reasonably be expected to (i) have, individually or in
the aggregate, a Company Material Adverse Effect or (ii) prevent or materially
delay the Company from performing its obligations under this Agreement or taking
any action necessary to consummate the transactions contemplated by this
Agreement; and (b) there are no actions, suits, grievances, arbitrations or
proceedings pending (or, to the knowledge of the Company, threatened) against or
affecting the Company or any of the Company's Subsidiaries, or any of their
respective properties, officers or directors or for which the Company or any of
the Company's Subsidiaries is required to indemnify a third party at law or in
equity before, and there are no orders, judgments or decrees of or before, any
Governmental Entity, in each case, which would reasonably be expected to (i)
have, individually or in the aggregate, a Company Material Adverse Effect or
(ii) prevent or materially delay the Company from consummating the transactions
contemplated by this Agreement.
Section 3.11 TAX MATTERS.
(a) Except as would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect, (i) the Company and each
of its
18
Subsidiaries have prepared and timely filed (taking into account any
extension of time within which to file) all Tax Returns required to be filed by
any of them and all such filed Tax Returns (taking into account all amendments
thereto) are complete and accurate; (ii) the Company and each of its
Subsidiaries have paid on a timely basis all Taxes that are due and payable by
them, except, in the case of clause (i) or clause (ii) hereof, for Taxes
contested in good faith or for which adequate reserves have been established;
(iii) the U.S. consolidated federal income Tax Returns of Xxxxx Xxxxxxxx USA,
Inc. have been examined by the Internal Revenue Service (or the period for
assessment of the Taxes in respect of which such Tax Returns were required to be
filed has expired) for the periods as set forth in the Company Disclosure
Schedule; (iv) as of the date of this Agreement, there are not pending or, to
the knowledge of the Company threatened in writing, any audits, examinations,
investigations or other proceedings in respect of Taxes; (v) there are no Liens
for Taxes on any of the assets of the Company or any of its Subsidiaries other
than Permitted Liens; and (vi) none of Xxxxx Xxxxxxxx USA, Inc. or any of its
Subsidiaries has been a "controlled corporation" or a "distributing corporation"
in any distribution occurring during the last 30 months that was purported or
intended to be governed by Section 355 of the Code (or any similar provision of
state, local or foreign Law). For purposes of this Agreement, "PERMITTED LIENS"
means any Lien (A) for Taxes not yet due, being contested in good faith or for
which adequate accruals or reserves have been established, or (B) which is a
carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like
lien arising in the ordinary course of business.
(b) For purposes of this Agreement: (i) "TAXES" means any and all
domestic or foreign, federal, state, local or other taxes of any kind (together
with any and all interest, penalties, additions to tax and additional amounts
imposed with respect thereto) imposed by any Governmental Entity, including
taxes on or with respect to income, franchises, windfall or other profits, gross
receipts, property, sales, use, capital stock, payroll, employment,
unemployment, social security, workers' compensation or net worth, and taxes in
the nature of excise, withholding, ad valorem or value added; and (ii) "TAX
RETURN" means any return, report or similar filing required to be filed with
respect to Taxes, including any information return, claim for refund, amended
return, or declaration of estimated Taxes. It is agreed and understood that no
representation or warranty is made in Sections 3.1 through 3.10 or in Sections
3.12 through 3.21 in respect of Tax matters.
Section 3.12 LABOR MATTERS.
(a) Except to the extent imposed by applicable foreign Law, as of the
date hereof, neither the Company nor any of its Subsidiaries is a party to, or
bound by, any collective bargaining agreement (or similar agreement or
arrangement in any foreign country) with any employee, labor union or similar
labor organization; there are no collective bargaining agreements (or similar
agreements or arrangements in any foreign country) that pertain to any of the
employees of the Company or its Subsidiaries; and no employees of the Company or
its Subsidiaries are represented by any labor union or organization with respect
to their employment with the Company or its Subsidiaries.
(b) As of the date hereof, no labor union, labor organization, works
council, or group of employees of the Company or its Subsidiaries has made a
pending demand for recognition or certification, and there are no representation
or certification proceedings or
19
petitions seeking a representation proceeding presently pending or, to the
knowledge of the Company, threatened in writing to be brought or filed with the
National Labor Relations Board or any other foreign labor relations tribunal or
authority. As of the date hereof, the Company and its Subsidiaries have no
knowledge of any labor union organizing activities with respect to any employees
of the Company or its Subsidiaries.
(c) From March 31, 2003 to the date hereof, there has been no actual,
or to the knowledge of the Company, threatened: (i) strikes, lockouts,
slowdowns, or work stoppages, or (ii) unfair labor practice charges, material
arbitrations, material grievances, labor disputes (other than routine individual
grievances), in each case, (x) against or affecting the Company or its
Subsidiaries and (y) that, individually or in the aggregate, would reasonably be
expected to have a Company Material Adverse Effect.
(d) The Company and its Subsidiaries are in compliance with all
applicable Laws respecting employment and employment practices, including,
without limitation, all laws respecting terms and conditions of employment,
wages and hours and labor relations, health and safety, child labor,
immigration, employment discrimination, disability rights or benefits, equal
opportunity, affirmative action, classification of workers as independent
contractors, workers' compensation, employee leave issues and unemployment
insurance, except to the extent that the failure to comply with any such Law,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect. The Company and its Subsidiaries are and have
been in compliance in all material respects with all notice and other
requirements, and do not have any material liabilities, under the Worker
Adjustment and Retraining Notification Act and any similar foreign, state or
local law relating to plant closings and layoffs.
(e) From March 31, 2003 to the date hereof, except as has not had,
and would not reasonably be expected to have, a Company Material Adverse Effect,
the Company and its Subsidiaries have not received (i) written notice of any
charge or complaint with respect to or relating to them pending before the Equal
Employment Opportunity Commission or any other Governmental Entity responsible
for the prevention of unlawful employment practices, (ii) written notice of any
unfair labor practice charge or complaint pending or threatened before the
National Labor Relations Board or any other Governmental Entity against them, or
(iii) written notice of any complaints, grievances or arbitrations arising out
of any collective bargaining agreement or similar agreement.
(f) The Company and its Subsidiaries have taken all reasonable steps
to require that their manufacturers, contractors and subcontractors engaged in
the manufacturing of products for the Company and its Subsidiaries do not
utilize forced labor, prison labor, convict labor, indentured labor, child
labor, corporal punishment or other forms of mental or physical coercion in
connection with the manufacture of the products for the Company and its
Subsidiaries, including the maintenance of a compliance program to monitor
activities of such entities.
Section 3.13 INTELLECTUAL PROPERTY.
(a) For the purposes of this Agreement, "INTELLECTUAL PROPERTY" means
all U.S. and foreign (i) trademarks, service marks, trade names, domain names,
logos, slogans, trade
20
dress, and other similar designations of source or origin, together with the
goodwill symbolized by any of the foregoing ("TRADEMARKS"); (ii) copyrights and
copyrightable subject matter ("COPYRIGHTS"); (iii) patents, patent applications,
patent disclosures, and all related continuations, continuations-in-part,
divisionals, reissues, re-examinations, substitutions, and extensions thereof
("PATENTS"); (iv) rights of publicity, (v) moral rights and rights of
attribution and integrity, (v) computer programs (whether in source code, object
code, or other form), databases and compilations and data ("SOFTWARE"), (vi)
trade secrets and all confidential information, know-how, inventions, processes,
formulae, models, and methodologies ("TRADE SECRETS"), (vii) all rights in the
foregoing and in other similar intangible assets, (viii) all applications and
registrations for the foregoing, and (ix) all rights and remedies against past,
present, and future infringement, misappropriation, or other violation thereof.
(b) Section 3.13(b) of the Company Disclosure Schedule sets forth a
correct and complete list of all U.S. and foreign (i) Trademark registrations
and applications (including domain names), (ii) Copyright registrations and
applications, (iii) issued Patents and Patent applications and (iv) material
Software. The Company or a Subsidiary is the sole and exclusive beneficial and
record owner of all of the Intellectual Property set forth in Section 3.13(b) of
the Company Disclosure Schedule, and all such Intellectual Property is
subsisting and, to the knowledge of the Company, valid and enforceable.
(c) Either the Company or a Subsidiary of the Company owns, or is
licensed or otherwise possesses legally enforceable rights to use, free and
clear of all Liens, all material Intellectual Property used in their respective
businesses as currently conducted and the consummation of the transactions
contemplated hereby will not materially alter, impair, or require payments of
any additional amounts with respect to such rights.
(d) There are, and in the past two (2) years have been, no pending
or, to the knowledge of the Company, threatened claims by any person alleging
infringement by the Company or its Subsidiaries for their use of any
Intellectual Property in their respective businesses as currently conducted that
would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. To the knowledge of the Company, except as
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, the conduct of the businesses of the Company
and its Subsidiaries does not infringe upon any Intellectual Property rights or
any other proprietary right of any person in any material respect or violate or
conflict with any Contracts related thereto. As of the date hereof, and in the
past two (2) years, neither the Company nor any of its Subsidiaries has made any
claim of a violation or infringement by others of its rights to or in connection
with the Intellectual Property used in their respective businesses, which
violation or infringement would reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect.
(e) To the knowledge of the Company, except as disclosed in Sections
3.13(b) and 3.13(d) of the Company Disclosure Schedule, and except as would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, the word marks XXXXX XXXXXXXX and XXXX XXXXXXXXX, the
FLAG logo, and, with respect solely to fragrances, the word xxxx XXXXX, are
available for use and registration as trademarks throughout the United States,
Canada, Europe (namely, all Member States of the European
21
Union as of the date hereof, and Switzerland) and Japan in connection with the
sale, marketing and distribution of all of the following products and product
lines: fragrance, bedding, eyewear, jewelry/watches, bags, belts/small leather
goods, clothing (including outerwear, underwear, sleepwear/robes) and footwear.
(f) The Company and its Subsidiaries are in compliance in all
material respects with all applicable Laws, as well as its own rules, policies,
and procedures relating to privacy, data protection, and the collection and use
of personal information collected, used, or held for use by the Company or its
Subsidiaries in their respective businesses as currently conducted. No claims
have been asserted or, to the knowledge of the Company, threatened against the
Company or its Subsidiaries alleging a violation of any third party's privacy or
personal information or data rights and the consummation of the transactions
contemplated hereby will not cause any violation in any material respect of any
Law or rule, policy, or procedure related to privacy, data protection, or the
collection and use of such personal information.
Section 3.14 OPINION OF FINANCIAL ADVISOR. The Board of Directors of
the Company has received the opinion of X.X. Xxxxxx Securities Inc., dated the
date of this Agreement, substantially to the effect that, as of such date, the
Merger Consideration is fair to the holders of the Company Ordinary Shares from
a financial point of view.
Section 3.15 REQUIRED VOTE OF THE COMPANY SHAREHOLDERS. The
affirmative vote of the holders of outstanding Company Ordinary Shares, voting
together as a single class, representing a simple majority of the votes of the
Company Ordinary Shares that were present at the meeting and entitled to vote
thereon and were voted and did not abstain, is the only vote of holders of
securities of the Company which is required to approve and adopt this Agreement
and the transactions contemplated hereby (the "COMPANY SHAREHOLDER APPROVAL").
Section 3.16 MATERIAL CONTRACTS.
(a) Except for this Agreement and the Company Benefit Plans, as of
the date hereof, neither the Company nor any of its Subsidiaries is a party to
or bound by any:
(i) "material contract" (as such term is defined in item
601(b)(10) of Regulation S-K of the SEC);
(ii) employment Contract or Contract with an individual for
the provision of consulting services in lieu of employment that provides
for annual cash base salary compensation as of the date hereof exceeding
U.S.$400,000 per year;
(iii) Contract with any current or former director or officer
of the Company or its Subsidiaries that would be required to be disclosed
under Item 404 of Regulation S-K under the Securities Act;
(iv) Contract between (x) the Company or any of the Company's
Subsidiaries, on the one hand, and (y) any affiliate of the Company (other
than the Company's Subsidiaries), on the other hand, of the type that
would be required to be disclosed under Item 404 of Regulation S-K under
the Securities Act;
22
(v) Contract containing covenants of the Company or any of the
Company's Subsidiaries not to compete in the apparel business in any
geographical area;
(vi) Contract that creates a partnership or joint venture or
similar agreement with respect to any material business of the Company;
(vii) material written Contract (other than purchase orders)
with the top five (by dollar volume during the fiscal year ended March 31,
2005) suppliers or service providers of the Company and its Subsidiaries;
(viii) Contract that, individually or in the aggregate, would
reasonably be expected to prevent, or materially delay the Company's
ability to consummate the Merger;
(ix) indenture, credit agreement, loan agreement, security
agreement, guarantee, note, mortgage or other evidence of Indebtedness by
the Company (including agreements related to interest rate or currency
hedging activities) with any third party in excess of U.S.$1 million;
(x) collective bargaining agreement or employee association
agreement material to the Company and its Subsidiaries taken as a whole;
(xi) Contract for the sale of assets since March 31, 2005
(other than inventory in the ordinary course of business) in excess of
U.S$1 million;
(xii) written Contract that contains a put, call, right of
first refusal or similar right pursuant to which the Company or any
Subsidiary would be required to purchase or sell any securities of any
entity;
(xiii) settlement or conciliation agreement or similar
agreement with any Governmental Entity or order or consent of a
Governmental Entity to which the Company or any of its Subsidiaries is
subject involving future performance by the Company or any of its
Subsidiaries which is material to the Company and its Subsidiaries taken
as a whole;
(xiv) Contracts to which the Company or any of its
Subsidiaries is a party or otherwise bound (x) granting or obtaining any
right to use any material Trademarks or (y) restricting the Company's
rights, or permitting other parties, to use or register any material
Trademarks;
(xv) other Contract under which the Company and its
Subsidiaries are obligated to make annual payments in excess of U.S.$1
million (other than leases, subleases or real property license agreements
or in the ordinary course of business); or
(xvi) acquisition agreement (other than with respect to
inventory in the ordinary course) pursuant to which the Company or any of
its Subsidiaries has continuing indemnification, "earn-out" or other
contingent obligations, in each case, that would be reasonably be expected
to result in payments in excess of U.S.$1 million
23
(all contracts of the type described in this Section 3.16 being referred
to herein as "COMPANY MATERIAL CONTRACTS").
(b) The Company has made available to Parent copies of each Company
Material Contract in effect as of the date of this Agreement, together with all
material amendments and supplements thereto in effect as of the date of this
Agreement. Neither the Company nor any Subsidiary of the Company is in breach of
or default under the terms of any Company Material Contract where such breach or
default would reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect. To the knowledge of the Company, no other
party to any Company Material Contract is in breach of or default under the
terms of any Company Material Contract where such breach or default would
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Each Company Material Contract is a valid and binding
obligation in all material respects of the Company or the Subsidiary of the
Company which is party thereto and, to the knowledge of the Company, of each
other party thereto, and is in full force and effect, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar Laws, now or hereafter in effect, relating to
creditors' rights generally and (ii) equitable remedies of specific performance
and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. Except as would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect, (i) neither the Company
nor any Subsidiary of the Company has received any written notice or claim of
default under any Company Material Contract or any written notice of an
intention to, and to the knowledge of the Company, no other party to any Company
Material Contract intends to terminate, not renew or challenge the validity or
enforce-ability of any Company Material Contract (including as a result of the
execution and performance of this Agreement), (ii) to the Company's knowledge,
no event has occurred that, with or without notice or lapse of time or both,
would result in a material breach or a material default under any Company
Material Contract and (iii) the Company and the Subsidiaries of the Company have
performed all respective material obligations required to be performed by them
to date under the Company Material Contracts and are not (with or without the
lapse of time or the giving of notice, or both) in material breach thereunder.
Section 3.17 FINDERS OR BROKERS. Except for X.X. Xxxxxx Securities
Inc., neither the Company nor any of its Subsidiaries has employed any
investment banker, broker or finder in connection with the transactions
contemplated by this Agreement who might be entitled to any fee or any
commission in connection with or upon consummation of the Merger. Section 3.17
of the Company Disclosure Schedule contains the Company's good faith estimate as
of the date hereof of all fees or commissions required to be paid by the Company
or any of its Subsidiaries to any investment banker or legal advisor, in each
case, for the provision of services to the Company in connection with the
consummation of the transactions contemplated hereby. The Company has made
available to Parent a true and correct copy of its engagement letter with X.X.
Xxxxxx Securities Inc. for services provided in connection with this Agreement.
Section 3.18 PROPERTIES AND LEASES.
(a) Neither the Company nor any of its Subsidiaries owns any real
property. Section 3.18 of the Company Disclosure Schedule contains a true,
correct and complete list of all
24
leases, subleases or other occupancy agreements relating to all material real
property that any of the Company or its Subsidiaries leases or subleases or
otherwise has any right, title or interest in or to and sets forth the Company
or applicable Subsidiary that leases, subleases or otherwise has an interest in
the same (the property demised thereunder herein referred to as the "LEASED REAL
PROPERTY"), regardless of whether the terms thereof have commenced. No person
other than the Company or one of its Subsidiaries leases, subleases or licenses
or otherwise occupies the Leased Real Property.
(b) With respect to each Leased Real Property, except in each case as
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect: (i) such lease or sublease is legal, valid,
binding, enforceable and in full force and effect; (ii) there exists no material
default under any such lease or sublease by the Company or any Subsidiary which
has not been cured, and, to the knowledge of the Company, there has not occurred
any event that (with the lapse of time or the giving of notice or both) would
constitute a material default on the part of the Company or any of its
Subsidiaries under any such lease or sublease; and (iii) the Company has made
available to Parent copies of each such lease, sublease or license in effect as
of the date of this Agreement, together with all material amendments and
supplements thereto in effect as of the date of this Agreement.
Section 3.19 ENVIRONMENTAL MATTERS.
(a) Except as would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect:
(i) The Company and its Subsidiaries are and have been in
compliance with all Environmental Laws, including possessing all material
Company Permits required for its operations under applicable Environmental
Laws;
(ii) Neither the Company nor any of its Subsidiaries has
received written notice of, and, to the knowledge of the Company, is not
the subject of, any actions, claims, investigations, demands, citation,
complaint or notices by any person alleging liability arising under, or
non-compliance with any Environmental Law; and
(iii) With respect to any Owned Real Property or Leased Real
Property currently or formerly owned or leased, as the case may be, by the
Company or its Subsidiaries, there have been no Releases of Hazardous
Materials that are reasonably likely to result in a claim against the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has entered into any agreement that may require it to pay to,
reimburse, guarantee, pledge, defend, indemnify or hold harmless any
person from or against any liabilities arising out of or related to the
generation, manufacture, use, transportation or disposal of Hazardous
Materials, or otherwise arising in connection with or under Environmental
Laws.
(b) As used herein:
(i) the term "ENVIRONMENTAL LAW" means any federal, state,
local and foreign Law, judicial decisions, injunctions and permits and
governmental agreements relating to protection of human health or the
environment (including ambient air, surface
25
water, ground water, land surface or subsurface strata), including those
relating to the Release of Hazardous Materials.
(ii) the term "HAZARDOUS MATERIAL" means all substances or
materials regulated as hazardous, toxic, explosive, dangerous, flammable
or radioactive under any Environmental Law, including (a) petroleum,
asbestos or polychlorinated biphenyls and (b) in the United States, all
substances defined as Hazardous Substances, Oils, Pollutants or
Contaminants in the National Oil and Hazardous Substances Pollution
Contingency Plan, 40 C.F.R. Section 300.5.
(iii) the term "RELEASE" means any release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal, dispersal,
leaching or migration into the indoor or outdoor environment (including
ambient air, surface water, groundwater and surface or subsurface strata)
or into or out of any property, including the movement of Hazardous
Material through or in the air, soil, surface water, groundwater or
property.
Section 3.20 STATE TAKEOVER STATUTES. No "fair price," "moratorium,"
"control share acquisition" or other similar antitakeover statute or regulation
enacted under state or federal laws in the United States or in the British
Virgin Islands are applicable to the Company in connection with the transactions
contemplated by this Agreement.
Section 3.21 INSURANCE POLICIES. All insurance policies maintained by
the Company and its Subsidiaries as of the date hereof (collectively, the
"INSURANCE POLICIES") "are listed in Section 3.21 of the Company Disclosure
Schedule. All Insurance Policies are in full force and effect and provide
insurance in such amounts and against such risks as the management of the
Company reasonably has determined to be prudent in accordance with industry
practices or as is required by Law, and all premiums due and payable thereon
have been paid. Neither the Company nor any of its Subsidiaries is in material
breach or material default, and neither the Company nor any of its Subsidiaries
has taken any action or failed to take any action which, with notice or the
lapse of time, would constitute a material breach or material default, or permit
termination or material modification of any of the Insurance Policies, other
than the actions contemplated by this Agreement. The Company has made available
to Parent a list of each material claim made under an Insurance Policy at any
time during the calendar year immediately preceding the date hereof. Neither the
Company nor any of the Company's Subsidiaries has received written notice under
any Insurance Policy denying or disputing any material claim (or coverage with
respect thereto) made by the Company or any of the Company's Subsidiaries or
regarding the termination, cancellation or material amendment of, or material
premium increase with respect to, any Insurance Policy, in each case, at any
time during the two year period immediately prior to the date hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in the corresponding numbered sections of the
Disclosure Schedule delivered by Parent to the Company immediately prior to the
execution of this Agreement (the "PARENT DISCLOSURE SCHEDULE") (it being agreed
that disclosure of any item in any
26
section of the Parent Disclosure Schedule shall be deemed disclosure with
respect to any other section of this Agreement to which the relevance of such
item is reasonably apparent on its face), Parent and Merger Sub represent and
warrant to the Company as follows:
Section 4.1 QUALIFICATION; ORGANIZATION, SUBSIDIARIES, ETC. Each of
Parent and Merger Sub is a legal entity duly organized and validly existing
under the Laws of its respective jurisdiction of organization and has all
requisite corporate or similar power and authority to own, lease and operate its
properties and assets and to carry on its business as presently conducted and is
qualified to do business and is in good standing in each jurisdiction where the
ownership, leasing or operation of its assets or properties or conduct of its
business requires such qualification, except where the failure to be so
organized, validly existing, qualified or in good standing, or to have such
power or authority, would not, individually or in the aggregate, reasonably be
expected to prevent or materially delay or materially impair the ability of
Parent or Merger Sub to consummate the Merger and the other transactions
contemplated by this Agreement, including, without limitation, the Financing (as
hereinafter defined) (a "PARENT MATERIAL ADVERSE EFFECT"). Parent has made
available to the Company prior to the date of this Agreement a true and complete
copy of Parent's certificate of incorporation and by-laws and Merger Sub's
memorandum and articles of association, each as amended through the date hereof.
Such articles of incorporation, by-laws and memorandum and articles of
association are in full force and effect. Neither Parent nor Merger Sub is in
violation in any material respect of the provisions of its governing documents.
Section 4.2 CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO
VIOLATION.
(a) Each of Parent and Merger Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby, including the Merger and the Financing. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, including the Financing, have been duly and validly authorized by the
Boards of Directors of Parent and Merger Sub (and, with respect to Merger Sub,
by its sole shareholder, such consent attached hereto as Exhibit B) and, except
for the filing of the Articles of Merger with the Registrar, no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby, including
the Financing. This Agreement has been duly and validly executed and delivered
by Parent and Merger Sub and, assuming this Agreement constitutes the valid and
binding agreements of the Company, this Agreement constitutes the valid and
binding agreements of Parent and Merger Sub, enforceable against Parent and
Merger Sub in accordance with their terms.
(b) Other than in connection with or in compliance with (i) the
provisions of the BC Act, (ii) the Exchange Act, (iii) the HSR Act, (iv) the
ECMR and (v) the approvals set forth on Section 4.2 of the Parent Disclosure
Schedule (collectively, the "PARENT APPROVALS"), no authorization, consent,
clearance or approval of, or filing or notification with, any Governmental
Entity is necessary for the consummation by Parent or Merger Sub of the
transactions contemplated by this Agreement, including the Financing, except for
such authorizations, consents, approvals or filings, that, if not obtained or
made, would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
27
(c) The execution and delivery by Parent and Merger Sub of this
Agreement does not, and the consummation of the transactions contemplated
hereby, including the Financing, and compliance with the provisions hereof will
not (i) result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation under any Contract to which Parent or Merger Sub
is a party or by which Parent or Merger Sub is bound or result in the creation
of any Lien upon any of the properties or assets of Parent or any of its
Subsidiaries, (ii) conflict with or result in any violation of any provision of
the certificate of incorporation or by-laws or other equivalent organizational
document, in each case as amended, of Parent or any of its Subsidiaries or (iii)
conflict with or violate any Laws applicable to Parent, any of its Subsidiaries
or any of their respective properties or assets or any Order applicable to
Parent or Merger Sub in existence as of the date hereof, other than, in the case
of clauses (i) and (iii), any such violation, conflict, default, termination,
cancellation, acceleration, Lien or other circumstance that would not (x)
prevent or materially delay Parent or Merger Sub from performing their
respective obligations under this Agreement or taking any action necessary to
consummate the transactions contemplated hereby, including the Merger or (y)
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
Section 4.3 COMPLIANCE WITH LAW; PERMITS.
(a) Parent and Merger Sub are in compliance with and are not in
default under or in violation of any Laws or Orders applicable to Parent or
Merger Sub or any of their respective properties or assets, and have not
received any written notice of any non-compliance, default or violation of such
Laws or Orders, including, without limitation, all Environmental Laws, except
where such non-compliance, default or violation of Laws or Orders would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
(b) Parent and Parent's Subsidiaries are in possession of all
authorizations, licenses, permits, consents, certificates, approvals and orders
of any Governmental Entity necessary for Parent and Parent's Subsidiaries to
own, lease and operate their properties and assets or to carry on their
businesses as they are now being conducted (the "PARENT PERMITS"), except where
the failure to have any of the Parent Permits would not reasonably be expected
to have, individually or in the aggregate, a Parent Material Adverse Effect. All
Parent Permits are in full force and effect, except where the failure to be in
full force and effect would not reasonably be expected to have, individually or
in the aggregate, a Parent Material Adverse Effect. Parent and Merger Sub are in
compliance with the terms and conditions of the Parent Permits, and neither
Parent nor Merger Sub has received written notice of any violation of the terms
or conditions of the Parent Permits, or alleging the failure to hold or obtain
any Parent Permits required to own, lease and operate their properties and
assets or to carry on their businesses as they are now being conducted, except
violations or failures that would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. Neither
Parent nor Merger Sub has received written notice that any of the Parent Permits
will not be renewed, and there are no actions, suits, inquiries, investigations
or proceedings pending to revoke or withdraw any such Parent Permits, except for
such non-renewals, revocations or withdrawals that would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
28
Section 4.4 INVESTIGATIONS; LITIGATION. (a) Parent has not received
written notice of any investigation or review pending (and, to the knowledge of
Parent, no such investigation or review is threatened) by any Governmental
Entity with respect to Parent or any of its Subsidiaries which would reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse
Effect; and (b) there are no actions, suits, grievances, arbitrations or
proceedings pending (or, to Parent's knowledge, threatened) against or affecting
Parent or its Subsidiaries, or any of their respective properties, officers or
directors or for which Parent or any of its Subsidiaries is required to
indemnify a third party at law or in equity before, and there are no orders,
judgments or decrees of or before any Governmental Entity, in each case, which
would reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
Section 4.5 AVAILABLE FUNDS. The financing of the transactions
contemplated hereby will consist of a combination of equity financing (the
"EQUITY FINANCING") and debt financing (which includes funds loaned to Parent
which are in turn loaned to Merger Sub) (the "DEBT FINANCING", and together with
the Equity Financing, the "FINANCING"). Section 4.5 of the Parent Disclosure
Schedule sets forth true, accurate and complete copies of executed commitment
letters (the "FINANCING COMMITMENTS") pursuant to which, and subject to the
terms and conditions thereof, the parties thereto have committed to provide
Parent with the Financing. As of the date hereof, the Financing Commitments are
in full force and effect and have not been withdrawn or terminated or otherwise
amended or modified in any respect. Each of the Financing Commitments, in the
form so delivered, is a legal, valid and binding obligation of Parent and, to
the knowledge of Parent and Merger Sub, the other parties thereto. No event has
occurred which, with or without notice, lapse of time or both, would constitute
a default or breach on the part of Parent or Merger Sub under any term or
condition of the Financing Commitments, and neither Parent nor Merger Sub
reasonably believes that it will be unable to satisfy on a timely basis any term
or condition of closing to be satisfied by it contained in the Financing
Commitments. Parent and/or Merger Sub have fully paid any and all commitment
fees or other fees required by the Financing Commitments to be paid on or before
the date of this Agreement. The proceeds from the Financing as contemplated by
the Financing Commitments, together with cash on hand of the Company and its
Subsidiaries anticipated to be available at the Effective Time, constitute all
of the financing required to be provided by Parent for the consummation of the
transactions contemplated hereby, and are sufficient for the satisfaction of all
of Parent's and Merger Sub's obligations under this Agreement, including the
payment of the Merger Consideration and the Option and Stock-Based Consideration
and the payment of all associated costs and expenses (including any refinancing
of Indebtedness of Parent or the Company required in connection therewith). The
Financing Commitments contain all of the conditions precedent to the obligations
of the parties thereunder to make the Financing available to Parent on the terms
therein.
Section 4.6 CAPITALIZATION OF MERGER SUB. As of the date of this
Agreement, the authorized share capital of Merger Sub consists of one ordinary
share, no par value per share, all of which are validly issued and outstanding.
All of the issued and outstanding share capital of Merger Sub is, and
immediately prior to the Effective Time will be, owned by Parent or a direct or
indirect wholly-owned subsidiary of Parent. Merger Sub has not conducted any
business prior to the date hereof and has no, and prior to the Effective Time
will have no, assets, liabilities or obligations of any nature other than those
incident to its formation and pursuant to or in
29
connection with this Agreement and the Merger and the other transactions
contemplated by this Agreement.
Section 4.7 GUARANTEE. Concurrently with the execution of this
Agreement and subject to the limitations set forth in Section 8.11, the
Guarantors have delivered to the Company the Guarantee, dated as of the date
hereof, in favor of the Company, in the form set forth in Exhibit A hereto, with
respect to the performance by Parent and Merger Sub, respectively, of their
obligations under this Agreement in the event of a breach by either Parent or
Merger Sub of such obligations.
Section 4.8 NO VOTE OF PARENT STOCKHOLDERS. No vote of the
stockholders of Parent or the holders of any other securities of Parent (equity
or otherwise), is required by any applicable Law, the certificate of
incorporation or bylaws of Parent or the applicable rules of the any exchange on
which securities of Parent are traded, in order for Parent to consummate the
Merger or effect the Financing.
Section 4.9 FINDERS OR BROKERS. Except for Citigroup Global Markets
Inc., neither Parent nor any of its Subsidiaries has employed any investment
banker, broker or finder in connection with the transactions contemplated by
this Agreement who might be entitled to any fee or any commission in connection
with or upon consummation of the Merger.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 CONDUCT OF BUSINESS BY THE COMPANY AND PARENT.
(a) 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 (i) as may be required by Law,
(ii) as may be agreed in writing by Parent, (iii) as may be expressly permitted
pursuant to this Agreement or (iv) as set forth in Section 5.1 of the Company
Disclosure Schedule, the Company covenants and agrees with Parent that the
business of the Company and its Subsidiaries shall be conducted only in, and
such entities shall not take any action except in, the ordinary course of
business in all material respects and consistent with past practice; and the
Company for itself and on behalf of its Subsidiaries agrees with Parent to use
its reasonable best efforts to preserve substantially intact their business
organizations and goodwill, to keep available the services of those of their
present officers, employees and consultants who are integral to the operation of
their businesses as presently conducted and to preserve their present
relationships with significant customers, licensees, licensors and suppliers and
with other persons with whom they have significant business relations; PROVIDED,
HOWEVER, that no action by the Company or its Subsidiaries with respect to
matters specifically addressed by any other provision of this Section 5.1 shall
be deemed a breach of this sentence unless such action would constitute a breach
of such other provision. The Company agrees with Parent, that between the date
hereof and the Effective Time, except as set forth in Section 5.1 of the Company
Disclosure Schedule, without the prior written consent of Parent:
30
(i) shall not, and shall not permit any of its Subsidiaries
that is not wholly-owned to, declare, set aside, make, authorize or pay
any dividends on or distribution with respect to its outstanding share
capital (whether in cash, assets, shares or other securities of the
Company or its Subsidiaries), other than dividends in nonmaterial amounts
paid as part of the Company's cash management system in the ordinary
course of business and consistent with past practice by any wholly-owned
Subsidiary of the Company to the Company or any wholly-owed Subsidiary of
the Company;
(ii) shall not, and shall not permit any of its Subsidiaries
to, adjust, subdivide, split, combine or reclassify any of its share
capital or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares;
(iii) except as required pursuant to existing written
agreements or employee benefit plans (including the severance and
retention plans) in effect as of the date hereof, as specifically
permitted by the terms of this Agreement or as otherwise required by Law,
shall not, and shall not permit any of its Subsidiaries to (A) increase
the compensation or other benefits payable or to become payable to its
directors, executive officers or other employees of the Company, except in
the ordinary course of business consistent with past practice (including,
for this purpose, the normal salary, bonus and equity compensation review
process conducted each year), (B) grant any severance or termination pay
to, or enter into any severance agreement with any director, executive
officer or other employee of the Company or any of its Subsidiaries at a
level of "Director" (i.e., the level immediately below "Vice President")
or above, (C) enter into or amend any individual employment arrangement
with any executive officer or other employee of the Company (except (i)
with respect to promotions of current employees to a level below "Senior
Vice President" and with a base salary of less than $150,000 per year or
an equivalent foreign amount, or (ii) to the extent necessary to replace a
departing employee; provided that any such replacement employee (whether
internal or external) is at a level below "Senior Vice President" and has
a base salary of less than $150,000 per year or an equivalent foreign
amount, (D) accelerate the payment or vesting of benefits or amounts
payable or to become payable under any Company Benefit Plan or Foreign
Benefit Plan, (E) establish, adopt, enter into or amend any bonus plan or
arrangement covering employees of the Company or (F) establish, adopt,
enter into or amend any collective bargaining agreement, plan, trust,
fund, policy or arrangement for the benefit of any current or former
directors, officers or employees or any of their beneficiaries, except, in
each case, as would not result in a material increase to the Company in
the cost of maintaining such collective bargaining agreement, plan, trust,
fund, policy or arrangement;
(iv) shall not, and shall not permit any of its Subsidiaries
to, enter into or make any loans to any of its officers, directors,
employees, agents or consultants (other than loans or advances in the
ordinary course of business consistent with past practice, including
travel cash advances, to employees of the Company (other than officers and
directors with respect to any loans or advances other than travel cash
advances) not to exceed U.S.$100,000 in each case) or make any change in
its existing borrowing or
31
lending arrangements for or on behalf of any of such persons, except as
required by the terms of any Company Benefit Plan;
(v) shall not, and shall not permit any of its Subsidiaries
to, materially change financial accounting policies or procedures or any
of its methods of reporting income, deductions or other material items for
financial accounting purposes, except as required by GAAP, SEC rule or
policy or applicable Law;
(vi) except in respect of the Merger, shall not, and shall not
permit any of its Subsidiaries to, authorize, propose or announce an
intention to authorize or propose, or enter into any agreement with
respect to, any merger, consolidation or business combination, the
acquisition or sale of assets, which are material to the Company and its
Subsidiaries, taken as a whole, other than in the ordinary course of
business consistent with past practice, plan of complete or partial
liquidation, dissolution, restructuring, recapitalization or other
reorganization;
(vii) except as required in connection with the transactions
contemplated by Section 5.4(d), shall not, and shall not permit any of its
Subsidiaries to, adopt any amendments to its memorandum and articles of
association or similar applicable charter or governing documents;
(viii) shall not, and shall not permit any of its Subsidiaries
to, issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any of its shares
or other ownership interest or voting security in the Company or any
Subsidiaries or any securities convertible into or exchangeable for any
such shares or ownership interest, or any rights, warrants or options to
acquire or with respect to any such shares, voting securities or ownership
interests or convertible or exchangeable securities or take any action to
cause to be exercisable any otherwise unexercisable option under any
existing stock option plan (except as otherwise provided by the express
terms of any unexercisable options outstanding on the date hereof), other
than (A) issuances of Company Ordinary Shares in respect of any exercise
of Company Stock Options and Company Stock-Based Awards outstanding on the
date hereof, (B) the sale of Company Ordinary Shares pursuant to the
exercise of options to purchase Company Ordinary Shares if necessary at
the direction of the applicable optionee with respect to the shares
underlying such optionee's options upon exercise or for withholding, or
(C) issuances of Company Ordinary Shares or options to acquire Company
Ordinary Shares pursuant to obligations under employment agreements in
effect on the date hereof (which grants are required to be made on a date
prior to Closing);
(ix) except as may be required under employment agreements
executed prior to the date hereof (which grants are required to be made on
a date prior to Closing), shall not, and shall not permit any of its
Subsidiaries to, grant, confer or award any compensatory warrants,
options, convertible security or other rights to acquire any of its shares
or take any action to cause to be exercisable any otherwise unexercisable
option under any existing stock option plan (except as otherwise provided
by the express terms of any unexercisable options outstanding on the date
hereof);
32
(x) except in connection with the exercise of outstanding
stock options, shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, purchase, redeem or otherwise acquire any of its
shares or any rights, warrants or options to acquire any such shares;
(xi) shall not, and shall not permit any of its Subsidiaries
to, incur, assume, guarantee, prepay, refinance or otherwise become liable
for any Indebtedness (directly, contingently or otherwise), except for the
incurrence of Indebtedness in the ordinary course of business of the
Company or any of its Subsidiaries under existing credit facilities
(including the Company's existing cash-collateralized letter of credit
facility as it may be extended or renewed) of the Company or any of its
Subsidiaries (or under a cash-collateralized letter of credit facility
that is substituted for or replaces or refinances the Company's existing
cash-collateralized letter of credit facility on substantially similar
terms (including a lender commitment thereunder in an amount not to exceed
$150 million) and which will provide for the immediate release of the cash
collateral upon repayment of amounts outstanding at Closing and
termination of such agreement) in an amount not to exceed U.S.$290 million
in aggregate principal amount outstanding at any time;
(xii) shall not sell, lease, license, transfer, exchange or
swap, mortgage or otherwise encumber (including securitizations), or
subject to any Lien (other than Permitted Liens) or otherwise dispose of
any material portion of its properties or assets, including the capital
stock of Subsidiaries, other than in the ordinary course of business
consistent with past practice and except (A) pursuant to existing
agreements in effect prior to the execution of this Agreement or (B) as
may be required by applicable Law or any Governmental Entity in order to
permit or facilitate the consummation of the transactions contemplated
hereby;
(xiii) shall not, and shall not permit any of its Subsidiaries
to, enter into, any Company Material Contracts with a term longer than one
year which cannot be terminated without material penalty upon notice of
sixty (60) days or less;
(xiv) notwithstanding clause (xiii) above and without limiting
any other restrictions hereunder, shall not, and shall not permit any of
its Subsidiaries to, enter into or modify (A) any Contract described under
clause (v), clause (x), and clause (xvi), in each case of Section 3.16(a)
or (B) any leases covering Leased Real Property for retail stores in the
United States or Canada that are not outlet stores;
(xv) shall not, and shall not permit any of its Subsidiaries
to, dispose of, license, grant, or obtain, or permit to lapse any rights
to, any material Intellectual Property, or renew any existing license
agreement of the Company and its Subsidiaries on materially different
terms relative to existing terms;
(xvi) shall not, and shall not permit any of its Subsidiaries
to, make any loans, advances or capital contributions to, or investments
in, any other person;
33
(xvii) shall not, and shall not permit any of its Subsidiaries
to, enter into any transaction, agreement, understanding or arrangement
between (i) the Company or any of the Company's Subsidiaries, on the one
hand, and (ii) any affiliate of the Company (other than the Company's
Subsidiaries), on the other hand, that would be required to be disclosed
under Item 404 of Regulation S-K;
(xviii) shall not, and shall not permit any of its
Subsidiaries to, settle any actions, suits, inquiries, investigations, or
proceedings pending or threatened against or affecting the Company or any
of the Company's Subsidiaries or any of their respective properties at law
or in equity before any Governmental Entity (it being understood that the
Company shall consult with Parent in the defense and/or settlement of any
such actions, suits, inquiries, investigations, or proceedings), other
than in the ordinary course of business consistent with past practice, but
not, in any individual case, in excess of U.S.$1,000,000 or that involves
equitable remedies (including but not limited to any that would prohibit
or restrict the Company from operating as it is currently or has
historically); PROVIDED, that the Company and its Subsidiaries shall be
permitted to settle in its discretion for monetary amounts only (other
than non-monetary matters that do not materially restrict the future
operations of the business) any of the matters set forth on Annex C of
Section 5.1 of the Company Disclosure Schedule in a monetary amount up to
the amount set forth opposite such matter on such schedule;
(xix) shall not, and shall not permit any of its Subsidiaries
to, enter into or materially modify any currency exchange, commodities or
other hedging transactions or arrangements, other than in the ordinary
course of business and consistent with past practice;
(xx) shall not, and shall not permit any of its Subsidiaries
to, make any capital expenditures, capital additions or capital
improvements in excess of U.S.$100 million in the aggregate amount
authorized in the capital expenditures budget set forth on Annex A of
Section 5.1 of the Company Disclosure Schedule, provided further that any
capital expenditures, capital additions or capital improvements (whether
new or maintenance and whether pursuant to one or more outlays) in excess
of $1 million per project shall require the consent of Parent; or
(xxi) shall not, and shall not permit any of its Subsidiaries
to, agree, in writing or otherwise, to take any of the foregoing actions.
Section 5.2 INVESTIGATION. The Company shall afford to Parent and to
its officers, directors, employees, accountants, consultants, legal counsel,
financial advisors, financing sources, investment bankers and other agents,
advisors and representatives (collectively, "REPRESENTATIVES") reasonable access
during normal business hours, throughout the period prior to the Effective Time,
to its and its Subsidiaries' properties, contracts, commitments, books and
records and any other report, schedule or other document filed or received by it
pursuant to the requirements of applicable Laws and shall use its reasonable
best efforts to cause its Representatives to furnish promptly to Parent such
additional financial and operating data and other information as to its and its
Subsidiaries' respective businesses and properties as Parent or its
Representatives may from time to time reasonably request, except that nothing
herein shall
34
require the Company or any of its Subsidiaries to disclose any information to
Parent that would cause a violation of any agreement to which the Company or any
of its Subsidiaries is a party (provided that the Company shall, and shall cause
its Subsidiaries to, use reasonable best efforts to obtain waivers under such
agreements or, to the extent permissible, implement requisite procedures to
enable the provision of reasonable access without violating such agreement),
would be reasonably likely to result in a loss of privilege to the Company or
any of its Subsidiaries, or would constitute a violation of applicable Laws;
PROVIDED, that the maximum amount of information that can be disclosed without
having either of such effects shall be disclosed to Parent. Parent hereby agrees
that it shall treat any such information in accordance with the Confidentiality
Agreement (the "CONFIDENTIALITY AGREEMENT"), dated as of October 5, 2005,
between the Company and Apax Partners Worldwide, LLP ("APAX"); provided, that
the Company hereby waives the terms and conditions in the Confidentiality
Agreement insofar as such terms prohibit Apax or any of its affiliates from
contacting any customers, suppliers, officers or employees of the Company or any
of its Subsidiaries; provided, further, that, in no event shall Apax or any of
its affiliates contact any customer, supplier, officer or employee of the
Company or any of its Subsidiaries without the Company's prior written consent,
such consent not to be unreasonably withheld.
Section 5.3 NO SOLICITATION.
(a) The Company agrees that neither it nor any Subsidiary of the
Company shall, and that it shall cause its and their respective directors,
employees who hold the title of Vice President or above, accountants,
consultants, legal counsel, financial advisors, financing sources or investment
bankers not to, and that it shall use its reasonable best efforts to cause the
Company's other employees who hold a title below Vice President not to, directly
or indirectly: (i) solicit, initiate or knowingly facilitate or encourage any
Company Alternative Proposal, (ii) participate in any negotiations regarding, or
furnish to any person any nonpublic information (or grant access to any of the
properties, assets or nonpublic records of the Company or any of its
Subsidiaries) with respect to or in furtherance of any Company Alternative
Proposal, (iii) engage in discussions with any person with respect to any
Company Alternative Proposal, except to notify such person as to the existence
of the provisions of this Section 5.3, (iv) withhold, withdraw or modify (or
publicly propose or announce any intention or desire to withhold, withdraw or
modify), in a manner adverse to Parent, the Company Recommendation, (v) agree
to, accept, approve, endorse or recommend (or publicly propose or announce any
intention to agree to, accept, approve, endorse or recommend) any Company
Alternative Proposal or (vi) enter into any letter of intent or similar document
or any agreement or commitment providing for any Company Alternative Proposal
(except for confidentiality agreements permitted under Section 5.3(b));
provided, however, it is understood and agreed that any determination or action
by the Board of Directors of the Company permitted under Section 5.3(b), 5.3(c)
or 7.1(g) shall not be deemed to be a breach or violation of this Section
5.3(a).
(b) Notwithstanding the limitations set forth in Section 5.3(a), if
the Company receives an unsolicited written Company Alternative Proposal (other
than as a result of its breach of Section 5.3(a)) which (i) constitutes a
Company Superior Proposal (and the Board so determines) or (ii) which the Board
of Directors of the Company determines in good faith after consultation with the
Company's outside legal and financial advisors could reasonably be expected to
result, after the taking of any of the actions referred to in either of clause
(x) or (y)
35
below, in a Company Superior Proposal, the Company may take, or the Company may
direct its Representatives to take, the following actions: (x) furnish nonpublic
information to the third party making such Company Alternative Proposal, if, and
only if, (i) all such information provided to such third party has previously
been made available to Parent or is made available to Parent concurrently with
the time such information is provided to such third party and (ii) prior to so
furnishing such information, the Company receives from the third party an
executed confidentiality agreement on terms substantially similar, with respect
to confidentiality, to the terms of the Confidentiality Agreement and (y) engage
in discussions or negotiations with the third party with respect to the Company
Alternative Proposal.
(c) From and after the execution of this Agreement, the Company shall
promptly, and in any event within 48 hours following receipt thereof, advise
Parent orally and in writing of the receipt, directly or indirectly, of any
proposal for a Company Alternative Proposal (including any materially modified
proposal) and any determination by the Board of Directors of the Company under
Section 5.3(b), which notification shall identify the offeror and include a copy
of any such proposal, if it is in writing, or a written summary of the material
terms and conditions of any Company Alternative Proposal relating to a Company
Alternative Proposal if it is not in writing. In addition, the Company shall
keep Parent reasonably informed on a reasonably current basis with respect to
any material development relating to such proposal, including the entering into
of discussions or negotiations and the results of such discussions or
negotiations and any changes in material terms or conditions based thereon. The
Company shall promptly make available to Parent all information provided to such
third party that has not previously been made available to Parent regardless of
whether Parent previously requested such information. In the event of any
Company Change in Recommendation (as defined herein), the Company shall provide
Parent with the Company's stockholder lists and following a Company Change in
Recommendation Parent may contact the Company's shareholders and prospective
investors without regard to the limitations set forth in Section 5.7.
(d) The Board of Directors of the Company may (i) (A) change,
withhold or withdraw (or modify or amend in a manner adverse to Parent or Merger
Sub) the Company Recommendation, or publicly propose to change, withhold or
withdraw (or modify or amend in a manner adverse to Parent or Merger Sub) the
Company Recommendation or (B) recommend or approve, or propose publicly to
recommend or approve, any Company Alternative Proposal that constitutes a
Company Superior Proposal (any such action, a "COMPANY CHANGE OF
RECOMMENDATION") if the Board of Directors of the Company has concluded in good
faith after consultation with the Company's outside legal and financial advisors
that the failure of the Board of Directors to effect a Company Change of
Recommendation would be reasonably likely to be inconsistent with the directors'
exercise of their fiduciary obligations to the Company's shareholders under
applicable Law. Nothing contained in this Agreement shall prohibit the Company
or its Board of Directors from disclosing to the Company's shareholders a
position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange
Act.
(e) The Company shall immediately cease and cause to be terminated
any existing negotiations or discussions with any third party conducted
heretofore with respect to any Company Alternative Proposal. The Company shall,
if it has not already done so, promptly request, to the extent it has a
contractual right to do so, that each Person, if any, that has heretofore
executed a confidentiality agreement within the twelve (12) months immediately
prior
36
to the date of this Agreement in connection with such Person's consideration of
a Company Alterative Proposal to return or destroy all confidential information
or data heretofore furnished to such Person by or on behalf of the Company or
any of its Subsidiaries.
(f) As used in this Agreement, "COMPANY ALTERNATIVE PROPOSAL" shall
mean any bona fide proposal or offer made by any person prior to the receipt of
the Company Shareholder Approval (other than a proposal or offer by Parent or
any of its Subsidiaries) for (i) a merger or business combination or similar
transaction with the Company; (ii) the acquisition (by purchase, tender offer,
exchange offer or otherwise) by any person of twenty percent (20%) or more of
the assets of the Company and its Subsidiaries, taken as a whole; (iii) the
acquisition by any person of twenty percent (20%) or more of the issued and
outstanding Company Ordinary Shares; (iv) the exclusive, long term license of
Trademarks of the Company and its Subsidiaries to any third party if such
license would be material to the Company and its Subsidiaries, taken as a whole;
or (v) any recapitalization transaction in which the shareholders of the Company
receive a payment or distribution in the form of cash, debt securities or
securities with a limited life (any such transaction referred to in clause (v),
a "RECAPITALIZATION TRANSACTION").
(g) As used in this Agreement "COMPANY SUPERIOR PROPOSAL" shall mean
a Company Alternative Proposal for or in respect of a majority of the
outstanding Ordinary Shares or all or substantially all of the Company's and its
Subsidiaries' assets that is reasonably capable of being consummated, made by
any person that the Board of Directors of the Company determines in good faith,
after consultation with the Company's financial and legal advisors, and
considering such factors as the Board of Directors considers to be appropriate
(including the conditionality and the timing and likelihood of consummation of
such proposal and any fees to be paid to Parent pursuant to the terms hereof),
(1) is on terms that are more favorable, both in general and from a financial
point of view, to the Company and its shareholders than the transactions
contemplated by this Agreement and (2) which provides for fully committed and
available financing and, other than in the case of a corporate or strategic
buyer that the Board reasonably believes, with the advise of its financial
advisors, has adequate financing resources to consummate the transactions
contemplated hereby, for which such person has received executed financing
commitment letters from reputable financing sources.
Section 5.4 FILINGS, OTHER ACTIONS.
(a) COVENANTS OF THE COMPANY WITH RESPECT TO PROXY STATEMENT. As
promptly as reasonably practicable following the date of this Agreement, the
Company shall, with the assistance of Parent prepare and file with the SEC the
Proxy Statement (as defined herein), which shall, except to the extent provided
in Section 5.3, include the text of this Agreement, the fairness opinion of X.X.
Xxxxxx Securities Inc. referred to in Section 3.14 hereof and the recommendation
of the Company's Board of Directors that the Company's shareholders approve and
adopt this Agreement, and shall use its reasonable best efforts, after
consultation with Parent, to respond to any comments by the SEC staff in respect
of the Proxy Statement. The Company shall provide Parent with a reasonable
opportunity to review and comment on the Proxy Statement or any amendments or
supplements thereto. The Company agrees that (i) none of the information with
respect to the Company or its Subsidiaries to be included in the Proxy Statement
will, at the time of the mailing of the Proxy Statement or any amendments or
supplements thereto, and at the time of the Company Meeting, contain any untrue
statement of a
37
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading and (ii) the Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations promulgated thereunder. The
letters to shareholders, notices of meeting, proxy statement and forms of
proxies to be distributed to shareholders in connection with the Merger and any
schedules required to be filed with the SEC in connection therewith are
collectively referred to herein as the "PROXY STATEMENT." Any information
required under the BC Act and the Company's Memorandum and Articles of
Association in connection with duly calling, giving notice of, convening and
holding the Company Meeting shall be contained in the Proxy Statement, which
information shall be prepared by the Company in accordance with the BC Act and
the Company's Memorandum and Articles of Association. If at any time prior to
the Company Meeting any event or circumstance relating to the Company or any of
its Subsidiaries, or their respective officers or directors, should be
discovered by the Company that should be set forth in an amendment or supplement
to the Proxy Statement, the Company shall promptly inform Parent and shall file
such amendment or supplement with the SEC and, if required by applicable Law,
the Company shall mail such amendment or supplement to the Company's
shareholders. Any expenses incurred in connection with the printing, filing and
mailing of the Proxy Statement (including applicable SEC filing fees) shall be
paid by the Company.
(b) COVENANTS OF PARENT WITH RESPECT TO PROXY STATEMENT. Parent
agrees that none of the information with respect to Parent or its Subsidiaries
provided by or on behalf of Parent to be included in the Proxy Statement will,
at the time of the mailing of the Proxy Statement or any amendments or
supplements thereto, and at the time of the Company Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. If at any time
prior to the Company Meeting any event or circumstance relating to Parent or any
of its Subsidiaries, or their respective officers or directors, should be
discovered by Parent that should be set forth in an amendment or supplement to
the Proxy Statement, Parent shall promptly inform the Company (which shall file
such amendment or supplement with the SEC) and, if required by applicable Law,
mail such amendment or supplement to the Company's shareholders.
(c) COOPERATION. The Company and Parent shall cooperate with each
other in the preparation of the Proxy Statement and shall cooperate with each
other and shall use their reasonable best efforts to lift any injunctions or
remove any other impediment to the consummation of the transactions contemplated
herein.
(d) RE-REGISTRATION. Prior to the date and time of the Company
Meeting (and in any event no later than ten business days prior to the Company
Meeting), (i) the directors of the Company shall, in accordance with the
provisions of the BC Act and the Company's Memorandum and Articles of
Association pass the resolutions necessary in order for the Company to make an
application to the Registrar to re-register the Company as a company limited by
shares pursuant to the provisions of the BC Act (the "RE-REGISTRATION") and to
re-register its Memorandum and Articles of Association under the BC Act and
which will be in effect from the date of Re-registration and (ii) the Company
will effect the Re-registration in accordance with such resolutions.
38
(e) SHAREHOLDER MEETING. Subject to the other provisions of this
Agreement, the Company shall take all action necessary in accordance with the BC
Act and its Memorandum and Articles of Association to duly call, give notice of,
convene and hold a meeting of its shareholders to be held as promptly as
reasonably practicable following the mailing of the Proxy Statement for the
purpose of obtaining the Company Shareholder Approval (the "COMPANY MEETING")
and, subject to Section 5.3, shall, through its Board of Directors, recommend to
its shareholders the approval and adoption of this Agreement, the Merger and the
other transactions contemplated hereby (the "COMPANY RECOMMENDATION"). Subject
to Section 5.3 of this Agreement, the Company will use its reasonable best
efforts to solicit from its shareholders proxies to be exercised in favor of the
approval of this Agreement and the Merger.
Section 5.5 STOCK OPTIONS AND OTHER STOCK BASED AWARDS; EMPLOYEE
MATTERS.
(a) STOCK OPTIONS AND OTHER STOCK BASED AWARDS.
(i) Each option to purchase Company Ordinary Shares (each, a
"COMPANY STOCK OPTION") granted under the employee and director stock plans of
the Company (the "COMPANY STOCK PLANS"), whether vested or unvested, that is
outstanding immediately prior to the Effective Time shall, as of the Effective
Time, become fully vested and be converted into the right at the Effective Time
to receive an amount in cash in U.S. dollars, equal to the product of (x) the
total number of Company Ordinary Shares subject to such Company Stock Option
multiplied by (y) the excess, if any, of the amount of the Merger Consideration
over the exercise price per Company Ordinary Share subject to such Company Stock
Option, with the aggregate amount of such payment rounded to the nearest cent
(the aggregate amount of such cash hereinafter referred to as the "OPTION
CONSIDERATION") less such amounts as are required to be withheld or deducted in
accordance with Section 2.2(b)(iii).
(ii) At the Effective Time, each right of any kind, contingent
or accrued, to receive Company Ordinary Shares or benefits measured in whole or
in part by the value of a number of Company Ordinary Shares (other than Company
Stock Options), and each award of any kind consisting of Company Ordinary Shares
(including restricted stock), granted under the Company Stock Plans or Company
Benefit Plans, (each, a "COMPANY STOCK-BASED AWARD"), whether vested or
unvested, which is outstanding immediately prior to the Effective Time shall
cease to represent a right or award with respect to Company Ordinary Shares,
shall become fully vested and shall entitle the holder thereof to receive, at
the Effective Time, subject to any deferral election in effect immediately prior
to the Effective Time made by such holder under the Company's deferred
compensation plans, an amount in cash equal to the Merger Consideration in
respect of each Company Ordinary Share underlying a particular Company
Stock-Based Award (the aggregate amount of such cash, together with the Option
Consideration, hereinafter referred to as the "OPTION AND STOCK-BASED
CONSIDERATION") less such amounts as are required to be withheld or deducted in
accordance with Section 2.2(b)(iii).
(iii) The compensation committee of the board of directors of
the Company (the "COMPENSATION COMMITTEE") shall make such adjustments and
amendments to or make such determinations with respect to the Company Stock
Options and Company Stock-Based Awards to implement the foregoing provisions of
this Section 5.5.
39
(b) EMPLOYEE MATTERS.
(i) From and after the Effective Time, Parent shall cause the
Surviving Corporation to honor all Company Benefit Plans and compensation
arrangements and agreements in accordance with their terms as in effect
immediately before the Effective Time; provided, however, that, subject to the
last two sentences of this Section 5.5(b)(i), nothing herein shall limit the
right of Parent to amend or terminate such Company Benefit Plans. From the
Closing Date through March 31, 2007, except as required by Law, Parent shall
provide, or shall cause to be provided, to each current and former employee of
the Company and its Subsidiaries (the "COMPANY EMPLOYEES") compensation and
benefits (excluding for this purpose any retention or severance payments or
benefits), pursuant to welfare, compensation and employee benefits plans,
programs and arrangements, that are no less favorable, in the aggregate, it
being acknowledged and agreed that in determining such with respect to employees
who participate in the Company's equity participation plan following the
Effective Time, the compensation and benefits under such equity participation
plan and such person's prior participation under the Company's bonus plan shall
both be excluded from a determination that the compensation and benefits
provided to such person after the Effective Time is no less favorable in the
aggregate, than the compensation and benefits provided to Company Employees
immediately before the Effective Time. For one year from the Closing Date,
except as required by Law, Parent shall honor, fulfill and discharge the
Company's and its Subsidiaries' obligations under, the severance and/or
retention plans listed on Section 5.5(b)(i) of the Company Disclosure Schedule
without any amendment or change that is adverse to the Company Employees. During
the period specified above, severance benefits offered to Company Employees
shall be determined without taking into account any reduction after the
Effective Time in the compensation paid to Company Employees and used to
determine severance benefits.
(ii) For purposes of vesting, eligibility to participate and
accrual of benefits (but not for purposes of benefit accruals under any defined
pension plan) under the employee benefit plans of Parent and its Subsidiaries
providing benefits to any Company Employees after the Effective Time (the "NEW
PLANS"), each Company Employee shall be credited with his or her years of
service with the Company and its Subsidiaries before the Effective Time, to the
same extent as such Company Employee was entitled, before the Effective Time, to
credit for such service under any similar Company employee benefit plan in which
such Company Employee participated or was eligible to participate immediately
prior to the Effective Time, provided that the foregoing shall not apply to the
extent that its application would result in a duplication of benefits. In
addition, and without limiting the generality of the foregoing: (i) each Company
Employee shall be immediately eligible to participate, without any waiting time,
in any and all New Plans to the extent coverage under such New Plan is
comparable to a Company Benefit Plan in which such Company Employee participated
immediately before the consummation of the Merger (such plans, collectively, the
"OLD PLANS"); and (ii) for purposes of each New Plan providing medical, dental,
pharmaceutical and/or vision benefits to any Company Employee, Parent shall
cause all pre-existing condition exclusions and actively-at-work requirements of
such New Plan to be waived for such employee and his or her covered dependents,
unless such conditions would not have been waived under the comparable plans of
the Company or its Subsidiaries in which such employee participated immediately
prior to the Effective Time and Parent shall cause any eligible expenses
incurred by such employee and his or her covered dependents during the portion
of the plan year of the Old Plan ending on the date
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such employee's participation in the corresponding New Plan begins to be taken
into account under such New Plan for purposes of satisfying all deductible,
coinsurance and maximum out-of-pocket requirements applicable to such employee
and his or her covered dependents for the applicable plan year as if such
amounts had been paid in accordance with such New Plan.
(iii) Parent hereby acknowledges that a "change of control"
(or similar phrase) within the meaning of the Company Stock Plans or the Company
Benefit Plans, as applicable, will occur at or prior to the Effective Time, as
applicable.
(iv) The Company's Compensation Committee in effect prior to
the Effective Time will determine annual bonuses for each Company Employee
employed as of immediately prior to the Effective Time (or, if earlier, the date
bonuses are paid) and then participating in the bonus plans established by the
Company or any of its Subsidiaries with respect to the fiscal year ending March
31, 2006 (the "2006 BONUS PLANS, and each such Company Employee a
"BONUS-ELIGIBLE EMPLOYEE"). If the Effective Time occurs prior to the
calculation of results of actual performance for the Company's fiscal year
ending March 31, 2006 ("FISCAL 2006"), each Bonus-Eligible Employee shall be
eligible for a full Fiscal 2006 bonus equal to such Bonus-Eligible Employee's
deemed bonus entitlement under the 2006 Bonus Plans for Fiscal 2006, as if the
2006 Bonus Plans and the Bonus-Eligible Employee's participation in such 2006
Bonus Plans had continued through the end of Fiscal 2006, based on comparing the
Company's annual performance goals for the year to the Company's projected
performance for Fiscal 2006, determined by the Compensation Committee as in
effect immediately prior to the Effective Time utilizing actual performance for
the period beginning on the first day of Fiscal 2006 and ending as of the end of
the month immediately preceding the month in which the Effective Time occurs (or
as of the end of the month in which the Effective Time occurs if the Effective
Time coincides with the end of the month) and assuming the Company's performance
for the remainder of Fiscal 2006 equaled the Company's monthly performance goals
for the balance of the year. Subject to the severance plans listed on Section
5.5(b)(i) of the Company Disclosure Schedule, bonuses under the 2006 Bonus Plan
to be paid pursuant to the foregoing shall be paid (i) at a time consistent with
the Company's past practices for the payment of bonuses under the Company bonus
plans (whether or not such time occurs prior to or following the Effective Time)
and (ii) only to Bonus-Eligible Employees then currently employed by the Company
at such time of payment (consistent with past practices of the Company).
(v) Neither the Company nor any Subsidiary shall establish any
bonus plan for its fiscal year ending March 31, 2007 ("FISCAL 2007") or periods
thereafter.
Section 5.6 REASONABLE BEST EFFORTS.
(a) Subject to the terms and conditions set forth in this Agreement,
each of the parties hereto shall use its reasonable best efforts (subject to,
and in accordance with, applicable Law) to take promptly, or cause to be taken,
all actions, and to do promptly, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable under applicable Laws and regulations to consummate and make effective
the Merger and the other transactions contemplated by this Agreement, including
(i) the obtaining of all necessary actions or nonactions, waivers, consents,
clearances and approvals, including the
41
Company Approvals, from Governmental Entities and the making of all necessary
registrations and filings and the taking of all steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated by this Agreement and (iv) the
execution and delivery of any additional instruments necessary to consummate the
transactions contemplated by this Agreement.
(b) Subject to the terms and conditions herein provided and without
limiting the foregoing, the Company and Parent shall (i) promptly but in no
event later than thirty (30) days after the date hereof make their respective
filings and thereafter make any other required submissions under the HSR Act,
(ii) use reasonable best efforts to cooperate with each other in (x) determining
whether any filings are required to be made with, or consents, permits,
authorizations, clearances or approvals are required to be obtained from, any
third parties or other Governmental Entities (including any foreign jurisdiction
in which the Company's Subsidiaries are operating any business) in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and (y) promptly making all such filings and
seeking all such consents, permits, authorizations or approvals and (iii) 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, including
taking all such further action as reasonably may be necessary to resolve such
objections, if any, as the United States Federal Trade Commission, the Antitrust
Division of the United States Department of Justice, state antitrust enforcement
authorities or competition authorities of any other nation or other jurisdiction
or any other person may assert under Regulatory Law (as hereinafter defined)
with respect to the transactions contemplated hereby, and to avoid or eliminate
each and every impediment under any Law that may be asserted by any Governmental
Entity with respect to the Merger so as to enable the Closing to occur as soon
as reasonably possible (and in any event no later than the End Date (as
hereinafter defined)), including, without limitation (x) proposing, negotiating,
committing to and effecting, by consent decree, hold separate order, or
otherwise, the sale, divestiture or disposition of such assets or businesses of
Parent or the Company (or any of their respective Subsidiaries) and (y)
otherwise taking or committing to take actions that after the Closing would
limit the freedom of Parent or its Subsidiaries' (including the Surviving
Corporation's) freedom of action with respect to, or its ability to retain, one
or more of its or its Subsidiaries' (including the Surviving Corporation's)
businesses, product lines or assets, in each case as may be required in order to
avoid the entry of, or to effect the dissolution of, any injunction, temporary
restraining order, or other order in any suit or proceeding, which would
otherwise have the effect of preventing or materially delaying the Closing.
(c) Parent and the Company will cooperate and consult with each other
in connection with the making of all registrations, filings, notifications and
any other material actions pursuant to this Section 5.6, including, subject to
applicable legal limitations and the instructions of any Governmental Entity, by
permitting counsel for the other party to review in advance, and consider in
good faith the views of the other party in connection with, any proposed written
communication to any Governmental Entity and by providing counsel for the other
party with copies of all filings and submissions made by such party and all
correspondence between
42
such party (and its advisors) with any Governmental Entity and any other
information supplied by such party and such party's Subsidiaries to a
Governmental Entity or received from such a Governmental Entity in connection
with the transactions contemplated by this Agreement, PROVIDED, HOWEVER, that
materials may be redacted (x) to remove references concerning the valuation of
the businesses of the Company and its Subsidiaries, (y) as necessary to comply
with contractual arrangements, and (z) as necessary to address reasonable
privilege or confidentiality concerns. Parent and the Company will (i) furnish
to the other parties such information and assistance as such parties reasonably
may request in connection with the preparation of any submissions to, or agency
proceedings by, any Governmental Entities; (ii) promptly inform the other party
of any communications with, and inquiries or requests for information from, such
Governmental Entities in connection with the transactions contemplated by the
Agreement; and (iii) consult with the other parties in advance of any meeting or
conference, whether in-person or by telephone, with any such Governmental Entity
or, in connection with any proceeding by a private party, with any other Person,
and to the extent permitted by such applicable Governmental Entity or other
Person, give the other parties the opportunity to attend and participate in such
meetings and conferences. Parent and the Company may, as each deems advisable
and necessary, reasonably designate any competitively sensitive or any
confidential business material provided to the other under this Section as
"outside counsel only." Such materials and the information contained therein
shall be given only to the outside legal counsel of the recipient and shall not
be disclosed by such outside counsel to employees, officers or directors of the
recipient unless express permission is obtained in the advance from the source
of the materials or its legal counsel.
(d) In furtherance and not in limitation of the covenants of the
parties contained in this Section 5.6, if any administrative or judicial action
or proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement as violative of any Regulatory Law (as defined below), each of the
Company and Parent shall cooperate in all respects with each other and use
reasonable best efforts to contest and resist any such action or proceeding and
to have vacated, lifted, reversed or overturned any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent, that is in effect
and that prohibits, prevents or restricts consummation of the transactions
contemplated by this Agreement. Notwithstanding the foregoing or any other
provision of this Agreement, nothing in this Section 5.6 shall limit a party's
right to terminate this Agreement pursuant to Section 7.1(b) or 7.1(c) so long
as such party has, prior to such termination, complied with its obligations
under this Section 5.6.
(e) If any objections are asserted with respect to the transactions
contemplated hereby under any Regulatory Law or if any suit is instituted by any
Governmental Entity or any private party challenging any of the transactions
contemplated hereby as violative of any Regulatory Law, each of the Company and
Parent shall use reasonable best efforts to resolve any such objections or
challenge as such Governmental Entity or private party may have to such
transactions under such Regulatory Law so as to permit consummation of the
transactions contemplated hereby. For purposes of this Agreement, "REGULATORY
LAW" means the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the HSR
Act, the Federal Trade Commission Act, as amended, and all other federal, state
or foreign statutes, rules, regulations, orders, decrees, administrative and
judicial doctrines and other Laws, including without limitation any antitrust,
competition or trade regulation laws, that are designed or intended to prohibit,
restrict or regulate
43
actions having the purpose or effect of monopolization or restraint of trade or
lessening competition through merger or acquisition.
(f) Parent shall provide the Company any certificates from Parent,
and any opinions, appraisals or other statements, relating to the solvency and
adequate capitalization of Parent and Parent's ability to pay its debts that are
given to any banks or other lenders in connection with the Financing. Any such
certificate, opinion, appraisal or other statement will be provided to the
Company at the time it is provided to any banks or other lenders.
Section 5.7 PRESS RELEASES. The Company and Parent will consult with
and provide each other the opportunity to review in advance any press release
relating to this Agreement or the transactions contemplated herein. Neither
Party shall issue any such press release prior to such consultation and review,
except as may be required by Law or by obligations pursuant to any listing
agreement with any national securities exchange.
Section 5.8 INDEMNIFICATION AND INSURANCE.
(a) Parent and Merger Sub agree that all rights to exculpation and
indemnification for acts or omissions occurring at or prior to the Effective
Time, whether asserted or claimed prior to, at or after the Effective Time
(including any matters arising in connection with the transactions contemplated
by this Agreement), now existing in favor of the current or former directors,
officers or employees (in their capacity as such and not as shareholders or
optionholders of the Company or its Subsidiaries), as the case may be (such
current or former directors, officers and employees, the "INDEMNIFIED PARTIES"),
of the Company or its Subsidiaries as provided in their respective articles of
association, certificates of incorporation or by-laws (or comparable
organizational documents) or in any agreement shall survive the Merger and shall
continue in full force and effect. For a period of six (6) years from and after
the Effective Time, Parent and Surviving Corporation shall (i) maintain in
effect provisions in the articles of association, certificate of incorporation
and bylaws (or comparable organizational documents) of each of the Company and
its Subsidiaries regarding indemnification of officers and directors that are
substantively identical to those contained in the articles of association,
certificate of incorporation and bylaws (or comparable organizational documents)
of each of the Company and its Subsidiaries and (ii) indemnify the Indemnified
Parties (in each case to the fullest extent permitted by the articles of
association, certificate of incorporation and bylaws (or comparable
organizational documents) of each of the Company and its Subsidiaries or
indemnification agreement or arrangement with such Indemnified Party) against
all claims, losses, liabilities and damages incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of actions taken by them in their
capacity as officers, directors or employees at or prior to the Effective Time
(including any matters arising in connection with the transactions contemplated
by this Agreement). Following the Effective Time, the Surviving Corporation
shall honor any indemnification agreements of the Company and its Subsidiaries
with any of their respective directors, officers and employees existing as on
the date hereof. For a period of six (6) years from and after the Effective
Time, the Surviving Corporation shall either cause to be maintained in effect
the current policies of directors' and officers' liability insurance and
fiduciary liability insurance maintained by the Company or its Subsidiaries or
provide substitute policies or purchase a "tail policy," in either case, of at
least the same coverage and amounts containing
44
terms and conditions which are, in the aggregate, no less advantageous to the
insureds with respect to claims arising from facts or events that occurred on or
before the Effective Time, except that in no event shall the Surviving
Corporation be required to pay with respect to such insurance policies in
respect of any one policy year more than 200% of the annual premium payable by
the Company for such insurance for the year ending March 31, 2005 (the "MAXIMUM
AMOUNT"), and if the Surviving Corporation is unable to obtain the insurance
required by this Section 5.8 it shall obtain as much comparable insurance as
possible for the years within such six-year period for an annual premium equal
to the Maximum Amount, in respect of each policy year within such period; and
further provided that if the Surviving Corporation purchases a "tail policy" and
the same coverage costs more than $5 million, the Surviving Corporation shall
purchase the maximum amount of coverage that can be obtained for $5 million.
(b) The provisions of this Section 5.8 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties and
their heirs and legal representatives.
(c) The rights of the Indemnified Parties and their heirs and legal
representatives under this Section 5.8 shall be in addition to any rights such
Indemnified Parties may have under the articles of association, certificate of
incorporation or by-laws (or comparable organizational documents) of the Company
or any of its Subsidiaries, any agreements between such persons and the Company
or any of its Subsidiaries, or any applicable Laws.
(d) In the event that either Parent or the Surviving Corporation or
any of their respective successors or assigns (A) consolidates with or merges
into any other Persons, or (B) transfers 50% or more of its properties or assets
to any Person, then and in each case, proper provision shall be made so the
applicable successors and assigns or tranferees assume the obligations set forth
in this Section 5.8.
Section 5.9 SECTION 16 MATTERS. Prior to the Effective Time, the
Company shall use its reasonable best efforts to approve in advance in
accordance with the procedures set forth in Rule 16b-3 promulgated under the
Exchange Act, any dispositions of Company Ordinary Shares (including derivative
securities with respect to Company Ordinary Shares) resulting from the
transactions contemplated by this Agreement by each officer or director of the
Company who is subject to Section 16 of the Exchange Act (or who will become
subject to Section 16 of the Exchange Act as a result of the transactions
contemplated hereby) with respect to equity securities of the Company.
Section 5.10 CONTROL OF OPERATIONS. Nothing contained in this
Agreement shall give Parent, directly or indirectly, the right to control or
direct the Company's operations prior to the Effective Time; PROVIDED, that the
foregoing shall not limit the obligations of the Company pursuant to Section
5.1. Prior to the Effective Time, the Company shall exercise, consistent with
the terms and conditions of this Agreement, complete control and supervision
over its operations (subject only to the covenants of the Company as set forth
in Section 5.1).
Section 5.11 CERTAIN TRANSFER TAXES. Any liability arising out of any
real estate transfer Tax with respect to interests in real property owned
directly or indirectly by the Company or any of its Subsidiaries immediately
prior to the Merger, if applicable and due with
45
respect to the Merger, shall be borne by the Surviving Corporation or Parent and
expressly shall not be a liability of shareholders of the Company.
Section 5.12 FINANCING.
(a) Parent shall use its reasonable best efforts to obtain the
Financing on the terms and conditions described in the Financing Commitments
(provided that Parent and Merger Sub may replace or amend the Financing
Commitments to add lenders, lead arrangers, bookrunners, syndication agents or
similar entities who had not executed the Financing Commitments as of the date
hereof, so long as any such amendment or replacement does not adversely affect
the ability of Parent to consummate the transactions contemplated by this
Agreement without delay) including using its reasonable best efforts to (i)
negotiate the Financing Agreements on the terms and conditions contained in the
Financing Commitments and (ii) satisfy on a timely basis all conditions
applicable to Parent in the Financing Agreements. In the event that any portion
of the Financing becomes unavailable in the manner or from the sources
contemplated in the Financing Commitments, Parent shall promptly notify the
Company and shall use its reasonable best efforts to arrange to obtain any such
portion from alternative sources, on terms that are no more adverse to the
ability of Parent to consummate the transactions contemplated by this Agreement,
as promptly as practicable following the occurrence of such event; PROVIDED,
HOWEVER, that Parent shall not be required to obtain financing (i) on terms,
which are, taken as a whole, materially less advantageous to Parent or (ii) on
economic terms less advantageous to Parent in any event, in each case, than
those of the Financing contemplated by the Financing Commitments (taking into
account any market flex provisions thereof).
(b) The Company shall, and shall cause its Subsidiaries and its and
their Representatives to, reasonably cooperate in connection with the
arrangement of the Financing as may be reasonably requested by Parent (provided
that such requested cooperation does not unreasonably interfere with the ongoing
operations of the Company and its Subsidiaries). Such cooperation by the Company
shall include, at the reasonable request of Parent and if necessary to obtain
the Financing or obtain any portion thereof from alternative sources pursuant to
subsection (a) above, (i) agreeing to enter into such agreements, and to use
reasonable best efforts to deliver such officer's certificates and opinions, as
are customary in financings of such type and as are, in the good faith
determination of the persons executing such officer's certificates or opinions,
accurate, and agreeing to pledge, grant security interests in, and otherwise
grant liens on, the Company's assets pursuant to such agreements as may be
reasonably requested, PROVIDED that no obligation of the Company under any such
agreement, pledge or grant shall be effective until the Effective Time, (ii)
participating in meetings, drafting sessions, due diligence sessions, management
presentation sessions, "road shows" and sessions with rating agencies, (iii)
using commercially reasonable efforts to prepare or participate in the
preparation of business projections and financial statements for inclusion in
offering memoranda, private placement memoranda, prospectuses and similar
documents, (iv) instructing its independent accountants to provide reasonable
assistance to Parent (including to provide consent to Parent to prepare and use
their audit reports relating to the Company and any necessary "comfort letters"
in connection with the Financing) and (v) providing to the lenders specified in
the Financing Commitments financial and other information in the Company's
possession with respect to the Merger, making the Company's senior officers
available to assist the lenders
46
specified in the Financing Commitments and otherwise reasonably cooperating in
connection with the consummation of the Financing.
Section 5.13 MERGER SUB. Parent shall use its reasonable best efforts
to (a) cause Merger Sub to perform its obligations under this Agreement and to
consummate the Merger on the terms and conditions set forth in this Agreement
and (b) ensure that, prior to the Effective Time, Merger Sub shall not conduct
any business or make any investments other than as specifically contemplated by
this Agreement, or incur or guarantee any Indebtedness (other than as
contemplated by the Financing).
Section 5.14 [Intentionally Omitted].
Section 5.15 EXISTING INDEBTEDNESS.
(a) Within five (5) business days following the mailing of the Proxy
Statement (or such other time as may be agreed between Parent and the Company),
the Company shall cause Xxxxx Xxxxxxxx U.S.A., Inc., a direct wholly owned
subsidiary of the Company ("TH USA") to (i) commence a cash tender offer to
purchase all of TH USA's outstanding 6.85% Notes due 2008 (the "2008 NOTES") and
(ii) solicit the consent of the holders of the 2008 Notes regarding certain
amendments (the "2008 INDENTURE AMENDMENTS") described on Section 5.15 of the
Parent Disclosure Schedule to the covenants contained in the Indenture, dated as
of May 1, 1998, by and among TH USA, as issuer, the Company, as guarantor, and
Wilmington Trust Company as successor to The Chase Manhattan Bank, as trustee
(the "INDENTURE"). Such offer to purchase and consent solicitation (the "2008
DEBT OFFER") shall be conducted in accordance with the terms of the Indenture
and all applicable rules and regulations of the SEC and other applicable Laws.
(b) Within five (5) business days following the mailing of the Proxy
Statement (or such other time as may be agreed between Parent and the Company),
the Company shall cause TH USA to (i) commence a cash tender offer to purchase
all of TH USA's outstanding 9% Senior Bonds due 2031 (the "2031 SENIOR BONDS",
and together with the 2008 Notes, the "DEBT SECURITIES") and (ii) solicit the
consent of the holders of the 2031 Senior Bonds regarding certain amendments
(the "2031 INDENTURE AMENDMENTS") described on Section 5.15 of the Parent
Disclosure Schedule to the covenants contained in the Indenture. Such offer to
purchase and consent solicitation (the "2031 DEBT OFFER", and together with the
2008 Debt Offer, the "DEBT OFFERS") shall be conducted in accordance with the
terms of the Indenture and all applicable rules and regulations of the SEC and
other applicable Laws.
(c) Parent and Merger Sub shall have sole discretion over the terms
and structure of the Debt Offers (including the appointment of a solicitation
agent selected by Parent); PROVIDED, that the material terms of the proposed
Indenture Amendments, the consent solicitation fee, the conditions to the Debt
Offers, price thereof and certain other terms set forth on Section 5.15 of the
Parent Disclosure Schedule shall be no less favorable to the holders of the Debt
Securities than as set forth in Section 5.15 of the Parent Disclosure Schedule.
The Company agrees to reasonably cooperate, and to cause its Representatives and
TH USA to reasonably cooperate, and to use its reasonable best efforts to cause
TH USA to consummate the Debt Offers, including assisting to the extent
reasonably requested by Parent in the preparation of and
47
executing all documents required in connection therewith in form and substance
reasonably satisfactory to Parent and Merger Sub and taking any other reasonable
actions Parent and Merger Sub reasonably determine to be necessary in connection
therewith (including providing a list to Parent of the current holders of Debt
Securities holding through DTC); PROVIDED, that prior to the Effective Time,
neither the Company nor any of its Subsidiaries shall be required to (i) make
any cash expenditures or (ii) take any action that could obligate the Company or
any of its Subsidiaries to repurchase any Debt Securities or incur any
additional obligations to the holders of the Debt Securities prior to the
consummation of the Debt Offers. Subject to Section 5.15 of the Parent
Disclosure Schedule, the consent solicitation fees, if any, to be paid in the
Debt Offers shall be as determined at any time, or from time to time, by Parent
in its sole discretion. Subject to the provisos in the first two sentences of
this Section 5.15(c), the Company shall cause TH USA to make any changes in the
terms of the Debt Offers as may be reasonably requested by Parent and Merger
Sub, but the Company shall cause TH USA not to waive, without Parent's and
Merger Sub's prior consent, any condition to the Debt Offers or make any changes
to the terms and conditions of the Debt Offers. Each of the Company, Parent and
Merger Sub agree to comply in all material respects with all laws and
regulations applicable to the Debt Offers. Any out-of-pocket expenses paid prior
to the Closing or, in the event the Closing does not occur, any out-of-pocket
expenses incurred, in each case, in connection with the Debt Offers, including
solicitation agent or dealer manager fees, shall be paid by the Parent.
(d) Promptly following the date of this Agreement, Parent shall
prepare, or cause to be prepared, subject to the reasonable approval of the
Company, the documentation to be sent to the holders of the Debt Securities in
connection with the Debt Offers. Any mailings to holders of the Debt Securities
shall be subject to the reasonable approval of the Company and Parent.
(e) If at any time prior to the Effective Time any information
relating to the Company or any of its Subsidiaries, affiliates, officers or
directors, should be discovered by the Company, Parent or Merger Sub which if
not set forth in an amendment or supplement to the documents mailed to holders
in respect of the Debt Offers would reasonably be expected to cause such
documents to include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and,
to the extent required by law, rules or regulations, an appropriate amendment or
supplement describing such information shall promptly be prepared and, if
required, filed with the SEC and/or disseminated to the holders of Debt
Securities.
Section 5.16 NOTIFICATION. From and after the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement
pursuant to and in accordance with Section 7.1, the Company and Parent shall
promptly notify each other in writing of the occurrence, or non-occurrence, of
any event that, individually or in the aggregate, would make the timely
satisfaction of any of the conditions set forth in Section 6.1, 6.2 and 6.3
impossible or unlikely.
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ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment (or waiver by all parties) at or prior to the
Effective Time of the following conditions:
(a) The Company Shareholder Approval shall have been obtained in
accordance with the BC Act, the Memorandum and Articles of Association of the
Company and the rules and regulations of the New York Stock Exchange.
(b) No Law or Order shall have been enacted, entered, promulgated or
enforced by any Governmental Entity, or shall otherwise be in effect, which
prohibits the consummation of the Merger and which shall continue to be in
effect.
(c) Any applicable waiting period under the HSR Act shall have
expired or been earlier terminated, the European Commission shall have approved
(or be deemed to have approved) the Merger pursuant to the ECMR and any other
Company Approvals required to be obtained for the consummation, as of the
Effective Time, of the transactions contemplated by this Agreement, other than
any Company Approvals the failure to obtain which would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, shall have been obtained.
Section 6.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger is further subject to
the fulfillment of the following conditions:
(a) The representations and warranties of Parent and Merger Sub set
forth in this Agreement that are qualified by Parent Material Adverse Effect
shall be true and correct in all respects, and the representations and
warranties of Parent and Merger Sub set forth in this Agreement that are not
qualified by Parent Material Adverse Effect shall be true and correct (without
giving effect to any "materiality" qualifiers set forth therein) except for such
failures to be true and correct as would not, in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect, in each case (or, in the case
of those representations and warranties that are made as of a particular date or
period, as of such date or period) as of the Closing Date as though made at and
as of the Closing Date. The representations and warranties of Parent and Merger
Sub set forth in the first sentence of Section 4.2(a) (Authorization) of this
Agreement shall be true and correct in all respects as of the Closing Date as
though made at and as of the Closing Date;
(b) Parent shall have in all material respects performed all
obligations and complied with all covenants required by this Agreement to be
performed or complied with by it prior to the Effective Time;
(c) Parent shall have delivered to the Company a certificate, signed
by its Chief Executive Officer or Chief Financial Officer, to the effect that,
at the Effective Time, after giving effect to the Merger and the transactions
contemplated hereby, including, without
49
limitation, the Financing, and assuming the accuracy of the representations and
warranties made by the Company in this Agreement in all respects, Parent and its
Subsidiaries, taken as a whole, will not (i) be insolvent (either because the
financial condition is such that the sum of its debts is greater than the fair
value of its assets or because the present fair saleable value of its assets
will be less than the amount required to pay its probable liability on its debts
as they become absolute and matured), (ii) have unreasonably small capital with
which to engage in its business or (iii) have incurred or plan to incur debts
beyond its ability to pay as they become absolute and matured; and
(d) Parent shall have delivered to the Company a certificate, dated
the Effective Time and signed by its Chief Executive Officer on behalf of
Parent, certifying to the effect that the conditions set forth in Sections
6.2(a) and 6.2(b) have been satisfied.
Section 6.3 CONDITIONS TO OBLIGATION OF PARENT AND MERGER SUB TO
EFFECT THE MERGER. The obligation of Parent and Merger Sub to effect the Merger
is further subject to the fulfillment of the following conditions:
(a) Except as set forth in the next sentence, (i) the representations
and warranties of the Company set forth in this Agreement that are qualified by
Company Material Adverse Effect shall be true and correct in all respects, and
(ii) the representations and warranties of the Company set forth in this
Agreement that are not qualified by Company Material Adverse Effect shall be
true and correct (without giving effect to any "materiality" qualifiers set
forth therein), except for such failures to be true and correct as would not, in
the aggregate, reasonably be expected to have a Company Material Adverse Effect,
in each case, as of the Closing Date as though made at and as of the Closing
Date (or, in the case of those representations and warranties that are made as
of a particular date or period, as of such date or period). The representations
and warranties of the Company set forth in the first sentences of each of
Sections 3.1 (Qualification, Organization and Good Standing), 3.2(a) (Capital
Stock) and 3.17 (Finders or Brokers) and in Sections 3.2(b) (Capital Stock) and
3.3(a)(Authorization) shall be true and correct in all respects (except, in the
case of Section 3.2, for insubstantial numerical inaccuracies) as of the Closing
Date as though made at and as of the Closing Date (other than those of such
representations and warranties that expressly relate to an earlier date, in
which case such particular representations shall have been true and correct in
all respects as of such earlier date);
(b) The Company shall have in all material respects performed all
obligations and complied with all covenants required by this Agreement to be
performed or complied with by it prior to the Effective Time;
(c) The Company shall have delivered to Parent a certificate, dated
the Effective Time and signed by its Chief Executive Officer on behalf of the
Company, certifying to the effect that the conditions set forth in Sections
6.3(a) and 6.3(b) have been satisfied;
(d) Substantially concurrently with the Closing, Parent or Merger Sub
shall have received the proceeds of the Debt Financing contemplated by the
Financing Commitments related to the Debt Financing on the terms and conditions
set forth therein (and, with respect to terms and conditions not so set forth,
on terms and conditions reasonably acceptable to Parent) or
50
proceeds in the same aggregate amount as contemplated by the Debt Financing from
other financing sources as provided in Section 5.12(a); and
(e) (i) Each of the 2008 Debt Offer and the 2031 Debt Offer shall
have been consummated and substantially concurrently with the Closing, the
Company shall have paid the depositary under the Debt Offers the purchase price
for the Debt Securities tendered thereunder (including all principal amounts,
accrued interest, premiums, breakage costs, solicitation agent fees and other
expenses in connection with the Debt Offers) and (ii) consents shall have been
obtained from the holders of a majority of the outstanding principal amount of
each of (x) the 2008 Notes and (y) the 2031 Senior Bonds, in each case, agreeing
to the execution and delivery of a supplemental indenture amending the terms and
provisions of the Indenture as set forth on Section 5.15 of the Parent
Disclosure Schedule, including to permit the consummation of the Merger and the
other transactions contemplated hereby, all in accordance with the provisions of
Section 5.15, and each such supplemental indenture shall, substantially
concurrently with the Closing, have been executed by the parties thereto.
ARTICLE VII
TERMINATION
Section 7.1 TERMINATION OR ABANDONMENT. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement may be terminated
and abandoned at any time prior to the Effective Time, whether before or after
any approval of the matters presented in connection with the Merger by the
shareholders of the Company:
(a) by the mutual written consent of the Company and Parent;
(b) by either the Company or Parent if (i) the Effective Time shall
not have occurred on or before September 21, 2006 (the "END DATE") and (ii) the
party seeking to terminate this Agreement pursuant to this clause 7.1(b) shall
not have breached in any material respect its obligations under this Agreement
in any manner that shall have proximately caused the failure to consummate the
Merger on or before such date, except that, if, as of the End Date, all
conditions set forth in Section 6.1, 6.2 and 6.3 of this Agreement shall have
been satisfied or waived (other than those that are satisfied by action taken at
the Closing) other than the condition set forth in Section 6.1(c), then either
the Company or Parent may extend the End Date to December 29, 2006 (the
"EXTENDED END DATE"), by providing written notice to the other party on or
before the End Date;
(c) by either the Company or Parent if an Order shall have been
entered permanently restraining, enjoining or otherwise prohibiting the
consummation of the Merger and such Order shall have become final and
non-appealable;
(d) by either the Company or Parent if the Company Meeting (including
any adjournments thereof) shall have concluded and the Company Shareholder
Approval contemplated by this Agreement shall not have been obtained;
(e) by the Company, if Parent shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained
51
in this Agreement, which breach or failure to perform (1) would result in a
failure of a condition set forth in Section 6.1 or 6.2 and (2) cannot be cured
by the End Date (provided that the Company shall have given Parent written
notice, delivered at least thirty (30) days prior to such termination). Any such
notice shall state the Company's intention to terminate this Agreement pursuant
to this Section 7.1(e) and the basis for such termination;
(f) by Parent, if the Company shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (i) would result in a failure of a condition set forth in
Section 6.1 or 6.3 and (ii) cannot be cured by the End Date (provided that
Parent shall have given the Company written notice, delivered at least thirty
(30) days prior to such termination). Any such notice shall state Parent's
intention to terminate the Agreement pursuant to this Section 7.1(f) and the
basis for such termination;
(g) by the Company, if the Board of Directors of the Company has
concluded in good faith, after consultation with the Company's outside legal and
financial advisors, that a Company Alternative Proposal is a Company Superior
Proposal and has determined to enter into a definitive agreement with respect to
such Company Alternative Proposal, provided that (i) the Company shall have
complied with the provisions of Section 5.3 in connection with such Company
Alternative Proposal and any other publicly announced Company Alternative
Proposals, (ii) the Company shall have given Parent three (3) business days'
written notice of the material terms of the Company Superior Proposal and its
intention to terminate this Agreement pursuant to this Section 7.1(g) (a
"SUPERIOR PROPOSAL NOTICE"), and (iii) the Board of Directors has taken into
account any revised proposal made by Parent to the Company within three business
days of such notice (the "NOTICE PERIOD") and again has determined in good faith
after consultation with its legal and financial advisors that the original
proposal from the third party which was the subject of the Superior Proposal
Notice remains a Company Superior Proposal; PROVIDED, FURTHER, that, if the
third party whose proposal was the subject of a Superior Proposal Notice
modifies or amends such proposal to increase the consideration to be paid for
the Company's shares or amends other material terms during the Notice Period, a
new three (3) business day period shall begin for purposes of this Section
7.1(g).
(h) by Parent, if the Board of Directors of the Company (or any
committee thereof) shall have (i) made a Company Change in Recommendation or the
Company shall have breached its obligations in the last sentence of Section
5.4(e), (ii) determined that a Company Alternative Proposal constitutes a
Company Superior Proposal, (iii) provided a Superior Proposal Notice; (iv)
failed to publicly affirm the Company Recommendation or recommend against any
Company Alternative Proposal within ten (10) business days of Parent's request,
which request may only be made with respect to any Company Alternative Proposal
on a single occasion, provided that any change in price or any other material
terms of a Company Alternative Proposal shall be deemed to be a new Company
Alternative Proposal for purposes of this clause (iv), after any Company
Alternative Proposal shall have been disclosed to the Company's shareholders
generally, or (v) resolved or otherwise determined to take, or announced an
intention to take, any of the foregoing; provided, however, that any
determination or action by the Board of Directors of the Company pursuant to
Section 5.3(b)(ii) shall not, in and of itself, be deemed to permit Parent to
terminate this Agreement under this Section 7.1(h).
52
In the event of termination of this Agreement pursuant to this
Section 7.1, this Agreement shall terminate (except for the Confidentiality
Agreement referred to in Section 5.2, the Guarantee and the provisions of
Sections 7.2, 8.2, 8.4 and 8.5), and there shall be no other liability on the
part of the Company, on the one hand, or Parent or Merger Sub, on the other
hand, to the other except liability arising out of an intentional breach of this
Agreement or fraud or as provided for in the Confidentiality Agreement or the
Guarantee, in which case, subject to Section 8.11 hereof, the aggrieved party
shall be entitled to all rights and remedies available at law or in equity.
Section 7.2 TERMINATION FEES. Notwithstanding any provision in this
Agreement to the contrary:
(a) If
(i) this Agreement is terminated by the Company pursuant to
Section 7.1(g); or
(ii) this Agreement is terminated by Parent pursuant to
Section 7.1(h) or, following a material breach of Section 5.3, pursuant to
Section 7.1(f);
then in any such event described in 7.2(a)(i) or (ii) the Company shall pay to
Parent a fee of fifty (U.S.$50) million (the "FULL FEE") in cash and the Company
shall have no further liability with respect to this Agreement or the
transactions contemplated hereby to Parent (provided that, subject to Section
8.11 hereof, nothing herein shall release any party from liability for
intentional breach or fraud), such payment to be made concurrently with, and a
condition to, the termination of this Agreement (in the case of Section
7.2(a)(i)) or within two business days following the termination of this
Agreement (in the case of Section 7.2(a)(ii)), it being understood that in no
event shall the Company be required to pay the Full Fee on more than one
occasion. Any such payment shall be reduced by any amounts as may be required to
be deducted or withheld therefrom under applicable Tax Law.
(b) If (A) at any time after the date of this Agreement, any Company
Alternative Proposal is publicly proposed or disclosed (or, in the case of a
termination pursuant to Section 7.1(b), is publicly disclosed or otherwise
communicated to the Board of Directors of the Company) prior to, and not
irrevocably withdrawn at the time of, the Company Meeting and (B) this Agreement
is terminated pursuant to Section 7.1(b) (but only if at such time Parent would
not be prohibited from terminating this Agreement by application of Section
7.1(b)(ii)), by Parent pursuant to Section 7.1(f) or by Parent or the Company
pursuant to Section 7.1(d); PROVIDED, that for purposes of this Section 7.2, a
Company Alternative Proposal shall not be deemed to be irrevocably withdrawn,
if, prior to the six month anniversary of the termination of this Agreement, the
offeror or its affiliates shall have disclosed publicly or to the Company the
intent of resubmitting or resubmits such proposal or any amended or substitute
Company Alternative Proposal, then the Company shall pay to Parent a fee of
twenty five (U.S.$25) million (the "PARTIAL FEE") in cash, and, subject to
Section 7.2(c), shall have no further liability with respect to this Agreement
or the transactions contemplated hereby to Parent (provided that nothing herein
shall release any party from liability for intentional breach or fraud), such
payment to be made within two business days following the termination of this
Agreement (in
53
the manner described in this Section 7.2(b)), it being understood that in no
event shall the Company be required to pay the Partial Fee if the Full Fee is
otherwise required to be paid. Any such payment shall be reduced by any amounts
as may be required to be deducted or withheld therefrom under applicable Tax
Law.
(c) If the Partial Fee is paid pursuant to Section 7.2(b), and within
6 months after the termination of this Agreement, any definitive agreement
providing for a Qualifying Transaction (as defined below) shall have been
entered into, or a Qualifying Transaction shall have been consummated, then the
Company shall pay to Parent an additional fee of twenty five (U.S.$25) million
in cash and shall have no further liability with respect to this Agreement or
the transactions contemplated hereby to Parent (provided that, nothing herein
shall release any party from liability for intentional breach or fraud), such
payment to be made within two business days following the earlier of the
execution of such definitive agreement or the consummation of such Qualifying
Transaction. Any such payment shall be reduced by any amounts as may be required
to be deducted or withheld therefrom under applicable Tax Law.
For purposes of this Agreement, "QUALIFYING TRANSACTION" shall mean
any (i) acquisition of the Company by merger or business combination
transaction; (ii) acquisition by any person (other than Parent or any of its
Subsidiaries or affiliates) of fifty percent (50%) or more of the assets of the
Company and its Subsidiaries, taken as a whole; (iii) acquisition by any person
(other than Parent or any of its Subsidiaries or affiliates) of fifty percent
(50%) or more of the outstanding Company Ordinary Shares; (iv) the exclusive,
long term license of material Trademarks of the Company and its Subsidiaries to
any third party in connection with which a direct or indirect payment of at
least 50% of the Merger Consideration is made to the shareholders of the Company
in respect thereof; and (v) a Recapitalization Transaction in which the
shareholders of the Company receive a payment or distribution in the form of
cash, debt securities or securities with a limited life that have an aggregate
value of at least 50% of the Merger Consideration.
(d) If (A) prior to the termination of this Agreement, no Company
Alternative Proposal is publicly proposed or publicly disclosed or otherwise
communicated to the Board of Directors of the Company prior to the Company
Meeting and (B) this Agreement is terminated by Parent or the Company pursuant
to Section 7.1(d), the Company shall pay to Parent an amount equal to the sum of
Parent's Expenses (not to exceed U.S.$15 million in the aggregate) for which
Parent has not theretofore been reimbursed by the Company in cash by wire
transfer in immediately available funds and the Company shall have no further
liability with respect to this Agreement or the transactions contemplated hereby
to Parent (provided that nothing herein shall release any party from liability
for intentional breach or fraud), such payment to be made following such
termination within two business days following delivery to the Company of notice
of demand for such payment. For purposes of this Agreement, "EXPENSES" means,
with respect to a party hereto, all reasonable out-of-pocket expenses
(including, without limitation, all reasonable fees and expenses of debt
financing sources (including those who are parties to the Financing
Commitments), counsel, accountants, investment bankers, experts and consultants
to a party hereto) incurred by a party or on its behalf in connection with or
related to the sale process, including the authorization, negotiation, execution
and performance of this Agreement and the transactions contemplated hereby,
including the Financing, as to which Parent has provided reasonable
documentation.
54
(e) If
(i) this Agreement is terminated pursuant to Section 7.1(b)
and at such time all conditions to Parent's obligations to consummate the
Merger shall have been satisfied, other than Excluded Conditions (as
defined below) and Section 6.3(d); or
(ii) this Agreement is terminated pursuant to Section 7.1(e)
because of either (1) a failure of Parent or Merger Sub to receive the
proceeds of the Debt Financing contemplated by the Financial Commitments
or alternative sources pursuant to Section 5.12 or (2) an intentional
breach by Parent of its obligations under Section 5.12;
then Parent shall pay to the Company U.S.$50 million in cash (the "PARENT
TERMINATION FEE"), it being understood that in no event shall Parent be required
to pay the fee referred to in this Section 7.2(e) on more than one occasion, and
provided further that the provisions of this Section 7.2(e) shall be subject to
Section 8.11 hereof. The Parent Termination Fee shall be payable within two
business days after the termination of this Agreement. Any such payment shall be
reduced by any amounts as may be required to be deducted or withheld therefrom
under applicable Tax Law. "Excluded Conditions" consist of any one or more of
(1) Section 6.3(c); (2) Section 6.3(e), but only if the failure to satisfy such
Section 6.3(e) results from either (x) the failure to satisfy Section 6.3(d) or
(y) Parent's intentional breach of Section 5.15 and the schedules thereto
(provided that this clause (2) shall not apply if the condition in Section
6.3(d) would have been satisfied but for such breach), or (3) Section 6.1(b) or
(c), but only if the failure to satisfy such Sections result from Parent's
breach of Section 5.6 (provided that this clause (3) shall not apply if the
condition in Section 6.3(d) would have been satisfied but for such breach).
Nothing in this Section shall limit the ability of the Company to seek damages
against Parent and Merger Sub for intentional breach of this Agreement or fraud,
subject to Section 8.11.
Section 7.3 AMENDMENT OR SUPPLEMENT. At any time before or after
approval of the matters presented in connection with the Merger by the
shareholders of the Company and prior to the Effective Time, this Agreement may
be amended or supplemented in writing by the Company and Parent with respect to
any of the terms contained in this Agreement, except that following approval by
the shareholders of the Company there shall be no amendment or change to the
provisions hereof which by Law or in accordance with the rules of any relevant
stock exchange requires further approval by such shareholders without such
further approval nor any amendment or change not permitted under applicable Law.
Section 7.4 EXTENSION OF TIME, WAIVER, ETC. At any time prior to the
Effective Time, the Company and Parent may:
(a) extend the time for the performance of any of the obligations or
acts of the other party;
(b) waive any inaccuracies in the representations and warranties of
the other party contained herein or in any document delivered pursuant hereto;
or
(c) waive compliance with any of the agreements or conditions of the
other party contained herein.
55
Notwithstanding the foregoing, no failure or delay by the Company or
Parent 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 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
MISCELLANEOUS
Section 8.1 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Merger.
Section 8.2 EXPENSES. Except as set forth in Sections 5.11 and 7.2 or
in the Guarantee, whether or not the Merger is consummated, all costs and
expenses incurred in connection with the Merger, this Agreement and the
transactions contemplated hereby shall be paid by the party incurring or
required to incur such expenses.
Section 8.3 COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in two or more counterparts (including by facsimile), 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 8.4 GOVERNING LAW. Except to the extent that the internal law
of the British Virgin Islands, pursuant to conflict of laws principles of
British Virgin Islands law, is required to be applied to this Agreement and the
Merger, this Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to any choice or conflict
of law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the Laws of any jurisdiction
other than the State of New York.
Section 8.5 JURISDICTION; ENFORCEMENT. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement exclusively in a
federal court located in the Borough of Manhattan, City of New York, or, if not
able to be brought in such court, in a state court located in the Borough of
Manhattan, City of New York. In addition, each of the parties hereto irrevocably
agrees that any legal action or proceeding with respect to this Agreement and
the rights and obligations arising hereunder, or for recognition and enforcement
of any judgment in respect of this Agreement and the rights and obligations
arising hereunder brought by the other party hereto or its successors or assigns
shall be brought and determined exclusively in a federal court located in the
Borough of Manhattan, City of New York, or, if not able to be brought in such
court, in a state court located in the Borough of Manhattan, City of New York,.
Each of the parties hereto hereby irrevocably submits with
56
regard to any such action or proceeding for itself and in respect of its
property, generally and unconditionally, to the personal jurisdiction of the
aforesaid courts and agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any court
other than the aforesaid courts. Each of the parties hereto hereby irrevocably
waives, and agrees not to assert, by way of motion, as a defense, counterclaim
or otherwise, in any action or proceeding with respect to this Agreement, (a)
any claim that it is not personally subject to the jurisdiction of the
above-named courts for any reason other than the failure to serve in accordance
with this Section 8.5, (b) any claim that it or its property is exempt or immune
from jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise)
and (c) to the fullest extent permitted by the applicable Law, any claim that
(i) the suit, action or proceeding in such court is brought in an inconvenient
forum, (ii) the venue of such suit, action or proceeding is improper or (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
Section 8.6 NOTICES. Any notice required to be given hereunder shall
be sufficient if in writing, and sent by facsimile transmission (provided that
any notice received by facsimile transmission or otherwise at the addressee's
location on any business day after 5:00 p.m. (addressee's local time) shall be
deemed to have been received at 9:00 a.m. (addressee's local time) on the next
business day), by reliable overnight delivery service (with proof of service),
hand delivery or certified or registered mail (return receipt requested and
first-class postage prepaid), addressed as follows:
To Parent or Merger Sub:
BMD Venture Capital B.V.
Rokin 55
1012 KK Amsterdam
The Netherlands
with copies to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Four Times Square
New York, New York
Telecopy: (000) 000-0000
Attention: Xxx X. Xxxxx
Xxxxxx X. Xxxxx
and
Xxxxxxxx Chance U.S. LP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxxxx
57
To the Company:
Xxxxx Xxxxxxxx Corporation
9/F, Novel Industrial Xxxxxxxx
000-000 Xxx Xxx Xxx Xxxx
Xxxxxx Sha Wan, Kowloon
Hong Kong
Telecopy: (000) 0000 0000
Attention: Xxxxx X.X. Xxxx
with copies to:
Xxxxx Xxxxxxxx USA, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxxxxx, Esq.
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed. Any party to this Agreement
may notify any other party of any changes to the address or any of the other
details specified in this paragraph; provided that such notification shall only
be effective on the date specified in such notice or five (5) business days
after the notice is given, whichever is later. Rejection or other refusal to
accept or the inability to deliver because of changed address of which no notice
was given shall be deemed to be receipt of the notice as of the date of such
rejection, refusal or inability to deliver.
Section 8.7 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
prior written consent of the other parties, except that Parent or Merger Sub may
assign, in whole or in part, its rights and obligations under this Agreement to
any direct or indirect wholly owned subsidiary of Apax without the prior written
consent of the Company, PROVIDED that Parent or Merger Sub, as applicable, shall
remain liable for all of its obligations under this Agreement. 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 8.8 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
58
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 8.9 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement (including the exhibits and schedules hereto), the Guarantee 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 (a) the rights of the Company's shareholders to receive the
Merger Consideration at the Effective Time, (b) the right of holders of Company
Stock Options and Company Stock-Based Awards to receive the Option and
Stock-Based Consideration provided for in Section 5.5(a) of the Merger Agreement
at the Effective Time, (c) the right of the Company, on behalf of its
shareholders, to pursue damages (subject to Section 8.11) in the event of
Parent's or Merger Sub's intentional breach of this Agreement or fraud, which
right is hereby acknowledged and agreed by Parent, Merger Sub and the
Guarantors, and (d) the provisions of Section 5.8 hereof, this Agreement is not
intended to and shall not confer upon any person other than the parties hereto
any rights or remedies hereunder.
Section 8.10 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 8.11 REMEDIES. The parties agree that the current, former and
prospective stockholders of Parent and their respective affiliates (other than
Parent and Merger Sub) and any current, former or prospective officer, director,
employee, general or limited partner, member or investor of the foregoing are
not parties to this Agreement and (i) the Company shall not have any right to
cause any monies to be contributed to Parent or Merger Sub by any current,
former or prospective stockholder of Parent or Merger Sub or any of their
respective affiliates or any current, former or prospective officer, director,
employee, general or limited partner, member or investor of the foregoing and
(ii) except to the extent provided in the Guarantee, the Company may not
otherwise pursue any claim or seek any legal or equitable remedy in connection
with this Agreement (including monetary damages and specific performance)
against any current, former or prospective stockholder of Parent or Merger Sub
or any affiliate thereof (other than Parent or Merger Sub) or any current,
former or prospective officer, director, employee, general or limited partner,
member or investor of the foregoing (including of Parent or Merger Sub),
including by reason of the Financing Commitment related to the Equity Financing.
Neither Parent nor Merger Sub shall have any liability to the Company in excess
of an aggregate amount of $50 million (the "LIABILITY CAP") in respect of (i)
any claims for monetary damages that the Company may bring against Parent or
Merger Sub pursuant to or in connection with this Agreement or the Guarantee,
(ii) all other such amounts paid by Parent or Merger Sub to the Company with
respect to all claims that had previously been brought by the Company against
Parent and/or Merger Sub, (iii) any amounts paid by Parent to the Company
pursuant to Section 7.2(e) and (iv) all amounts paid to the Company under the
Guarantee. Notwithstanding anything herein to the contrary, if the payment to
the Company of any judgment for monetary damages, when taken together with any
amounts paid pursuant to Section 7.2(e) hereof and any amounts paid pursuant to
the Guarantee, would cause the Liability Cap to be exceeded, such judgment shall
be paid only to the maximum extent as would not cause the Liability Cap to be
exceeded.
59
Section 8.12 INTERPRETATION. When a reference is made in this
Agreement to an Article or Section, such reference shall be to an Article or
Section of this Agreement unless otherwise indicated. The table of contents to
this Agreement is for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
thereto unless otherwise defined therein. The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of such
term. Any agreement, instrument or statute defined or referred to herein or in
any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns. Each of
the parties has participated in the drafting and negotiation of this Agreement.
If an ambiguity or question of intent or interpretation arises, this Agreement
must be construed as if it is drafted by all the parties and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of
authorship of any of the provisions of this Agreement.
Section 8.13 DEFINITIONS.
(a) References in this Agreement to "Subsidiaries" of any party shall
mean any corporation, partnership, association, trust or other form of legal
entity of which (i) 50% or more of the outstanding voting securities are on the
date hereof directly or indirectly owned by such party, (ii) such party or any
Subsidiary of such party is a general partner (excluding partnerships in which
such party or any Subsidiary of such party does not have a majority of the
voting interests in such partnership) or (iii) if a limited liability company or
other business entity, a majority of the ownership interests having the power to
govern or elect members of the applicable governing body of such entity is at
the time owned or controlled, directly or indirectly, by such party or any
subsidiary of such party. 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 or other ownership interests,
by Contract or otherwise. References in the Agreement to "person" shall mean an
individual, a corporation, a partnership, an association, a trust or any other
entity, group (as such term is used in Section 13 of the Exchange Act) or
organization, including, without limitation, a Governmental Entity. As used in
this Agreement, "knowledge" of any person means the actual knowledge of the
executive officers of such person.
60
(b) Each of the following terms is defined on the pages set forth
opposite such term:
2008 Debt Offer..................................................47
2008 Indenture Amendments........................................47
2008 Notes.......................................................47
2031 Debt Offer..................................................47
2031 Indenture Amendments........................................47
2031 Senior Bonds................................................47
affiliates.......................................................60
Agreement.........................................................4
Apax.............................................................35
Articles of Merger................................................5
BC Act............................................................4
Book-Entry Shares.................................................7
Cancelled Shares..................................................6
Certificates......................................................7
Closing...........................................................4
Closing Date......................................................4
Code..............................................................8
Company...........................................................4
Company Alternative Proposal.....................................37
Company Approvals................................................13
Company Benefit Plans............................................16
Company Change of Recommendation.................................36
Company Disclosure Schedule.......................................9
Company Employees................................................40
Company Incentive Plans..........................................11
Company Material Adverse Effect..................................10
Company Material Contracts.......................................24
Company Meeting..................................................39
Company Ordinary Shares...........................................6
Company Permits..................................................16
Company Recommendation...........................................39
Company Shareholder Approval.....................................22
Company Stock Option.............................................39
Company Stock Plans..............................................39
Company Stock-Based Award........................................39
Company Superior Proposal........................................37
Compensation Committee...........................................39
Confidentiality Agreement........................................35
Contract.........................................................13
control..........................................................60
controlled by....................................................60
Copyrights.......................................................21
Debt Financing...................................................29
Debt Offers......................................................47
61
Debt Securities..................................................47
Dissenting Shares.................................................6
ECMR.............................................................13
Effective Time....................................................5
End Date.........................................................51
Environmental Law................................................25
Equity Commitment...............................................iii
Equity Financing.................................................29
ERISA............................................................16
ERISA Affiliate..................................................17
Exchange Act.....................................................13
Exchange Fund.....................................................7
Expenses.........................................................54
Extended End Date................................................51
Financing Commitments............................................29
Fiscal 2007......................................................41
Foreign Benefit Plan.............................................18
GAAP.............................................................14
Governmental Entity..............................................13
Guarantee.........................................................4
Hazardous Material...............................................26
Hong Kong Tax Matter.............................................10
HSR Act..........................................................13
Indebtedness.....................................................12
Indemnified Parties..............................................44
Indenture........................................................47
Insurance Policies...............................................26
Intellectual Property............................................20
knowledge........................................................60
Law..............................................................15
Laws.............................................................15
Leased Real Property.............................................25
Lien.............................................................13
Match Period.....................................................52
Maximum Amount...................................................45
Merger............................................................4
Merger Consideration..............................................6
Merger Sub........................................................4
New Plans........................................................40
Old Plans........................................................40
Option and Stock-Based Consideration.............................39
Option Consideration.............................................39
Parent............................................................4
Parent Approvals.................................................27
Parent Disclosure Schedule.......................................26
Parent Material Adverse Effect...................................27
62
Parent Permits...................................................28
Partial Fee......................................................53
Patents..........................................................21
Paying Agent......................................................7
Permitted Liens..................................................19
person...........................................................60
Preference Shares................................................11
Proxy Statement..................................................38
Qualifying Transaction...........................................54
Recapitalization Transaction.....................................37
Registrar.........................................................5
Regulatory Law...................................................43
Release..........................................................26
Representatives..................................................34
Re-registration..................................................38
Xxxxxxxx-Xxxxx Act...............................................14
Securities Class Action..........................................10
Share.............................................................6
Shares............................................................6
Software.........................................................21
Subsidiaries.....................................................60
Superior Proposal Notice.........................................52
Surviving Corporation.............................................4
Tax Return.......................................................19
Taxes............................................................19
Termination Date.................................................30
Trade Secrets....................................................21
Trademarks.......................................................21
under common control with........................................60
63
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
BMD VENTURE CAPITAL B.V.
BY:/s/ X. Xxxxxxx
-------------------------
Name: X. Xxxxxxx
Title: Managing Director
ELMIRA (BVI) UNLIMITED
BY: /s/ X. Xxxxxxx
--------------------------
Name: X. Xxxxxxx
Title: Managing Director
XXXXX XXXXXXXX CORPORATION
By: /s/ Xxxxx X. Xxxx
--------------------------
Name: Xxxxx X. Xxxx
Title: Chief Executive Officer
and President
